No oil was recovered during the testing of the Davsan Tolgoi #11 well (DT-11) on Petro Matad production sharing contract (PSC) on Block XX in eastern Mongolia.

Four wells drilled at a lower elevation to the crest of Davsan Tolgoi or on separate structures are still considered valid candidates for further testing and possible stimulation, according to the company.

The drilling program to date has proven the fundamentals of a petroleum system on Block XX, and exploration works will continue.

The processing and interpretation of the 2011 2D seismic program on the six sub-basins of Block XX is continuing

"We are disappointed that the test results from DT-11 have revealed that the crest of Davsan Tolgoi anticline does not contain commercial oil,” said Doug McGay, Petro Matad chief executive officer.

“However, it is important to note that the focus on the prospect on the crestal area is only one component of Davsan Tolgoi and there is still scope for the development of other parts of the prospect. In addition, there remains advanced exploration potential in the area around Davsan Tolgoi, and the other basins in Block XX are developing into promising plays.”

"Both the DQE International drilling rig and the workover rig are on standby on site, awaiting an early start to the 2012 drilling season. The company had also identified and had successful contract negotiations with an international company that will supply fracing services. While this program has been placed on standby for the current time, it is envisaged that stimulation programs will be run on a selection of the existing wells in 2012 following the winter stand-down,” he explained.