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 operations at the Lloyd #1 well at its Basin Edge Play Unit, Block 12, Georgia.
In the most recent Operations Update of December 18, 2007 for drilling operations at the “C” Prospect, it was reported that after drilling to a measured depth of approximately 3,000 meters, a new up-dip drilling trajectory (Sidetrack #1-2) 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.
In early February, Sidetrack #1-2 reached the top of the middle Eocene formation at a measured depth of approximately 2,600 meters, and similar hydrocarbon shows were encountered in a position approximately 440 meters up-dip to those encountered in the top of the middle Eocene formation within the Lloyd #1 original well bore. Hydrocarbon shows and potential reservoir were observed based on analysis of cuttings and mud logs.
Drilling in the Lloyd #1-Sidetrack #1-2 has also confirmed the up-dip 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.
After completing logging runs, intermediate 9-5/8″ casing was set to a depth of approximately 2,533 meters within the middle Eocene formation. Upon resumption of drilling from this depth, unexpectedly difficult drilling conditions were encountered that resulted in extremely slow rates of penetration and unacceptable well bore instability.
Analysis has determined that these conditions are most likely attributable to the highly tectonized nature of the middle Eocene formation and the angle at which the well was being drilled. As a result, a new sidetrack with a lower well bore angle has commenced drilling from a measured depth of approximately 2,200 meters. This modification should permit operations to progress more efficiently with the objective of drilling through the remainder of the middle Eocene formation in order to optimally encounter the well’s Cretaceous age geologic formation targets. This Eocene formation is expected to be situated stratigraphically directly above the Cretaceous age formations that are the primary target objectives within the “C” Prospect.
At this time, drilling operations at the Lloyd #1-Sidetrack #1-3 are progressing with the expectation of reaching the top of the primary objective Cretaceous formations at a measured depth of approximately 2,950 meters within the next two to three weeks. This is approximately 300 meters up-dip on the “C” structure from where it otherwise was expected to be encountered in the well’s original trajectory. Plans are to continue drilling the well to a maximum vertical depth of as much as 3,700 meters.
Steve C. Nicandros, President and Chief Executive Officer, commented:
“Since the middle of December, our work at the ‘C’ Prospect has continued to be exciting and encouraging. The important technical progress achieved to date has provided further confirmation of our geologic model, and we have already identified future drilling locations for follow-up evaluation of what has been discovered throughout the Tertiary age formations. As our exploration efforts have continued, we have experienced unanticipated delays associated with challenging drilling conditions at the Lloyd #1 well. However, this is a reality of drilling exploration wells that by no means overshadows the promising results obtained to date. As a result, we remain very focused on completing evaluation of the Eocene formation and reaching the Cretaceous objectives of the Basin Edge ‘C’ Prospect within the next two to three weeks.”
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 up-dip presence of the Oligocene and Eocene sections within the Lloyd #1-Sidetrack #1-2 provides further confirmation that the geology is relatively intact and continuous within the “C” Prospect 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 404595
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.