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Petro Matad said a new well in Mongolia had presented 'encouraging' results and would be subject to a testing programme.
The Heron-1 well was drilled to 2960 metres, with the top Lower Tsagaantsav reservoir, the primary target for the well, encountered at 2803 metres.
'The formation drilled from 2803 to 2880 metres was predominantly sandstone interbedded with shales and siltstones,' the company said.
'Oil and gas shows were recorded over this interval and on the basis of the drilling data, the gross reservoir interval in Heron-1 appears to be very similar to the productive reservoirs found in oil wells immediately to the north in Block XIX.'
Wireline logs had been acquired and analysis of that data supported the interpretation of a 77 metre gross interval of potential oil reservoir.
'Within this interval the logs also define three zones with a total gross thickness of 22 metres, 14 metres net, exhibiting better porosity and permeability characteristics than is generally seen within the Lower Tsagaantsav.'
'Overall, the reservoir quality and oil saturations indicated on the wireline logs are sufficiently encouraging that casing will now be run in preparation for a testing programme.'
A casing operation was now underway and discussions with the testing contractor had commenced to determine how quickly the testing equipment could be mobilised to the Heron-1 location.
'The results of the Heron-1 well are encouraging,' chief executive Mike Buck said.
'Along with the well and wireline logging data being consistent with our pre-drill prognosis, there is also evidence of zones with better than expected porosity/permeability characteristics.'
'The well will now be tested and we are pushing the contractor to mobilise equipment as quickly as possible.'
'Further updates will be provided in due course.'