Frontera Resources Regulatory News (FRR)

FRONTERA RESOURCES CORPORATION

Houston, Texas, U.S.A. - 30 September 2016

 FRONTERA RESOURCES RELEASES FIRST HALF 2016 FINANCIAL RESULTS

Frontera Resources Corporation (London Stock Exchange, AIM Market - Symbol: FRR), an independent oil and gas exploration and production company ("Frontera" or the "Company"), today releases its financial results for the first half of 2016.

Highlights

- Revenues from exploration pilot oil and gas production sales totaled $2.0 million.

- Ongoing exploration efforts resulted in a net loss of $10.9 million, or $0.003 per share on a fully diluted basis. Of this total, approximately $1.1 million is reflected in one-time charges associated with recorded impairment and inventory related accounting due to significant decrease of crude oil prices.

Update:

During the first half of 2016, the Company continued to invest in its focused exploration work programs in the country of Georgia amidst a depressed commodity price environment. Ongoing technical study of results from workover, drilling, and stimulation completion programs associated with its ongoing Oil Window and Gas Window operations at its South Kakheti Gas Complex provided the basis for design and implementation of an accelerated and more technically advanced work program over the remainder of this year and next year. This planned program, as outlined in the Company's Circular to shareholders provided on 10 June 2016, is currently underway and is expected to result in increased revenue from exploration related pilot production programs for oil and gas.

Ongoing work programs have this year resulted in important new technical milestones that have been achieved in frac operations with application of demonstrated stimulation methodology that has improved overall hydrocarbon recovery. As the Company continues to implement techniques that have been applied in similar zones across North America, it continues to evolve completion designs in order to maximize production rates and cumulative volumes. As announced on September 26, 2016, well preparation, site construction and associated materials procurement are in process for the next six well campaign that is planned to commence in October.

Political challenges in Georgia's domestic gas market continue to delay related gas-focused investment and production due to the Ministry of Energy's discouragement of ongoing exploration of domestic natural gas resources in favor of preserving existing gas import monopolies. This continues to maintain a hold on previously announced expectations to achieve daily gas production in excess of 7 million cubic feet per day from existing exploration pilot production operations. As efforts are ongoing to address the Ministry's opposition to this work, we are hopeful that it will ultimately see the benefit of allowing for a free and competitive market for U.S. and foreign investment in its domestic natural gas sector.

Steve C. Nicandros, Chairman and Chief Executive Officer commented:

"Frontera's exploration investments since the beginning of this year continue to demonstrate our commitment to the methodical technical progress that our work has achieved to date. Because of the significant oil and gas resources that our historical investments have identified, our focused efforts to evolve stimulation completion designs are now yielding results that have never before been achieved. As we continue our planned work programs through the remainder of this year, we strongly believe that our operations are reaching new milestones that will result in bringing the giant oil and gas resources associated with Block 12 into increased, sustainable production levels."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Enquiries:

Frontera Resources Corporation

Jesse Jefferies

(713) 585-3216

info@fronteraresources.com

Nominated Adviser:

Cairn Financial Advisers LLP

61 Cheapside, London EC2V 6AX

Jo Turner / Liam Murray

+44 (0) 20 7148 7900

Broker

Cornhill Capital Limited

Nick Bealer

+44 (0) 207 710 9610

Financial PR:

Buchanan

Ben Romney

+44 (0) 20 7466 5000

frontera@buchanan.uk.com

Notes to Editors:

About Frontera Resources Corporation

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 in Eastern Europe around the Black Sea. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market - Symbol: FRR. For more information, please visit www.fronteraresources.com.

1. Information on Resource Estimates: The independent 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). Internal resources estimates were determined by the Company. 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 both independent and internal estimates in this announcement.

2. 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.

3. Glossary of Terms: BCF - means Billion Cubic Feet of gas. TCF - means Trillion Cubic Feet of gas. Mcf - means Thousand Cubic Feet of gas. OOIP - means Original Oil in Place. Bopd - means Barrels of Oil Per Day.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements

The accompanying notes are an integral part of these condensed consolidated financial statements.

