Manas Petroleum Updates Corporate Website to Include Mongolian Operations

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Location and Basin Name

Mongolia is located on the Asian continent south of Russia and north and west of China (Figure 1). The capital of Mongolia is Ulaanbaatar, a city of approximately 1,000,000 people founded in 1639 and located in the north central part of the country, which has approximately 3,086,918 inhabitants. Ulaanbaatar is located 440 kilometers (270 miles) to the northwest of the Manas Blocks 13 --Tsagaan-Els and 14 - Zuunbayan. Mongolia is a vast country of mountains, lakes, deserts, and grasslands with a total area of 1,564,100 square kilometers (603,902 square miles). Blocks 13 and 14 are in the East Gobi Basin (Figure 1). The blocks are in the province of Dornogovi in the southeast of Mongolia.

Gross and net interest in the property

DWM Petroleum, a wholly-owned subsidiary of Manas Petroleum Corporation, has legal title to Blocks 13 and 14. Twenty-six percent of the beneficial title to these blocks is held in trust for others -- ten percent in favor of a Mongolian oil and gas company, subject to regulatory approval and negotiations, and eight percent for each of two investor groups. The blocks, which cover an aggregate of over 20,000 square kilometers (almost five million acres) of land, are located on Mongolia's southern border. The production contracts provide for a five-year exploration period (with two optional six month extensions) beginning on April 21, 2009, and a twenty-year exploitation period (with two five year extensions). The Mongolian government is entitled to 12.5% royalty interest.
Description of target zones.

The primary prospective section is in the Valaginian lower cretaceous rocks of the East Gobi Basin. These rocks were formed in fluvial and lacustrine depositional environments. The Valaginian age Tsagaan Tsav formation is the main sandstone reservoir rock in the Tsagaan Els and Zuunbayan oil fields, which are located between Blocks XIII and XIV. Depth to top of Tsagaan Tsav is less than 750 meters (2,461 feet) in the Zuunbayan field area, and the Tsagaan Tsav unit is approximately 600 meters (1,970 feet) thick in the East Gobi Basin. The Hauterivian to Albian age Zuunbayan formation is approximately 970 meters (3,200 feet) thick and consists of sandstone with interbedded shales and occasional interbedded tuffs representing near shore lacustrine and fluvial depositional environments. The lower part of the overlying Zuunbayan formation contains additional possible sandstone reservoir rocks with the upper part forming a seal. The overlying Cenomanian age Sainshad or Baruunbayan formation forms a regional seal.

Distance to the nearest commercial production

Commercial production occurred from 1953 until 1969 in the Zuunbayan and Tsagaan-Els oil fields and resumed in 2007 by Sinopec. These fields are located in between Blocks XIII and XIV, in a producing block entirely surrounded by the two subject blocks (Figure 6). Each of the producing fields is approximately 20 kilometers from the boundary of the blocks (Figure 2). The range of pool or field sizes, based on the Zuunbayan and Tsagan-Els fields, would range from 63 to 942 hectares (154 to 2,328 acres). The analysis performed by Gustavson Associates (Resource Evaluation Report on Manas Petroleum Corporation's Concessions in Mongolia, September 1, 2010) indicates a likely range of individual field sizes, in terms of prospective resources, of 8.1 to 24.9 million barrels.

Depth of the target zone

The main pay section is expected between 425 meters (1,394 feet) and 2,500 meters (8,203 feet) below the surface.


The Zuunbayan, Southwest Zuunbayan, and Tsagaan Els oil fields are located between Block XIII and Block XIV in Block XCVII. The Zuunbayan oil field, with estimated original oil in place (OOIP) of 25.7 million barrels was discovered in 1941 based on surface oil seeps and a surface anticline. Discoveries on two nearby anticlines were also made in the Southwest Zuunbayan field, with an OOIP of 6.1 million barrels and the Tsagaan Els field, with an estimated OOIP of 118 million barrels (Sproule 1995, Evaluation of the Crude Oil Reserves of Nescor Energy Co. in the Zuunbayan Major, SW Zuunbayan, and Tsagaan Els Fields, Mongolia).

