Petro Matad 
has said it will spend up to US$47 million on exploration programmes on the XX
block in Mongolia over the next five years.

This comes as the Mongolian authorities extended the exploration period
under the production sharing contract (PSC) for the block.

While work at block XX has up until now focussed on the Davsan Tolgoi
target, which disappointed last year, but the company says there is ‘additional
exploration potential in the north of the XX block and the southern part of
block contains six ‘promising’ sub-basins.

It says that both the northern and southern parts of the XX block warrant
more detailed exploration and time is needed to build on the initial positive
results.

“We welcome the extension together with the Government”s appreciation
of the exploration processes, the progress that Petro Matad has made and the
need to systematically explore the remainder of Block XX,” said chief executive
Douglas McGay.

Petro Matad said that new expenditure commitments can be offset against
previous expenditures that exceed past obligations under the PSC.

“Over the last six years the company has made a significant investment in
Block XX and has a substantial surplus to the historic minimum spending
commitments that could be used to offset the new obligations if necessary,”
McGay adds.  

“We have accelerated our exploration activities on all prospective areas and
the extra time that this extension grants us will allow us to carry out quality
and thorough investigations to further define drillable prospects.  

“Given the proximity of proven oil fields and our works to date we remain
confident that Block XX has the potential to be of significant value.”

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