Frontera Resources Corporation and Subsidiaries

1. Nature of Operations

Frontera Resources Corporation, a Houston, Texas based Cayman Islands corporation, and its subsidiaries (collectively "Frontera" or the "Company") are engaged in the development of oil and gas projects in emerging marketplaces. Frontera was founded in 1996 and is headquartered in Houston, Texas. The Company emphasizes development of reserves in known hydrocarbon-bearing basins, and is attracted to projects that have significant exploration upside. Since 2002, the Company has focused substantially all of its efforts on the exploration and development of oilfields within the Republic of Georgia ("Georgia").

In June 1997, the Company entered into a 25-year production sharing agreement with the Ministry of Fuel and Energy of Georgia and State Company Georgian Oil ("Georgian Oil"), which gives the Company the exclusive right to explore, develop and produce crude oil in a 5500 square kilometer area in eastern Georgia known as Block 12, hereafter referred to as the "Block 12 PSA". The Block 12 PSA can be extended if commercial production remains viable upon its expiration in June 2022.

Under the terms of the Block 12 PSA, the Company is entitled to conduct exploration and production activities and is entitled to recover its cumulative costs and expenses from the crude oil produced from Block 12. Following recovery of cumulative costs and expenses from Block 12 production, the remaining crude oil sales, referred to as "Profit Oil", are allocated between Georgian Oil and Frontera in the proportion of 51% and 49%, respectively.

Under the terms of the Block 12 PSA, Frontera is exempt from all taxes imposed by the government of Georgia, and any taxes imposed on the Company are paid by Georgian Oil on behalf of the Company from Georgian Oil's 51% share of Profit Oil. Taxes are defined by the Block 12 PSA to mean all levies, duties, payments, fees, taxes or contributions payable to or imposed by any government agency, subdivision, municipal or local authorities within the government of Georgia.

Frontera's future revenues depend on operating results from its operations in the Republic of Georgia. The success of Frontera's operations is subject to various contingencies beyond management control. These contingencies include general and regional economic and political conditions, prices for crude oil, competition and changes in regulation. Frontera is subject to various additional political and economic uncertainties in Georgia which could include restrictions on transfer of funds, import and export duties, quotas and embargoes, domestic and international customs and tariffs, and changing taxation policies, foreign exchange restrictions, political conditions and regulations.

On August 2, 2011, the Company completed a merger with and into a new Cayman Islands exempted company ("Frontera Cayman"), with Frontera Cayman being the surviving entity (the "Merger"). By operation of the Merger, all assets, liabilities, properties, corporate acts, plans, policies, contracts, approvals and authorizations of each of the Company and Frontera Cayman and their respective shareholders, boards of directors, committees elected or appointed thereby, officers and agents, which were effective immediately before the Merger, were vested in, assumed by or taken, as applicable, for all purposes as the acts, plans, policies, contracts, approvals and authorizations of Frontera Cayman and are effective and binding on Frontera Cayman in the same manner as they were with respect to the Company or Frontera Cayman, as the case may be, before the Merger.

Frontera Resources Corporation and Subsidiaries

Simultaneously with the Merger, Frontera Cayman completed a private equity fundraising pursuant to which Frontera Cayman received aggregate gross proceeds (before deduction of placing agent commissions, corporate finance fees and offering expenses) of approximately £6.8 million ($11.0 million), through (i) the issue of 115,678,351 new Frontera Cayman ordinary shares ("Frontera Cayman Shares") under a Placing Agreement with Strand Hanson Limited (as nominated advisor), and Arbuthnot Securities Limited and Old Park Lane Capital plc as Placing Agents, and (ii) subscription agreements with an affiliate of one of the Company's directors and a member of senior management for the purchase of 53,959,053 new Frontera Cayman Shares (the "Equity Fundraising"). Frontera Cayman also entered into a Standby Equity Distribution Agreement with YA Global Master SPV, Ltd. ("YAGM"), pursuant to which YAGM has agreed (subject to certain conditions) to make available over a 36-month period, a facility of up to £21.6 million ($35.0 million) in consideration for the issue of Frontera Cayman Shares. This agreement was extended in April 2015 through December 31, 2018.

