Frontera Resources Corporation (London Stock Exchange, AIM Market – Symbol: FRR), an independent oil and gas exploration and production company, today announces continuation of new drilling operations at the Mtsare Khevi Field within its Shallow Fields Production Unit, Block 12, in the country of Georgia.
Drilling operations at the recently announced Mtsare Khevi #31 well have been completed. The well was drilled to a depth of 352 meters and log analysis indicated that approximately 22 meters of net pay were penetrated. After logging and cementing operations were completed, reservoir targets were successfully perforated and the well is currently being placed into production with the installation of a pumping unit. The #31 well was drilled five days ahead of plan and represents the continuous improvement of drilling operations within the field.
Once drilling operations were completed at the #31 location, the rig was released and mobilized to the Mtsare Khevi #32 well location where drilling operations will commence within the next week. The #32 well is the second of a planned twenty well program over the next twenty four months designed to exploit multiple Upper Pliocene sandstone reservoirs situated at a depth of approximately 300 meters.
Preparation of the next planned drilling location for the Mtsare Khevi #41 well is currently underway.
The Mtsare Khevi Field, which Frontera operates with 100% interest, is located in the western portion of the Shallow Fields Production Unit and currently delivers approximately 90 barrels of oil per day from its shallow reservoirs. Twenty new well locations have been identified for ongoing low-cost drilling, targeting both oil and gas reservoirs and providing for reservoir pressure support through three proposed water injection wells.
The independent engineering firm of Netherland, Sewell & Associates (“NSA”) places a “Best Estimate” for gross original oil-in-place for the Mtsare Khevi Field of 14.9 million barrels, with a “low”-to-“high” range of 11.3–19.7 million barrels; and a “Best Estimate” for associated recoverable gross contingent and unrisked prospective oil resources of 2.1 million barrels, with a “low”-to-“high” range of 1.4-3.2 million barrels. This assessment is generally consistent with Frontera’s internal estimates.
For gas, NSA places a “Best Estimate” for gross original gas-in-place for the Mtsare Khevi Field of 2.6 billion cubic feet, with a “low”-to-“high” range of 2.1–3.1 billion cubic feet; and a “Best Estimate” for associated gross contingent and unrisked prospective resources of 1.5 billion cubic feet, with “low”-to-“high” range of 1.2-1.9 billion cubic feet. Frontera’s internal estimates reflect additional resource potential along the northwest trend of the field’s fault block, which NSA have not yet been asked to evaluate.
The 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 oil and gas resources. The unit contains a number of known oil fields; Mirzaani, Mtsare Khevi, Nazarlebi and Patara Shiraki, representing undeveloped or under-developed fields that have additional associated exploitation potential. The unit also contains an inventory of “look-alike” exploration prospects, the Kakabeti, Lambalo, Mkralihevi, Mlashiskhevi-Oleskhevi and Tsitsmatiani prospects, each of which contains Soviet-era wells that had hydrocarbon shows while drilling, but were never placed on production or adequately appraised. Reservoir objectives are the well-known, regional clastic reservoirs of Pliocene and Miocene age, situated at depths from 10 meters to 1,500 meters.
Further to the successful completion of the recently announced equity financing package, the new drilling campaign at Mtsare Khevi Field is part of an overall plan whereby Frontera intends to increase production from its portfolio within Block 12 from 225b/d to c.5,000b/d over the next two years,
Frontera Resources Corporation
Vice President, Investor Relations and Corporate Communications
Strand Hanson Limited
James Harris / Andrew Emmott / Paul Cocker / Liam Buswell
+44 (0)20 7409 3494
Arbuthnot Securities Limited
Richard Johnson / Adam Lloyd
+44 (0)20 7012 2000
Old Park Lane Capital Plc
Michael Parnes / Luca Tenuta
+44 (0)20 7493 8188
Tim Thompson / Ben Romney
+44 (0)20 7466 5000
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 currently operates in the country of Georgia 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. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market – Symbol: FRR. For more information, please visit www.fronteraresources.com
2. Information on Resource Estimates: The contingent and prospective resources estimates contained in this announcement were determined by the independent consulting firm of Netherland, Sewell & Associates (NSA) in accordance with the definitions and guidelines set forth in the 2007 Petroleum Resources Management System (PRMS) adopted by the Society of Petroleum Engineers (SPE). The full report, dated July 1, 2010, is available at www.fronteraresources.com. Gerard Bono, Frontera’s Vice President and Chief Reservoir Engineer, who is a member of the SPE, is the qualified person who reviewed and approved the statements in this announcement
3. This release may contain certain forward-looking statements, including, without limitation, expectations, beliefs, plans and objectives regarding the transactions, work programs and other matters discussed in this release. Exploration for oil is a speculative business that involves a high degree of risk. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: risks inherent in oil and gas production operations; availability and performance of needed equipment and personnel; the Company’s ability to raise capital to fund its exploration and development programs; seismic data; evaluation of logs, cores and other data from wells drilled; inherent uncertainty in estimation of oil and gas resources; fluctuations in oil and gas prices; weather conditions; general economic conditions; the political situation in Georgia and relations with neighboring countries; and other factors listed in Frontera’s financial reports, which are available at www.fronteraresources.com. 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.