Frontera Resources Corporation (London Stock Exchange, AIM Market – Symbol: FRR; Over-the-Counter Market, U.S.A. – Symbol: FRTE), an independent oil and gas exploration and production company, today announced an update of operations at the Lloyd #1 well at its Basin Edge Play Unit, Block 12, Georgia.
Since issuing the most recent Operations Update of November 27, 2007 for drilling operations at the “C” Prospect, ongoing analysis has revealed that the Lloyd #1 well has encountered multiple potential reservoirs as well as multiple hydrocarbon shows throughout the Tertiary age section of the well. In addition, geologic core samples have been observed to contain oil and vertical fractures.
Within this Tertiary age section, drilling has also revealed the unexpected discovery of the presence of important additional lower-Tertiary age geologic formations within the “C” Prospect. These formations, which consist of Oligocene and Eocene age rocks, are known to contain prolific reservoirs in fields that are situated on-trend to the west and south of the “C” Prospect within the upper Kura Basin.
The deepest and oldest interval encountered thus far is of Eocene age, which is expected to be situated stratigraphically above the Cretaceous age formations that are primary target objectives within the “C” Prospect.
At this time, drilling operations continue with the objective of ultimately reaching target depth in Cretaceous age formations within the next three weeks. Based on analysis of drilling and logging results during the past two weeks, it was determined that the well was drilling through highly dipping lower Tertiary rocks. When calibrated to 3D seismic data, it was noted that the Lloyd #1 well-bore was on a trajectory further down-dip, or lower on the flank of the “C” Prospect structure than originally desired.
As a result, after drilling to a measured depth of approximately 3,000 meters to obtain important geologic information regarding the “C” Prospect’s down-dip flank, a new up-dip drilling trajectory was commenced from 1,600 meters within the Lloyd #1 well-bore. This was done in order to more optimally encounter the well’s Cretaceous age geologic formation targets and also appraise the Tertiary age geologic formations in an up-dip position to where oil and gas shows were encountered low on the structure. Based on the geologic results observed to date, the new trajectory is expected to re-encounter Tertiary age formations approximately 130 meters to 170 meters up-dip from where oil and gas shows have already been observed and core samples exhibiting live-oil and vertical fractures have been taken in middle-Miocene age sandstones. The well is now expected to encounter the top of the primary objective Cretaceous formations at a true vertical depth of approximately 2,700 meters, a depth that is 400 meters up-dip on the “C” structure from where it otherwise was expected to be encountered in the well’s former trajectory. On the basis of data gathered from drilling operations, plans are to continue drilling the well to a maximum depth of as much as 3,700 meters.
Steve C. Nicandros, President and Chief Executive Officer, commented:
“We remain very encouraged by the results that we continue to observe from the Lloyd #1 well, and I am proud of the manner in which our exploration team has approached the evaluation of the ‘C’ Prospect thus far. In this context, calibration of well logs and biostratigraphic data obtained from the Lloyd #1 well to the high resolution 3D seismic data over the ‘C’ Prospect has proved to be a critical element in the evolution of our understanding of this prospect, and we are incorporating this information into the ongoing drilling of the Lloyd #1 well. As a result, we will now be able to not only appraise the hydrocarbons that have already been encountered in the well’s Tertiary age secondary objectives, but we will also be able to adjust our drilling target to enhance the possibility to more optimally encounter the well’s Cretaceous age primary objectives. This is a very important achievement in our evaluation of the enormous potential of the Basin Edge ‘C’ Prospect with only the first well on the structure.”
As previously stated, analysis of the 3D seismic data related to the “C” Prospect prior to commencement of drilling indicated that the primary target reservoir objectives, identified on the basis of seismic attributes, could occur at depths from 2,000 meters to 3,700 meters. Data thus far gathered from the Lloyd #1 well continues to support this model. The recently discovered presence of the Oligocene and Eocene sections within the Lloyd #1 well provides further confirmation that the geology is relatively intact and that the primary objective Cretaceous section still lies ahead within the originally predicted depth intervals.
Frontera’s Basin Edge Play Unit is located along the northern border of Block 12 and represents what the company believes is one of the newest and potentially most prolific exploration plays in the Upper Kura Basin. Netherland, Sewell and Associates estimate total unrisked resource potential to be in excess of one billion barrels of recoverable oil within the unit’s two major prospects (“B” and “C”). Of this total, prior to the acquisition of new seismic data suggesting an even larger structure, the “C” Prospect was estimated to contain as much as 300 million barrels of recoverable oil from primary reservoir targets and as much as 250 million barrels from secondary reservoir objectives. Frontera’s primary reservoir targets are located in the Cretaceous age carbonate rocks, with secondary reservoir targets in the Tertiary age clastic rocks as well as Jurassic carbonates.
Frontera Resources Corporation
Vice President, Investor Relations and Corporate Communications
Brunswick Group LLP
Patrick Handley / Mark Antelme
+44 207 4045959
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, please visit www.fronteraresources.com.
2. The reserve information herein was determined by the independent consulting firm of Netherland, Sewell & Associates in accordance with the petroleum resource definitions adopted by the Society of Petroleum Engineers (SPE), World Petroleum Council (WPC) and the American Association of Petroleum Geologists (AAPG) in 2000.
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; and the political situation in Georgia and neighboring countries. 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.