Frontera Cayman simultaneously exchanged $121.6 million aggregate amount of the Company's 10% convertible notes payable plus accrued interest, for (i) 1,593,853,570 Frontera Cayman Shares, and (ii) $18.2 million aggregate principal amount of new 10% convertible notes due 2016 issued by Frontera Resources Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Frontera Cayman. These convertible notes payable were exchanged for shares of common stock at a price lower than the conversion price at inception of the notes. The difference in the value of the original conversion price to the actual conversion price was recorded in 2011 as inducement expense in the statement of comprehensive loss of approximately $99.4 million. Frontera Cayman also exchanged $9.2 million principal amount plus accrued interest of its related party notes payable for 141,515,879 newly issued Frontera Cayman Shares pursuant to note exchange agreements.

By operation of the Merger, each share of common stock of the Company has been converted into and represents the right to receive either (i) one Frontera Cayman Share (the "Stock Consideration") or (ii) £0.04 ($US0.065) (the "Cash Consideration"). As a result, all stockholders of the Company received the Stock Consideration, except for US stockholders who were not "accredited investors" as defined in Rule 501 under the US Securities Act of 1933, who received the Cash Consideration.

2. Liquidity and Capital Resources

The following key financial measurements reflect the Company's financial position and capital resources as of June 30, 2016, December 31, 2015, and June 30, 2015 (USD):

Frontera Resources Corporation and Subsidiaries

The Company has incurred net losses and negative cash flows from operations in most fiscal periods since inception. Management plans to continue to reduce costs and continue to raise additional financing in order to continue to facilitate the Company's 2016 operating plan. Additionally the Company has approximately $36.1 million of debt as of June 30, 2016 that is scheduled to mature in fiscal 2016.

Throughout 2016 and 2015, there has been volatility and disruption in the global commodity, capital and credit markets. While these market conditions persist, the Company's ability to access the capital and credit markets may be adversely affected. Notwithstanding management's plan to manage costs and raise additional financing, the Company's viability is dependent upon producing oil and gas in sufficient quantities and marketing such oil and gas at sufficient prices to provide positive operating cash flow to the Company. Commencement of production from its Mtsarekhavi gas field in second quarter of 2014, participation of farm-in partner in Taribani, together with periodic access to the SEDA facility (see discussion in Note 4) could provide positive cash flows for the seeable future. The Company is also in the process of addressing the outstanding debt which mature in fiscal 2016 with their current debt holders. See further discussion in Note 6.

The Company is responsible for providing funding for the development of Block 12 in Georgia and will require additional funding in order to obtain certain levels of production and generate sufficient cash flows to meet future capital and operating spending requirements. This is dependent upon, among other factors, achieving significant increases in production, production of oil and gas at costs that provide acceptable margins, reasonable levels of taxation from local authorities, and the ability to market the oil and gas produced at or near world prices.

Management's plan for addressing the above uncertainties is partially based on forward looking events which have yet to occur, including the commencement of additional production, refinancing of debt maturing in 2016 and ability to access capital markets and, accordingly, there is no assurance that those events will transpire or succeed as initially contemplated.

3. Basis of Presentation and Summary of Significant Accounting Policies

The condensed consolidated balance sheet of the Company at December 31, 2015 was derived from the Company's audited consolidated financial statements as of that date, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("US GAAP"). The condensed consolidated balance sheets at June 30, 2016 and June 30, 2015, the condensed consolidated statements of operations for the six month periods ended June 30, 2016 and 2015, the condensed consolidated statement of changes in stockholders' deficit for the six month period ended June 30, 2016, and the condensed consolidated statements of cash flows for the six month periods ended June 30, 2016 and 2015 were prepared by the Company.

In the opinion of Company management, all adjustments, consisting of normal recurring adjustments, necessary to state fairly the consolidated financial position, results of operations and cash flows were recorded. The results of operations for the six month period ended June 30, 2016 are not necessarily indicative of the operating results for a full year or of future operations.

