FRONTERA RESOURCES CORPORATION
Houston, Texas, U.S.A. – 30 September 2011
FRONTERA RESOURCES RELEASES FIRST HALF 2011 FINANCIAL RESULTS
Frontera Resources Corporation (London Stock Exchange, AIM Market – Symbol: FRR), an independent oil and gas exploration and production company (“Frontera” or the “Company”), today released financial results for the first half of 2011.
The 2011 half-year results represent the financials of the Company prior to the successfully executed merger with and into a new corporate structure in August 2011, which took place as part of a major financing initiative. Simultaneous with the merger, Frontera completed an equity financing package that could provide up to £26.8 million (US$43.5 million) for Frontera’s planned development drilling and operations campaigns throughout its portfolio in the country of Georgia. Additionally, the balance sheet was strengthened via the simultaneous conversion of US$112.6 million of debt, including US$9.2 million of management debt, into equity and substantially all of the remaining US$18.4 million of old loan notes into new convertible notes maturing in 2016. Overall, the transaction served to simplify and strengthen the Company’s balance sheet, as well as enhance Frontera’s operating and financial flexibility.
The net proceeds of the £6.8 million (US$11.0 million) equity placing, before expenses, coupled with a £21.5 million (US$35.0 million) Standby Equity Distribution Agreement (“SEDA”), could provide up to approximately £26.8 million (US$43.5 million) of new funds for investment. In both the fundraising and the debt conversion, the new shares were issued at a price of 4p per share.
Frontera’s core assets are located in an extensive underdeveloped onshore basin in eastern Georgia, with an inventory of discovered fields with significant exploration upside. Frontera operates a 100% interest in Block 12 within which its asset portfolio is situated, a block equivalent in size to approximately four UK North Sea Blocks. The Company intends to increase production from 225b/d to c.5,000b/d over two years, supported by the established oil and gas transportation infrastructure and favorable trading environment in Georgia.
2011 Half Year Results: Highlights
- For the six months ending June 30, 2011, the Company incurred a net loss of US$11.2 million, or US$0.08 per share on a fully-diluted basis. This loss compares to a net loss of US$9.2 million, or US$0.07 per share for the corresponding six months of 2010. The increase in net loss is due primarily to a reduction in derivative income associated with warrant revaluations, as well as an increase in interest expenses associated with Company debt that has since been significantly reduced.
- There were US$3.1 million of crude oil sales during the six months ended June 30, 2011, compared to US$2.3 million of crude oil sales during the corresponding period in 2010. The increase was mainly attributable to an increase in the price of oil in the 2011 period.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented:
“Throughout the first half of this year, we worked to complete the transformational transaction that was ultimately concluded in August. Reaching this significant milestone positioned us well for the commencement of new operational campaigns throughout our portfolio over the past month, against the backdrop of a significantly improved balance sheet and financial position.
“While our results from the first half of this year signal that we are still in the process of building a profitable company, our recent transaction, together with positive results from our currently ongoing operations, will put us well on the road to profitability during the second half of this year.”
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
Cornhill Capital Limited
Nick Bealer/Stefan Olivier
+44 (0)20 7012 2000
Tim Thompson / Ben Romney
+44 (0)20 7466 5000
Notes to Editors:
1. Frontera Resources Corporation is an independent 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. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market – Symbol: FRR. For more information, please visit www.fronteraresources.com
2. 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.