FRONTERA RESOURCES CORPORATION
Houston, Texas, U.S.A. – 29 September 2015
HALF YEARLY REPORT
FRONTERA RESOURCES RELEASES FIRST HALF 2015 RESULTS,
ANNOUNCES OPERATIONS UPDATE AND
UPGRADES GAS POTENTIAL IN GEORGIA OPERATIONS
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 2015 and provided an operations update, including announcement of a significant upgrade to gas resources associated with its holdings in the country of Georgia.
– Revenues from crude oil and gas sales totaled $3.2 million
– Net loss of $7.2 million, or $0.002 per share on a fully diluted basis.
– Mtsare Khevi Gas Complex: Drilling and workover operations continue in accordance with previously announced 8 well drilling program and 18 well workover program for the remainder of this year. This program is designed to continue to add new gas production as well as access gas production from extensive unperforated/behind-pipe gas-bearing intervals in existing wells. Together with ongoing well operations, expansion of existing processing facilities is underway and it anticipated that these operations will bring daily gas production in excess of 7 million cubic feet per day by the end of this year.
– Taribani Field Complex: Operations continue at the Niko#1 location under Phase I of the Varang Exploration farmout agreement at the Taribani Field. Preparations are currently underway to test and produce the first of several oil-bearing zones associated with this well. Associated with this operation, Varang Exploration recently completed its own independent assessment of the oil and gas reserves associated with the Niko#1 well and provided these results to Frontera. Conducted by the U.S.-based firm Ryder Scott, this assessment has estimated the well to contain 209,681 bbls of oil/condensate and 223 mmcf of Proved Undeveloped reserves; 483,554 bbls of oil/condensate and 197 mmcf of Probable Undeveloped reserves, and; 1,143,599 bbls of oil/condensate and 1,146 mmcf of Possible Undeveloped reserves.
In addition, during the first half of this year, an eight well campaign re-entry frac/re-completion campaign commenced within the field and is currently ongoing. This campaign is targeting Zones 9, 14 and 15 and is designed to also enhance oil production from the Taribani Field.
– Gas Resources/South Kakheti Gas Complex: Earlier this year, Frontera announced results of a report it commissioned by the independent consulting firm of Netherland, Sewell & Associates that confirmed combined prospective natural gas resources of as much as 12.9 trillion cubic feet (365 billion cubic meters) of gas-in-place, with as much as 9.4 trillion cubic feet (266 billion cubic meters) of recoverable prospective natural gas resources at the Mtsare Khevi Gas Complex and Taribani Field Complex.
Following on from this assessment, extensive geologic and geophysical studies have continued within and between the Mtsare Khevi Gas Complex and the Taribani Field Complex areas as the Company believes that these individual areas are geologically interconnected. As a result, during the first half of 2015, these studies have confirmed an extensive integrated gas resource potential much larger than previously identified. Because of this, Frontera has combined the technical focus of its Mtsare Kheve Gas Complex and Taribani Field Complex into one integrated geologic unit called the South Kakheti Gas Complex. In addition to gas resources previously identified for subsets of this combined area of approximately 2,000 square kilometers, Frontera’s recently concluded studies estimate as much as 135 trillion cubic feet (3.8 trillion cubic meters) of gas in place from reservoir targets found between 300 metres and 5,000 metres in depth. An independent assessment of Frontera’s new internal estimates will now commence during the fourth quarter of 2015.
Additionally, Frontera’s work at the South Kakheti Gas Complex includes the integration of ongoing studies related to the extensive Maykop shales situated predominantly throughout its boundaries. Significant unconventional reservoir potential is believed to be associated with these shales and ongoing analysis will further quantify and define the additional prospectivity related to these targets.
– Greater Black Sea Strategy: Following the Company’s announcement in July related to a strategic Memorandum of Understanding that was signed with Ukraine’s national energy company, National Joint Stock Company Naftogaz of Ukraine, Frontera has continued to advance its objectives under this agreement. Studies related to the evaluation of upstream exploration and production projects in Ukraine have resulted in commencement of efforts to acquire specific licence areas. In addition, an engineering study continues with Naftogaz related to the possibility of bringing liquefied natural gas (LNG) to Ukraine from Frontera’s ongoing gas work in Georgia.
Steve C. Nicandros, Chairman and Chief Executive Officer commented:
“During the first half of 2015 our ongoing investments in Georgia have continued to reveal the emergence of what we believe to be a world class gas play with the identification of the South Kakheti Gas Complex. Much like the recent evolution of prolific gas plays in the United States that have transformed the U.S.A.’s energy independence trajectory, our results continue to indicate that Georgia has the natural gas resources to follow a similar path. We believe that our ongoing work will further serve to establish Georgia’s domestic energy independence in the years to come and also make it a strategic supplier of gas to Europe’s nearby consumption markets.”
Frontera Resources Corporation:
Vice President, Investor Relations and Corporate Communications
+1 713 585 3216
Cairn Financial Advisers LLP
61 Cheapside, London EC2V 6AX
Avi Robinson / Jo Turner
+44 (0) 20 7148 7900
Cornhill Capital Limited
Nick Bealer / Stefan Olivier
+44 (0) 207 710 9610
+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.
2. The Mtsare Khevi Gas Complex is an area of approximately 140 square kilometers and encompasses gas reservoir targets found between 300 meters and 5,000 meters in depth. Based on Frontera’s internal estimates, analysis has revealed significant gas potential throughout this area of up to approximately 11 TCF of gas-in-place and up to approximately 9 TCF of recoverable gas resources. An April 2015 report by the independent consulting firm of Netherland, Sewell & Associates confirms prospective resources of as much as 8.29 TCF of gas-in-place for the Mtsare Khevi Gas Complex, with as much as 6.15 TCF of recoverable prospective resources.
3. The Taribani Field Complex is an area that encompasses approximately 1,400 square kilometers and includes the discovered yet undeveloped Taribani, Kila Kupra, Bayda and Iori fields within Block 12. Internal preliminary analysis suggests that there could be as much as 18 billion barrels of oil in place throughout this complex. Ongoing work continues to study and assess the viability of this analysis and larger scale development potential. Situated within the Taribani Field Complex, the Taribani Field’s oil potential consists of 788 million barrels of original oil in place (“OOIP”) at depths between 2,000 meters and 3,300 meters, independently assessed by Netherland, Sewell & Associates (“NSA”) in 2005. In addition, Frontera estimates gas-in-place resources associated with deeper horizons at the Taribani Field to be as much as approximately 9 tcf from reservoir targets found between 3,400 meters and 5,000 meters in depth. An April 2015 report by NSA confirms prospective resources of as much as 4.62 TCF of gas-in-place associated with deeper gas bearing sands at the Taribani Field, with as much as 3.23 TCF of recoverable prospective resources from horizons situated between 3,400 meters and 5,400 meters in depth.
4. Information on Resource Estimates: The 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). 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 the statements in this announcement.
5. 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.
6. 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.