Frontera Resources Corporation and Subsidiaries

Certain information and footnote disclosures normally included in financial statements presented in accordance with US GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's consolidated financial statements for the year ended December 31, 2015.

For a description of the Company's accounting policies, refer to Note 3 of the Company's 2015 consolidated financial statements.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Estimates of oil and natural gas reserves and their values, future production rates and future costs and expenses are inherently uncertain for numerous reasons, including many factors beyond the Company's control. Reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of data available and of engineering and geological interpretation and judgment. In addition, estimates of reserves may be revised based on actual production, results of subsequent exploitation and development activities, prevailing commodity prices, operating costs and other factors. These revisions may be material and could materially affect the Company's future depletion, depreciation and amortization expenses.

The Company's revenue, profitability, and future growth are substantially dependent upon the prevailing and future prices for oil and natural gas, which are dependent upon numerous factors beyond its control such as economic, regulatory developments and competition from other energy sources. The energy markets have historically been volatile and there can be no assurance that oil and natural gas prices will not be subject to wide fluctuations in the future. A substantial or extended decline in oil and natural gas prices could have a material adverse effect on the Company's financial position, results of operations, cash flows and quantities of oil and natural gas reserves that may be economically produced.

Impairment

Under the full cost method of accounting, the net book value of natural gas and crude oil properties may not exceed a calculated "ceiling." The ceiling limitation is the discounted estimated future net revenue from proved natural gas and crude oil properties plus the cost of properties not subject to amortization. In calculating future net revenues, costs used are those as of the end of the appropriate period. The prices used are the unweighted average first-day-of-the-month commodity prices for the prior twelve months. These prices are not changed except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts.

Frontera Resources Corporation and Subsidiaries

The net book value is compared to the ceiling limitation on both a quarterly and annual basis. Any excess of the net book value is written off as impairment expense. Impairment expense recorded in one period may not be reversed in a subsequent period even though higher natural gas and crude oil prices may have increased the ceiling limitation in the subsequent period. For the year ended December 31, 2015, the Company recorded an impairment of $4.1 million to the carrying value of the oil & natural gas properties in Georgia. For the period ending June 30, 2016 and 2015, the Company recorded an impairment of $0.7 million and $0 to the carrying value of the oil & natural gas properties in Georgia. The lower ceiling value resulted primarily from significant decreases in the trailing 12 month average prices for oil & natural gas, which significantly reduced proved reserves.

Fair Value Measurements

The Company's financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables and long-term debt. Management considers the carrying values of cash and cash equivalents, trade receivables and trade payables to be representative of their respective fair values. As such, the measurement was categorized as a Level 1 measurement per the fair value hierarchy.

The authoritative guidance related to fair value defines a hierarchy of inputs to valuation techniques based upon whether those inputs reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). Refer to the fair value of debt disclosed in Note 4. The Company does not have any assets or liabilities classified within Level 3 of the fair value hierarchy.

4. Debt

Debt consists of the following:

Frontera Resources Corporation and Subsidiaries

Related Party Notes Payable

On January 11, 2011, a revolving credit facility ("Credit Facility") was put in place by and between the Company, Steve C. Nicandros, a Director of the Company, and Zaza Mamulaishvili, then a member of the Company's senior management team and now a Director of the Company (together, the "Lenders") in the amount of $2,000,000. The $2,000,000 borrowing limit pursuant to the Credit Facility was removed on October 30, 2012. Accordingly, during respective reporting periods of 2016 and 2015, the Company entered into a series of further notes payable governed by this Credit Facility with the Lenders in the aggregate amounts of $5.6 million and $1.2 million, respectively. As of June 30, 2016 and 2015, the Company had $19.2 million and $12.1 million total related party notes outstanding. These notes have a one-year term, bear interest of 15%, and are classified within Related Party Notes Payable on the consolidated Balance Sheet. As of June 30, 2016, the fair value of the related party notes was approximately $15.1 million.

The further draw-downs under the Credit Facility as noted above, constitute related party transactions pursuant to the AIM Rules for Companies as the Lenders are directors or applicable employees of the Company, as the case may be.