The Tsagaan Els field was discovered in 1953 with development continuing until 1963. This field was evaluated but not produced at the time. There are multiple stacked pay horizons averaging 5 meters (16 feet) thick within both the Tsagaan Tsav Formation and lower Zuunbayan Formation. Field data include porosity of 13 to 18 percent, permeability of 0.1 to 16 millidarcies, high paraffin content, and sulfur content of less than 0.25 percent.

The Zuunbayan oil field was discovered in 1941. A refinery was built in 1950 when production started. Produced oils from the Zuunbayan field are waxy and average 28° API with an API gravity range of 23° to 38° reported. The Zuunbayan field is located 750 meters (2,460 feet) above sea level near the community of Zuunbayan. The depth to the main reservoir is 475 meters (1,558 feet) below surface. Other field data includes sulphur content of 0.11 percent to 0.23 percent, gas oil ratio of 3 to 150 ft/bbl, permeability of 2 to 1,000 millidarcies, porosity of 12 to 16 percent, hydrocarbon saturation from 22 to 50 percent, areal closure from 6 to 8 square kilometers, and a recovery factor to date of 9 percent. Pay thickness averages 6 meters (20 feet) and there are multiple stacked pay horizons in both the Tsagaan Tsav Formation and the lower Zuunbayan Formation. In the primary phase of the field, 1941-1969, there were 200 wells that had a cumulative oil production of 3.85 to 4 million barrels of oil. Production ceased after a fire in 1969 at the refining and production facilities for the field. Political conditions recently have brought renewed interest in this area of Mongolia for oil exploration.

Since 2000, new work has occurred at the Zuunbayan field with the construction of an oil terminal, seismic acquisition, and exploratory drilling. New discoveries have been reported. Additional wells have also been drilled in the areas of the East Zuunbayan and Tsagaan-Els fields.

The Mesozoic basin trend that occurs in southeastern Mongolia continues into China. The Aershan field complex in the Erlian Basin of China has oil reserves of approximately 100 million barrels.


Since August 1, 2008, Manas geologists supported by experts from the GII (Geophysical Institute of Israel) and University of Novosibirsk completed a Phase 1 field work program defining structural trends with potential petroleum accumulations. As of this writing, Manas has conducted a gravity analysis of the existing gravity data and has acquired additional gravity data to fill in gaps in the data on the east and west end of the block complex.

The company has completed the following work with the goal of acquiring new seismic data in the fourth calendar quarter of 2010:

Reconnaissance Surveys -- 9,000 sq km
Geological Mapping in 1:1000000 scale -- 2,365 sq km
Geological Mapping in 1:50000 scale -- 530 sq km
Gravity Profile survey -- 600 km
Geological- structural cross-sections -- 1,560 km
Lithological-stratigraphical cross-sections -- 1,400 meters
Paleontology-stratigraphical studies -- 100 km

Geosan LLC collected all of the available gravity studies in the area (Figure 5) and proceeded to process and interpret these data. Due to gaps in the data over large areas of Blocks 13 and 14, these areas had to be interpolated using the nearby data in order to complete the picture (Figure 6).

Since that April 2010 study, Manas commissioned the acquisition of an additional 4,000 km of gravity data over the blocks. The areas covered by this survey are shown in Figure 7 where 1,700 km of data was acquired over Block 13 and 2,300 km over Block 14.

Seismic data

The existing 2D seismic data over the concession area totals approximately 681 kilometers (423 miles) and was shot by ROC Oil of Australia. (554 km in Block 13 and 127 km in Block 14). Manas does not plan to reprocess the existing data due to the good quality of the data, but does plan to acquire 186 miles (300 kilometers) of new data (150 km on Block 13 and 150 km on Block 14) using a Chinese data acquisition company known as DQE International, a subsidiary of CNPC Daqing Petroleum that has been in operation since the 1970's and has a total of 16 seismic crews, 76 drilling crews, 60 well logging crews and 10 cementing crews.

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