Petro Matad To Commence Testing Of Davsan Tolgoi-11 Mongolia

Petro Matad today announced that the Company's Davsan Tolgoi-11 well (DT-11) reached a total depth of 1,220m in metamorphic basement rocks below the Tsagaantsav objective. Logging, casing and cementing operations have been completed.

DT-11 was drilled 225m south of the DT-1 well that was abandoned in August after testing revealed probable formation damage due to an inadequate cement bond.

DT-11 encountered the Uppermost Tsagaantsav paleovalley sequence at 1,074m depth with fair and good oil shows from 1,078m to 1,084m in both cuttings and in the conventional core that was recovered from 1,078.6m to 1,087m. Oil shows in the core included strong hydrocarbon odour, dark brown oil staining, dull golden to bright yellow fluorescence and yellow to white streaming cut.

A thin sequence of the Lower Tsagaantsav was penetrated from 1,134m to the top of basement at 1,151m with no indications of hydrocarbons. Petrophysical analysis indicates a total of 14.5 meters of net pay. The pay zones are divided into three test intervals: 1,076m-1,084m, 1,100m-1,102m, and 1,127m-1,134m in the upper, middle and lower part of the Uppermost Tsagaantsav paleovalley sequence, respectively.

As reported in the Company's interim results statement, DT-11 will be the last well to be drilled by Petro Matad during 2011. The Company's contractor, DQE International has stacked its rig on site ready for recommencement of drilling activity for Petro Matad in 2012.

Petro Matad CEO, Douglas McGay stated: "We are pleased that the efficient drilling and sound mechanical condition of the DT-11 replacement well will permit us to fully test the same Uppermost Tsagaantsav reservoir encountered in DT-1. We expect testing to commence in the near future."