Convertible Notes Payable

During May 2007, the Company raised approximately $67.0 million through a private placement of convertible unsecured notes due May 2012. The notes were issued at par and bear interest at 10% per annum, payable quarterly in arrears in cash or in kind at the Company's discretion. The notes are convertible into shares of common stock at a conversion price of $1.67 per share. The notes will be automatically converted into common stock at the conversion price if the stock price exceeds two times the conversion price for at least 20 consecutive trading days. On August 2, 2011, 85.1% of the 2012 Notes were converted into the common stock and another 14.6% were exchanged for the 2016 Notes.

On July 3, 2008, the Company raised $23.5 million through a private placement of convertible unsecured notes due July 2013. The notes were issued at par and bear interest at 10% per annum, payable quarterly in arrears in cash or in kind at the Company's discretion. The notes are convertible into common stock at a conversion price of $1.71 per share. On August 2, 2011, 84.0% of the 2013 Notes were converted into the common stock and another 16.0% were exchanged for the 2016 Notes.

On August 2, 2011, note holders exchanged $18,220,312 of 2012 and 2013 Notes into new notes issued under the 2016 Note Purchase Agreement due August 2016 (the "2016 Notes"). As of June 30, 2016 and 2015, the Company had $29.8 million and $26.8 million total convertible notes payable. The 2016 Notes accrue interest at the rate of 10% per annum, mature five years from the date of issuance and are convertible into Frontera Cayman Shares, at the option of the holder, at a conversion rate of $0.25 per share. As of June 30, 2016, the fair value of the convertible notes payable was approximately $27.1 million.

During the six month periods ended June 30, 2016 and 2015, the Company elected to pay the quarterly interest payments in kind and issued approximately $1.5 million and $1.3 million, respectively, in additional convertible notes in accordance with terms of the note purchase agreements.

Frontera Resources Corporation and Subsidiaries

Other Notes Payable

On June 28, 2011 the Company entered into the SEDA facility with YA Global Master SPV Ltd, an investment fund managed by Yorkville Advisors LLC providing for up to approximately £21.6 million (US$35 million) of additional equity investment, through the issue of the new shares in the Company. As of June 30, 2016 approximately £16.3 million (US$21.6 million) of commitment amount was still available for drawdown. This agreement was extended in April 2015 through December 31, 2018.

The Company drew down from their SEDA-backed loan agreements with YA II PN, Ltf. (formerly YA Global Master SPV Ltd.). Under these drawdowns, $3.1 million and $3.2 million remained outstanding as of June 30, 2016 and 2015, respectively. As of June 30, 2016, the fair value of the other notes payable was approximately $2.6 million.

Future principal maturities as of June 30, 2016 for long-term debt obligations are as follows:

5. Commitments and Contingencies

ARAR Arbitration

On January 9, 2008, Frontera Eastern Georgia Limited ("FEGL") served a notice of arbitration and claim on ARAR, Inc., for breach of contract under drilling services contract dated May 2, 2007. On December 16, 2008, FEGL entered into a settlement agreement with ARAR Inc, ARAR Petrol ve Gas Arama Uretim Paz A.S., and Mr. Fatih Alpay (collectively, "Defendants"), which was confirmed by the arbitration panel and pursuant to which Defendants were required to make a series of payments to FEGL through December 2009 in the aggregate amount of $1.25 million. In August 2009, the Defendants defaulted on monthly payments and remained in default on payments due August - December 2009. FEGL applied to the arbitration panel for entry of an agreed award pursuant to the settlement agreement and, on April 16, 2010, the arbitration panel entered a final, binding award in favor of FEGL against Defendants in the amount of $1.43 million ("Final Award"). Following series of subsequent court hearings in the US courts, on July 16, 2012, the US Court of Appeals for the Fifth Circuit confirmed the Final Award granting FEGL total amount of $1,552,707, which included total amount of the Final Award and FEGL's attorney's fees and expenses.

