FRONTERA RESOURCES ANNOUNCES COMMENCEMENT OF NEW OPERATONS AT MIRZAANI FIELD WITHIN SHALLOW FIELDS PRODUCTION UNIT IN GEORGIA
Frontera Resources Corporation (London Stock Exchange, AIM Market - Symbol: FRR), an independent oil and gas exploration and production company, today announced commencement of a new operations campaign at the Mirzaani Field within its Shallow Fields Production Unit, Block 12, in the country of Georgia.
The new operations campaign that commences with the re-entry of two recently drilled existing wells is currently underway at the #1 and #5 wells at the Mirzaani Field. These wells both established the presence of large undeveloped areas of the field and are being re-entered in order to perforate additional key reservoir sections that were penetrated by each well.
At the #1 well, situated in the undeveloped southeastern portion of the field, the objective is to re-enter and perforate approximately 10 meters of identified oil bearing sections within reservoir Zone 12. This will provide important reservoir and production information for planning future drilling operations within this portion of the field.
At the #5 well, situated in the undeveloped northwestern portion of the field, operations will consist of perforating approximately 11 meters of identified reservoir section within Zone 13. This work is part of a planned program to finish completion of this well and also obtain reservoir and production information relating to the extensive series of reservoir sandstones that were penetrated by the well.
The Mirzaani Field, which Frontera operates with 100% interest, is located in the eastern portion of the Shallow Fields Production Unit amidst a complex of several existing oil fields and currently delivers approximately 90 barrels of oil per day (b/d) from the older and historically developed portion of the field. Discovered in 1932, the Mirzaani Field has historically produced oil from a small developed portion of the field but contains extensive undeveloped and underdeveloped areas. After acquiring approximately 100 kilometers of new 2D seismic data as part of an effort to re-map and identify new potential associated with the field, Frontera drilled the Mirzaani #1, #2 and #5 discovery and appraisal wells, which were the first wells to be drilled in the field since the Soviet-era.
Frontera continues to evaluate results from the three new wells which discovered significant northwest (up-dip) and southeast (down-dip) extensions to the field. Ongoing analysis of results from the Mirzaani #1, #2 and #5 wells confirms the attractiveness of frac completions, which are expected to significantly increase production rates and enhance the economic value of the field. In this context, a successful multi-zone frac completion of the Mirzaani #5 well was conducted by Schlumberger in late 2010, targeting the Pliocene age Shiraki formation reservoir Zones 13 and 16/17, at depths of 897-909 and 1,057-1,075 meters respectively. Production testing of these co-mingled zones initially yielded oil at more than 100 b/d, although increasing water production, probably from the deepest horizon, began to impair oil production and the well was temporarily suspended pending commencement of the current new operations campaign. Based on results observed to date, 10 new well locations have been identified for exploitation of the undeveloped, up-dip northwest area of the Mirzaani Field over the next twenty-four months.
The independent engineering firm of Netherland, Sewell and Associates have assigned a "Best Estimate" for gross original oil-in-place for the Mirzaani Field and Mirzaani Northwest Extension of 541.7 million barrels, with a "low"-to-"high" range of 343.8-857.3 million barrels; and a "Best Estimate" for remaining recoverable gross contingent and unrisked prospective oil resources of 43.8 million barrels, with a "low"-to-"high" range of 20.5-86.1 million barrels. This assessment is consistent with Frontera's internal estimates.
The 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 oil and gas resources. The unit contains a number of known oil fields -- Mirzaani, Mtsare Khevi, Nazarlebi, and Patara Shiraki -- representing undeveloped or under-developed fields that have additional associated exploitation potential. The unit also contains an inventory of "look-alike" exploration prospects--the Kakabeti, Lambalo, Mkralihevi, Mlashiskhevi-Oleskhevi and Tsitsmatiani prospects--each of which contains Soviet-era wells that had hydrocarbon shows while drilling but were never placed on production or adequately appraised. Reservoir objectives are the well-known, regional clastic reservoirs of Pliocene and Miocene age, situated at depths from 10 meters to 1,500 meters.
Further to the successful completion of Frontera's equity financing package announced in August of this year, the commencement of new operations at the Mirzaani Field is part of an overall plan whereby Frontera intends to increase production from its portfolio in Block 12 from 225 b/d to around 5,000 b/d over the next 2 years.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented:
"Continuation of operations at the Mirzaani Field represents the start of a new campaign designed to build upon our discovery of significant undeveloped portions of the field. The success achieved from our work to date provides us with the excitement and expectation that this field has the potential to deliver important new reserve additions and near term production increases from our planned drilling programs over the next twenty four months."
Frontera Resources Corporation
Vice President, Investor Relations and Corporate Communications
Strand Hanson Limited
James Harris / Andrew Emmott / Paul Cocker / Liam Buswell
+44 (0)20 7409 3494
Arbuthnot Securities Limited
Richard Johnson / Adam Lloyd
+44 (0)20 7012 2000
Old Park Lane Capital Plc
Michael Parnes / Luca Tenuta
+44 (0)20 7493 8188
Tim Thompson / Ben Romney / Helen Chan
+44 (0)20 7466 5000
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 currently operates in the country of Georgia 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. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market - Symbol: FRR. For more information, please visit www.fronteraresources.com
2. 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). The full report, dated July 1, 2010, is available at www.fronteraresources.com. 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.
3. 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.
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