Houston, Texas U.S.A. (June 30, 2006): Frontera Resources Corporation (London Stock Exchange, AIM Market – Symbol: FRR), an independent oil and gas exploration and production company, today announces an update of its drilling operations and completion of an extensive 3D seismic survey within its onshore exploration and production license in the eastern portion of the country of Georgia known as Block XII.
Taribani Field Unit – Drilling Operations
In February 2006, Frontera began a three-well drilling program to reenter existing wells in the Taribani Field to determine whether sustainable commercial production could be established from undeveloped oil bearing horizons. Frontera believes targeted horizons can be effectively developed and produced with the use of conventional horizontal drilling, completion and associated production engineering techniques the company has tailored specifically for the Taribani Field. Extensive data collection and production testing results from the three-well program will collectively provide Frontera with the necessary technical data needed to determine whether or not the Taribani Field can be commercially developed.
In April 2006, Frontera completed horizontal drilling operations at the first well in the three-well program, the Dino #2. This well was designed to evaluate multiple horizons within the field, with a primary objective of a final horizontal completion into Zone 15 at a total depth of approximately 2,700 meters.
Once the horizontal portion was completed, an extended testing program commenced on the Dino#2, which is expected to continue through the end of August. Testing is being conducted at a pre-determined series of production parameters to evaluate the potential long-term sustainable flow rates from the well.
To date, information obtained from the Dino #2 well has successfully validated several important elements of Frontera’s hypothetical field model regarding commercial viability of the Taribani Field. Specifically, data has confirmed: (1) Frontera’s ability to successfully drill a horizontal well into the over-pressured reservoir environment that exists within the field; (2) the presence of fractures in Zones 9, 14 and 15; (3) that the orientation of reservoir fracture systems can be successfully encountered via horizontal drilling methods; and, (4) matrix porosities in Zones 9, 14 and 15 are higher than originally projected in the company’s third party reservoir engineering assessments, thereby verifying a larger hydrocarbon storage capability for the target reservoirs.
The current testing program will provide insights for several remaining elements of Frontera’s hypothesis for the Taribani Field and will contribute to the company’s final determination of commerciality there. Specifically, long-term testing of the Dino#2 will help determine: (1) whether the confirmed presence of fractures is sufficiently interconnected such that targeted reservoirs can be efficiently drained through sustained, long-term commercial production; (2) whether potential production of sediments can be successfully controlled during a long-term testing program so that the well can be continuously produced; and, (3) what the optimal sustainable flow rate from the well proves to be.
After competing drilling operations on the Dino #2 well, Frontera moved the F-200 rig to the Well #23 location within the Taribani Field, where drilling commenced on May 30, 2006 with an objective of a Zone 9 horizontal completion. However, after two unsuccessful attempts to sidetrack from the existing well bore the company decided to temporarily suspend operations at Well #23 and instead drill a new well at this location. Since necessary materials were not immediately on hand to commence the drilling of a new well, Frontera moved the rig to the Niko #1 well location within the Taribani Field where drilling will begin in early July.
The Niko #1 well is designed to evaluate multiple horizons within the field, with a horizontal completion into Zone 19 as its primary objective at a total depth of approximately 2,900 meters. Frontera expects the Niko #1 well will be completed within 40 days and then undergo a 90-day testing program similar to the program currently underway at the Dino #2 well. Prior to finishing the Niko #1 well, the company plans to procure additional materials to return to the Well #23 location and continue operations there.
Located in eastern Georgia within Frontera’s license area known as Block 12, the Taribani Field is a large, undeveloped oil field covering an area of approximately 80 square kilometers with productive horizons situated in Miocene and Pliocene age reservoirs. These reservoirs are at depths between 2,200 meters and 3,500 meters. The independent consulting firm of Netherland, Sewell & Associates has assigned 118 million barrels of P3 reserves from Zones 9, 14, 15 and 19 within the field. Additionally, Netherland, Sewell & Associates has assigned as much as 36 million barrels of unrisked resource potential associated with five deeper horizons in the field.
