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8. Frontera is the parent of a group of companies operating in the oil and gas and
exploration and production industry, including FRGC and FRUS. Frontera was founded in 1996
by Steve Nicandros and others, not ZM, and ZM was later hired by Mr. Nicandros as a salaried
employee. The Company is headquartered in Houston, Texas. Since 2002, Frontera has focused
substantially all of its efforts on the exploration and development of oilfields in the Black Sea
area, namely Georgia, Moldova, and Ukraine.10 Frontera has invested more than $550,000,000 in
the Country of Georgia alone, and owns all of the assets and proceeds from its exploration and
production activity there, which are consolidated up into Frontera as the parent holding company
as explained by its auditor, Price Waterhouse.11 Thus, contrary to the assertion of ZM, Frontera
has standing to bring this action as the beneficial owner of all of the assets and income being
operated in the Country of Georgia.
9. In June 1997, Frontera “entered into a 25 year production sharing agreement [the
Production Sharing Contract or “PSC”] with the Ministry of Fuel and Energy of Georgia and the
State Company Georgia Oil (“Georgia Oil”), which gives the Company exclusive right to
explore, develop, and produce crude oil and natural gas (“Petroleum”) in a 5,500 square
kilometer area in eastern Georgia known as Block 12 (“Block 12”).12 Frontera’s interests in
9 See, Employment Agreement attached as Exhibit 9.
10 See, Frontera Resources Notes to Condensed Consolidated Financial Statements dated June 30, 2017 (“Price
Waterhouse Notes”) and attached as Exhibit 10.
11 Id.
12 Price Waterhouse Notes, Exhibit 10.
118225056\V-6 5
Block 12 and the related Production Sharing Contract or PSC, can be extended if commercial
production remains viable upon its expiration in June 2022.13
10. As explained by Price Waterhouse, Frontera shares the income from its oil and
gas activities with the Georgian government. Specifically, Frontera is entitled to the following:
Under the terms of the Block 12 PSC, the Company [defined as
Frontera and its subsidiaries] is entitled to conduct exploration and
production activities and is entitled to recover its cumulative costs
and expenses from the Petroleum produced from Block 12.
Following recovery of cumulative costs and expenses from Block
12 production, the remaining Petroleum sales, referred to as ‘Profit
Oil’ or ‘Profit Natural Gas,’ are allocated between Georgia Oil and
Frontera in the proportion of 51% and 49% respectively.14
Thus Frontera is the beneficial owner of all of the income to Frontera from all of the assets in
Georgia.