Frontera Resources Reports Early Results of Mtsare Khevi Field Development in Georgia
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 early results of its ongoing development drilling program at the Mtsare Khevi Field in its Shallow Fields Production Unit, Block 12, in the country of Georgia.
Development drilling operations at the Mtsare Khevi Field have continued to progress rapidly since the announcement of the completion of the MK#12 and MK#25 wells in August. Four additional wells have been drilled, each targeting the Upper Pliocene age Akchagil formation as part of a total 20-well rolling development program this year. The MK#13, MK#14, MK#22 and MK#23 wells were drilled to total measured depths of approximately 355 meters and, as expected, each encountered three hydrocarbon bearing zones between depths of 200-315 meters (Horizons I, II and III). As expected, mud log oil shows exist in these horizons in all six wells, and well log analyses continue to indicate approximately 20-30 meters of potential gross pay in each well.
The combined results of the first six wells have revealed a structure larger in area than previously thought. In addition, the presence of a substantial gas cap in the field has been confirmed and continuous development drilling has successfully pushed the limits of the lowest known oil on the structure further down the flank than originally mapped, thereby increasing the size of the oil bearing portion of the field. Individual wells are also drilling more quickly than originally projected. As a result, this new information has initiated a structural remapping of the field, and current plans call for at least 40 additional locations to be drilled in 2009.
Of the six development wells drilled to date, wells MK#12 and MK#13 are currently producing a combined total of approximately 31 barrels of oil per day of good quality 21 degree API oil from Horizon I, greater than original projections. As part of planned development operations, Horizons II and III will shortly be added into production within each well, which is expected to significantly enhance per-well productivity.
The MK#25, MK#23 and MK#14 wells are currently being brought into production in a similar manner, with each well undergoing planned production tests of 30-60 days in order to optimize production parameters. Development drilling operations are continuing on a rolling basis with the MK#18 well currently in progress 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 ongoing development program, from which Frontera expects to yield approximately 250 bbls per day by year-end.
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 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 the focus of future operations to fully develop the Mtsare Khevi Field.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented:
“We are very pleased with the uninterrupted progress that has been achieved since the commencement of development drilling operations in August at the Mtsare Khevi Field. The low cost nature of drilling and operations combined with better than expected flow rates from a larger than anticipated structural area confirms our belief in the field’s substantial value.”
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. Together with anticipated production from the Mtsare Khevi Field, Frontera expects total daily production from this Unit to be approximately 400 bbls per day by the end of 2008.
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.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.