LONDON (Alliance News) - Frontera Resources Corp on Tuesday said it has signed a concession deal with the Moldovan government regarding the exploration, production and development of hydrocarbon resources in the country.
US-based Frontera will have the exclusive right to explore for and develop hydrocarbon resources in an area of around 3.0 million acres in the south of the country, the company said. This will focus on the Dobrudga Basin, onshore Moldova.
Frontera has been given a huge area to explore, with Moldova being 8.4 million acres in total.
The company focuses on emerging markets in Eastern Europe around the Black Sea where historic political or economic conditions have caused significant oil and gas plays to be underdeveloped.
Moldova has very little in the form of its own developed energy resources and imports almost all of its petroleum, coal and gas from abroad, mostly from Russia.
To date, Frontera has focused its operations activities on the eastern flank of the Greater Black Sea region on the onshore Kura Basin situated between the Black Sea and the Caspian Sea in the nations of Georgia and Azerbaijan.
Frontera currently exports oil from its block in Georgia using rail to transport it to international markets via the Georigan Black Sea port of Batumi.
The new concession agreement in Moldova will run for 50 years, and Frontera said that includes an initial exploration phase that could last for up to 10 years. The company will be subject to royalty payments on production in the future from the area, required to operate under environmental regulations and be subject to performance criteria.
"Frontera is very pleased to have concluded this important agreement with the government of Moldova. With this new mandate, we look forward to bringing advanced technical resources to exploring the portion of the Dobrudga Basin that is situated within the southern portion of the country," said Steve Nicandros, Frontera's chairman and chief executive.
"Overall, our agreement represents a new milestone of US investment in Moldova's oil and gas sector and also signifies the commencement of a focused effort to help the country advance towards energy independence from its untapped natural resource potential," he added.
Shares in Frontera were down 6.2% at 0.0821 pence on Tuesday afternoon.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance. Updated by Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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