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. Work at block XX has up until now focused on the DavsanTolgoi target, which disappointed last year. Now 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”. Both parts 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.”