Frontera Resources Corporation (London Stock Exchange, AIM Market – Symbol: FRR; OTCQX Market, U.S.A. – Symbol: FRTE), an independent oil and gas exploration and production company, today announced an update of operations at its Shallow Fields Production Unit, Block 12, Georgia.
Development drilling operations at the Mtsare Khevi Field have continued to progress since the completion of a multi-well workover program during the second quarter of 2008. Production results from this program, as reported previously by Frontera, confirmed the basis for commencement of a new development program. During the second half of August, the first two wells were successfully drilled as part of a continuous drilling program designed to drill as many as 60 new development wells within the field.
To date, the MK#12 and MK#25 development wells have been drilled to total measured depths of approximately 355 meters (1,164 feet). As expected, three oil and gas bearing zones were encountered within the Upper Pliocene age Akchagil formation between depths of approximately 200 meters to 315 meters with mud log oil shows present in these horizons. Well log analysis indicates approximately 20-30 meters of potential gross pay in each well. These results have confirmed reservoir thickness and continuity observed in older existing offset wells that were perforated and tested in Frontera’s workover program earlier this year. Production testing of these wells is underway and will continue over a period of 30–60 days. Development drilling will continue with the commencement of the MK#22 well while additional surface locations are being prepared in advance of planned continuous drilling operations. Dedicated rigs and equipment from within Georgia are being utilized to undertake this program with an objective of drilling as many as 20 wells this year.
The Mtsare Khevi Field is located in the western portion of Block 12 with multiple objective reservoirs situated at depths between 200 meters and 1,100 meters. It was discovered and partially delineated with multiple exploration wells from 1989 to 1994, but never developed and produced. After completing a field study in 2007 that indicated this field potentially contains approximately 5 million barrels of recoverable oil reserves, Frontera designed a plan to bring the shallow reservoirs from the Akchagil formation into production. Additional potential exists in deeper Miocene age sandstone horizons that have previously tested and flowed oil. This potential is currently under study and will become the focus of future operations to fully develop the Mtsare Khevi Field.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented:
“The commencement of our new drilling campaign within the Shallow Fields Production Unit at the Mtsare Khevi Field has progressed very well, and we are encouraged by the results and efficient pace of our early work in this new development program. As drilling continues, our rolling development plan calls for these shallow wells to be completed and brought into production as quickly as possible in order to ramp up production from the field, as it represents an important near-term value component within our overall portfolio.”
Frontera’s Shallow Fields Production Unit is located in the central portion of Block 12 and represents what the company believes to be an extensive trend of low-cost, low-risk undeveloped oil and gas reserves. Containing four discovered yet undeveloped or underdeveloped fields that have additional exploration potential, objectives are considered to be traditional, well-known reservoirs of Pliocene and Miocene age that are situated at depths from 10 meters to 1,500 meters.
Frontera Resources Corporation
Vice President, Investor Relations and Corporate Communications
Brunswick Group LLP
Patrick Handley / Camilla Gore
London: +44 207 4045959
+44 20 7425 8000
Notes to Editors:
1. Frontera Resources Corporation is an independent Houston, Texas, U.S.A.- based international oil and gas exploration and production company whose strategy is to identify opportunities and operate in emerging markets around the world. Frontera has operated in Georgia since 1997 where it holds a 100 percent working interest in a production sharing agreement with the government of Georgia. This gives Frontera the exclusive right to explore for, develop and produce oil and gas from a 5,060 square kilometer area in eastern Georgia known as Block 12. For more information about Frontera Resources, please see www.fronteraresources.com. For more information about Frontera’s Shallow Fields Production Unit, please see www.fronteraresources.com/Operations.php?link_id=43.
2. Gerard Bono, Frontera’s Vice President and Chief Reservoir Engineer, is the qualified person who reviewed and approved the estimated reserve information contained in this announcement. These estimates are currently being reviewed by Netherland, Sewell & Associates and will be released as soon as practicable.
3. This release contains certain forward-looking statements, including, without limitation, expectations, beliefs, plans and objectives regarding the potential transactions, potential drilling schedule, well results and ventures discussed in this release, as well as reserves, future drilling, development and production. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: future exploration and development activities; availability and performance of needed equipment and personnel; seismic data; evaluation of logs and cores from wells drilled; fluctuations in oil and gas prices; weather conditions; general economic conditions; the political situation in Georgia and neighboring countries; and other factors listed in Frontera’s financial reports, which are available at www.fronteraresources.comfrontera/Investors.php?link_id=23. There is no assurance that Frontera’s expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements.