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 its ongoing development drilling program at the Mtsare Khevi Field within its Shallow Fields Production Unit, Block 12, in the country of Georgia.
Progress has continued in the development of the Mtsare Khevi Field since drilling operations commenced in August. Since the last operations update in November, three wells have been drilled in addition to the ten wells previously announced, each targeting the Upper Pliocene age Akchagil formation as part of a rolling development program. All 13 wells drilled to date have reached total measured depths of approximately 355 meters (1,170 feet) and each has encountered multiple hydrocarbon bearing zones situated between 200 meters and 315 meters in depth. Well log analysis continues to indicate approximately 20-30 meters of gross pay in each well. Since the start of the development drilling campaign, ten wells have been tested as oil wells with initial rates from single horizons as high as 40 barrels per day of 21 degree to 28 degree API oil. In addition, two wells located high on the field structure have tested gas with initial rates of as much as 1.2 million cubic feet of gas per day.
The Akchagil formation of the Mtsare Khevi Field has three main reservoirs for development: Horizons I, II and III. The wells drilled to date are first being brought into production from Horizon I, the deepest of these reservoirs, with each well undergoing planned production and optimization tests over a 30-60 day period prior to being placed on production. Daily production from the field is currently approximately 130 barrels per day. Production is expected to increase as a result of ongoing efforts that include optimization of pump performance and the addition of perforations to currently producing horizons. In addition, work plans are in progress to co-mingle production from the shallower Horizons II and III, which is expected to significantly enhance production. The company is also examining the feasibility of adding gas development to the commercialization agenda for the Mtsare Khevi Field, given the discovery of gas. Rigs and equipment sourced from within Georgia are being utilized to undertake the ongoing development program.
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. The field 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 as much as 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 a focus of future operations to fully develop the Mtsare Khevi Field.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented:
“We have been delighted with the results from the continued efficient, low-cost development progress that has been made to date in our Mtsare Khevi Field operations. As this field continues to come to life, results are supporting our belief in the substantial value contained within this asset.”
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
+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. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market – Symbol: FRR and via the Over-the-Counter Market, U.S.A. – OTCQX Symbol: FRTE. For more information, please visit www.fronteraresources.com. For more information regarding Frontera’s work at the Shallow Fields Production Unit, please visit: 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 results; 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.com/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.