Through its subsidiary Central Asian Petroleum Corporation Limited (“Capcorp”), Petro Matad Limited was awarded Production Sharing Contract on Block IV on 8th July 2009.

Block IV lies in the southwest part of Mongolia, approximately 500 km southwest of the capital Ulaanbaatar, and covers an area of 39,011.27km².

Regional scale geological mapping and gravity and magnetic surveys gave a broad indication of the presence of sub-basins which appeared to contain sediments of Jurassic-Cretaceous age and hence may be prospective for oil.

Modern satellite gravity data was combined with geological surface mapping to define the depth and extents of the sub-basins to a reasonable level of accuracy. Careful calibration of the modelling was conducted in three sub-basins in Mongolia where accurate depth information was available from wells and seismic data.

The presence of source rocks in individual sub-basins cannot be proven without drilling wells; however, sub-basins with a depth to basement of less than 2,000 m are unlikely to have generated oil. On this basis, two of the three sub-basins in Block IV have potential for oil generation. The largest of the prospective sub-basins has a length of approx 400 km, a width of approx 30 km and a maximum depth of approx 10,000 m.

Block IV has sufficient potential to warrant the next step in exploration. Petro Matad is planning to acquire an extensive surface gravity and magnetics programme, a detailed surface geological mapping programme and a regional 2D seismic programme as part of its early exploration programme on the Block.