In order to enforce the Final Award against Defendants' assets located in in Turkey, in July 2010 FEGL filed an enforcement action in the 4th Commercial Court in Ankara, Turkey. The 4th Commercial Court conducted a series of hearings on the enforcement action, and by its order dated November 23, 2012, rejected FEGL's request for enforcement. FEGL filed its appeal with the appeals court in Ankara on June 7, 2013. On June 20, 2014, the appeals court granted Frontera's appeal, overturned the 4th Commercial Court's decision and remanded the case back to the 4th Commercial Court with instruction to adopt a new decision in line with the appeals court's ruling. On December 20, 2015, the 4th Commercial Court adopted new decision granting Frontera enforcement of the Final Award. The Defendants appealed this decision and the case is currently pending at the appeals court

Frontera Resources Corporation and Subsidiaries

Georgian Tax Refund

From the inception of operations in Georgia Company has incurred certain tax expenses which per the terms of the Production Sharing Agreement signed with Georgian government are subject of reimbursement from the state. The Company has notified appropriate authorities and is in the process of collecting a tax refund from the Georgian government. As of June 30, 2016 the amount of refund due to the Company was $5.4 million.

The Company has not recognized a receivable as of June 30, 2016 or 2015 for these ongoing proceedings.

6. Subsequent Events

On July 21, 2016, Frontera Resources Holdings, LLC (FRH), a wholly owned subsidiary of Frontera Resources Corporation ("Frontera"), initiated liquidation proceedings pursuant to Chapter 7 of the United States Bankruptcy Code in a proceeding styled Case No 16-80220; In re Frontera Resources Holdings, LLC, in the United States Bankruptcy Court for the Southern District of Texas (the "Chapter 7 Proceeding"). This Chapter 7 Proceeding relates to a series of 10% Convertible Notes (the "Notes") that were issued by FRH on August 1, 2011, and that matured and became payable by FRH on August 1, 2016. Frontera is not a debtor in the Chapter 7 Proceeding, however in order to seek a declaration and confirmation that it is not a surety or guarantor of the Notes, or otherwise liable to repay them as parent of FRH, Frontera initiated adversary proceeding in the United States Bankruptcy Court for the Southern District of Texas, which is styled Adversary No. 16-08008; Frontera Resources Corp. v. Casciato-Northrup, et al.; in the United States Bankruptcy Court for the Southern District of Texas (the "Adversary Proceeding"). In addition, Frontera asserted claims in the Adversary Proceeding against the holders of the largest outstanding group of Notes, Outrider Master Fund LP and Outrider Management, LLC (collectively "Outrider"), contending that Outrider was complicit in a scheme to misappropriate the Company's confidential information and trade secrets on a number of occasions in 2014, 2015 and 2016, and through those actions interfered with Frontera's financing efforts and ability to capitalize on financing and development opportunities that were then available to Frontera. The Adversary Proceeding and Chapter 7 Proceeding each are in their preliminary stages.

On August 1, 2016, the Company has issued 2,398,786,214 new ordinary shares of US$0.00004 each in the Company ("New Ordinary Shares") in order to create strategic alliances with service providers associated with its operations in the country of Georgia. The issuance of these New Ordinary Shares was in consideration of procurement of $4,000,000 of oilfield services by the Service Providers to enable implementation of accelerated and more technically advanced operations over the remainder of this year and next year at the Company's South Kakheti Gas Complex and Shallow Fields Production Unit assets within its Block 12 portfolio. In addition, the Company raised about $545,000 through a draw down on the Standby Equity Distribution Agreement ("SEDA") with YA II PN, Ltd. (formerly as YA Global Master SPV Ltd.) and issue of 513,365,718 new ordinary shares of $0.00004 each in the Company.

On September 26, 2016, the Company raised £527,475.24 through a draw down on the Standby Equity Distribution Agreement ("SEDA") with YA II PN, Ltd. (formerly as YA Global Master SPV Ltd.). and issue of 753,536,060 new ordinary shares of US$0.00004 each in the Company.

Events occurring after June 30, 2016 were evaluated through September 27, 2016, the date these financial statements were available to be issued, to ensure that any subsequent events meeting the criteria for recognition or disclosure were included.