Petro Matad's Block IV and V Production Sharing Contract areas in central Mongolia. The Company is pleased to provide a progress report on those operations.

Summary

The Company's 2011 exploration programme in Blocks IV and V consisted of stratigraphic core drilling, 2D seismic acquisition and field geology operations. Results of those activities have provided the first documentation of live oil and active oil migration in central Mongolia, and permit extrapolation of a viable hydrocarbon system along the 550km length of the "Valley of the Lakes" basins in Blocks IV & V. When combined with the 24,000 stations of gravity data acquired in 2010, the expanded seismic network has delineated a robust inventory of fold, fault and unconformity traps which will focus the Company's delineation of future drill targets.

Blocks IV and V consist of a linked system of Jurassic through Cretaceous rift basins that contain the same lacustrine and deltaic source, seal, and reservoir sequences that produce oil in similar basins throughout Central and Northeast Asia. The Block IV and V rift basins are located beneath the modern "Valley of the Lakes", where Cenozoic strike-slip faulting and local contractional folding have enhanced the trap potential compared with the producing basins of eastern Mongolia.

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