FRONTERA RESOURCES CORPORATION
Houston, Texas, U.S.A. – 5 September 2016
FRONTERA UPGRADES GAS POTENTIAL AND ANNOUNCES PROGRESS FROM
OIL AND GAS OPERATIONS IN THE COUNTRY OF GEORGIA
Frontera Resources Corporation (AIM: FRR), an independent oil and gas exploration and production company (“Frontera” or the “Company”), is pleased to issue the following update of operations and ongoing business in the country of Georgia.
• Frac completions on Zone 9 of Oil Window have yielded breakthrough stimulation results
• Niko#1 well has produced approximately 7,000 bbls of oil since the operation was completed in March
• Dino#2 and T-#45 wells achieved initial production rates of 726bbls and 186bbls per day respectively post re-frac completions
• Newly procured oil field equipment expected to be in field operations during the month of October.
• New mapping has revealed an approximate additional 15 TCF of gas potential at the South Kakheti Gas Complex
• Exploration works achieved a peak production of 900 barrels of oil equivalent per day (boepd) from various testing operations and are on track to achieve year end pilot production rates
• CPR for South Kakheti Gas Complex expected to be completed in H1’17
Since Frontera’s last update on 1 August 2016, operations are progressing in accordance with the work programs and activities as described in the Company’s Circular issued on 10 June 2016.
At the South Kakheti Gas Complex, operations are advancing with respect to Oil Window and Gas Window initiatives:
Oil Window: As well stimulation work has progressed in accordance with this year’s planned program, results have provided encouraging outcomes related to ongoing efforts to optimize frac designs such that important new technical milestones have been recently achieved. Of note, for the first time in the history of operations at Block 12, wells that had been previously abandoned as ‘dry holes’ when they were originally drilled and completed during the Soviet-era have now been converted to producing wells. The significance of this outcome is that Frontera’s methodical approach to evolving technical frac application designs has achieved a breakthrough in stimulation results.
Of note, several wells from the Company’s ongoing program have responded with important results from frac completions. In particular, Zone 9 stimulations at the Niko #1, Dino#2 and T-45 wells have yielded important new results that have demonstrated production capability that has never before been achieved.
The Niko#1 well had an initial production rate of approximately 465bbls per day post frac and has produced approximately 7,000 bbls of oil since the operation was completed in March. The significance of this result is observation of the extended production testing that has now provided the basis for application of a larger frac design as part of the Company’s work program this year.
At the Dino#2 and T-#45 wells, recent re-frac completions of these wells during the month of June each achieved initial production rates of 726bbls per day and 186bbls per day, respectively. These wells are currently under observation for extended production testing and have also confirmed themselves as candidates for additional re-frac as the Company adds new equipment this year in order to be able to deploy larger stimulations with a view to achieving higher recovery rates per well.
Procurement of additional stimulation and related equipment to expand the Company’s current fleet in order to undertake larger well-stimulation completions in the planned work programs is in progress and the Company expects the new equipment to be in field operations during the month of October.
Gas Window: Operations at the Udabno#2 well are in progress. Since May, operations have been delayed due to high bottom hole pressures and an obstruction that was encountered at approximately 3,300 meters that has required additional equipment to complete operations and prepare the well for testing. Frontera plans to undertake a testing program in October that is designed to evaluate an extensive gas-bearing interval of approximately 2,000 meters in gross thickness.
Since the first quarter of this year, new mapping has been underway associated with the extensive gas resources that Frontera has identified at the South Kakheti Gas Complex. This new mapping has revealed an approximate additional 15 TCF of gas potential and has served to move previous internal estimates from as much as 187 trillion cubic feet of gas in place from reservoir targets found between 300 meters and 5,000 meters in depth to as much as approximately 202 trillion cubic feet.
This new mapping work is integral to the Company’s continued assessment of the significant gas potential it has discovered with its historical investments and will provide the basis for completion of the next independent report related to natural gas in the Complex. Due to the significant area of the South Kakheti Gas Complex that is related to more than 2,500 square kilometers that contain approximately 2,000 kms of 2D and 150 sq km of 3D seismic data, as well as more than 680 modern and historical wells, integration of this work has taken longer to complete than originally anticipated. As a result, the Company expects that the next independent report will be issued during the first half of 2017. In the meantime, Frontera is advancing its work programs based on its internal assessments and completed independent reports.
Since Frontera’s announcement of May 16, 2016 RNS, the Company’s exploration works achieved a peak production of 900 barrels of oil equivalent per day (boepd) from its various testing operations. With respect to its exploration efforts in the western area of the South Kakheti Gas Complex, previously announced expectations to achieve daily gas production in excess of 7 million cubic feet per day from operations continue to be on hold due to ongoing discussions with the Ministry of Energy. Overall, the Company is on track to achieve its previously announced year end pilot production rates of 2,200boe per day.
Steve C. Nicandros, Chairman and Chief Executive Officer commented:
“Important milestones have been achieved with the evolution and implementation of our stimulation and completion designs at Zone 9 within our Oil Window objectives in the central region of the South Kakheti Complex. In a similar fashion to technical breakthroughs that were achieved in similar settings in the United States’ recent unconventional reservoir renaissance, we are achieving important success with each new completion. While this work has required a patient and methodical approach, the results have demonstrated that our technical approach is leading to game changing outcomes.
Similarly, within our Gas Window operations, detailed technical work continues to trend in a positive direction as the size of the identified gas resource continues to grow. The integrated technical analysis that Frontera has conducted has never before been done. Because of this, our work continues to uncover a major regional source of gas supply for Georgia’s domestic market and Europe’s import requirement for many decades to come. As we continue to work closely with Georgia’s Ministry of Energy, our hope is that we can soon find a way forward that will accelerate our efforts to bring this gas to market.”
Frontera Resources Corporation
Cairn Financial Advisers LLP
61 Cheapside, London EC2V 6AX
Jo Turner / Liam Murray
+44 (0) 20 7148 7900
Cornhill Capital Limited
+44 (0) 207 710 9610
Ben Romney/Hannah Brandstaetter
+44 (0) 20 7466 5000
Notes to Editors:
About Frontera Resources Corporation
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 in Eastern Europe around the Black Sea. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market – Symbol: FRR. For more information, please visit www.fronteraresources.com.
1. Information on Resource Estimates: The independent 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). Internal resources estimates were determined by the Company. 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 both independent and internal estimates in this announcement.
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.
3. Glossary of Terms: BCF – means Billion Cubic Feet of gas. TCF – means Trillion Cubic Feet of gas. Mcf – means Thousand Cubic Feet of gas. OOIP – means Original Oil in Place. Bopd – means Barrels of Oil Per Day.