History
Block XX was originally awarded to SOCO International plc (“SOCO”) along with Blocks XI, XIX, XXI and XXII. SOCO relinquished Blocks XI and XX, following the drilling of the 20-01 well on Block XX in 1998. SOCO then concentrated on developing Block XIX oil discoveries and funding further exploration. Petro Matad LLC applied for Block XX in December 2005 and it was subsequently awarded to Petro Matad LLC by the Mineral Resources and Petroleum Authority of Mongolia, effective from 19th July 2006, for a term of 5 years under a minimum work programme obligation.

Geology
Block XX lies in the far eastern part of Mongolia, 500km from the capital Ulaanbaatar and to the east of the Gobi Desert. The southern boundary of the block is within 30km of the border with China and the northern boundary is within 80km of China.

Block XX originally covered an area of 18,956km² and is located in the prospective Tamtsag Basin. The company relinquished 25% of the area of the block, as required by Mongolia law, in August 2008. Block XX is now 14,250km² in area. The Tamtsag Basin is the extension into Mongolia of the Hailar Basin in China. The basin extends into Block XX and contains an active and proven petroleum system which involves the generation and trapping of petroleum in structures containing sedimentary rocks that were deposited in river and lake environments. The Tamtsag Basin is geologically similar to adjacent productive regions such as the Erlian and Songlia Basins in China.

Petro Matad’s Block XX covers the south western extension of the Tamtsag Basin. Other less explored grabens exist within the north of Block XX. The main infrastructure is the Tolson Uul Oil Fields just to the north of Block XX and the oil export road, which runs through Block XX into China.

Seismic and other analyses
Petro Matad has created an extensive seismic and other geophysical surveys database over Block XX. The database comprises a total of 3,189km of 2D seismic data, 133km² 3D seismic data and 3,000km² of gravity and magnetic data acquired by Petro Matad.

The seismic data set within Block XX consists of 2,153km of pre-existing data that has been reprocessed by the Company, and 578km of 2D seismic data that Petro Matad acquired in the field in 2007 and 2008. The 3D seismic survey was acquired and the data were processed by Petro Matad in 2008. In 2007, a gravity and magnetic survey over 3,000km² was commissioned by the Company over areas that do not include the Tamtsag Basin.

Results
The interpretation and mapping of the Company’s entire 2D seismic data set matured 3 prospects, confirmed 2 strong leads, and identified 9 leads.

The 3D seismic survey was acquired over the most advanced Prospect 8Ts. Upon completion and interpretation of the 3D seismic survey, Block XX’s Unrisked Prospective Resource is 638 MMbbl and Risked Prospective Resource is 112 MMbbl. Prospect 8Ts was renamed Davsan Tolgoi and the Company is planning to undertake a drilling programme within the Davsan Tolgoi Prospect and is also examining work programmes to further the exploration in other prospective areas previously identified in Block XX.

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