Basin Edge Play Unit – Seismic Operations
In 2005, the company acquired approximately 165 kilometers of 2-D seismic over the Basin Edge Play Unit’s “C” prospect. Processing and interpretation of this seismic data revealed a large independent four-way structural closure of approximately 55 square kilometers in size. As a result, Frontera chose to prioritize and focus on this sizable prospect within the broader Basin Edge Play Unit that is located in the northeastern portion of Block 12.
Consequently, in March 2006, Frontera acquired a new 80 square kilometer 3D seismic survey over its Basin Edge Play Unit’s “C” prospect that was successfully completed on June 20th. This data is now being processed and will subsequently undergo a detailed interpretation effort that will be integrated into existing mapping before year end. Drilling operations at the Basin Edge Play Unit’s “C” prospect are planned for 2007.
Frontera also recently acquired approximately 170 kilometers of 2D seismic data over a second prospect within the Basin Edge Play Unit, known as the “B” prospect. Interpretation of this data is currently ongoing.
The “C” and “B” prospects are two large exploration prospects Frontera has mapped with Jurassic, Cretaceous and Tertiary age reservoir objectives. Targeted reservoirs are anticipated to be situated at depths of between 2,000 meters and 2,500 meters. The reservoir engineering firm of Netherland, Sewell and Associates, Inc. has assigned unrisked resource potential in excess of one billion barrels of recoverable reserve potential to these two exploration prospects.
Steve C. Nicandros, Frontera’s Chairman and Chief Executive Officer, commented:
“We are encouraged by the continued progress of our various business units from within our operations in Georgia.
At the Taribani Field Unit, the results to date from the Dino #2 well have constructively increased our understanding of the Taribani Field. Moreover, we were very fortunate to have obtained critical confirmation of several key elements of our hypothetical field model so early in our planned three-well drilling program. We must now complete the testing program that is currently underway at the Dino #2 well and continue our planned drilling program such that a complete and methodical analysis of the collective results can help us determine whether the Taribani Field can be commercially developed. We always knew there was a mechanical risk associated with re-entering wells that are over 30 years old and this has been demonstrated in our experience at Well #23. Nevertheless, we are very satisfied we were able to quickly move the F-200 rig to the Niko #1 well and simultaneously begin acquiring the necessary materials to thereafter return to the Well #23 location.
At our Basin Edge Play Unit, the successful completion of the 80 square kilometer 3D seismic survey over our ‘C’ prospect marks another important milestone within this business unit that keeps us on track to drill this large structure next year. The data quality from the recently completed survey is excellent and we look forward to the exciting new insights it will bring to this important prospect.”
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 and operate opportunities in emerging markets around the world. Frontera has operated in Georgia since 1997 where it holds a 100 per cent 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, please see www.fronteraresources.com.
For more information regarding Frontera’s operations at the Taribani Field Unit, please see www.fronteraresources.com/Operation.php?link_id=18.
For more information regarding Frontera’s operations at the Basin Edge Play Unit, please see www.fronteraresources.com/Operation.php?link_id=35 .
For more information regarding Netherland, Sewell and Associates, please see www.netherlandsewell.com .
This release contains certain forward-looking statements, including, without limitation, expectations, beliefs, plans and objectives regarding the potential transactions, potential drilling schedule and ventures discussed in this release, as well as reserves and future 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 results, availability and performance of needed equipment and personnel, the final results of the processing of seismic data, fluctuations in oil and gas prices, weather conditions, general economic conditions and the political situation in Georgia and neighboring countries. 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.
The reserve information in this press release was determined by the independent consulting firm of Netherland, Sewell & Associates in accordance with the petroleum resource definitions adopted by the Society of Petroleum Engineers (SPE), World Petroleum Council (WPC) and the American Association of Petroleum Geologists (AAPG) in 2000.
Citigate Dewe Rogerson (+44 20 7638 9571)