Frontera Resources Regulatory News (FRR)

30 Jun 2006 07:01

Frontera Resources Corporation30 June 2006 June 30, 2006 FRONTERA RESOURCES PROVIDES UPDATE ON DRILLING OPERATIONS AND ANNOUNCES COMPLETION OF AN EXTENSIVE 3D SEISMIC SURVEY IN THE COUNTRY OF GEORGIA Houston, Texas U.S.A. (June 30, 2006): Frontera Resources Corporation (LondonStock Exchange, AIM Market - Symbol: FRR), an independent oil and gasexploration and production company, today announces an update of its drillingoperations and completion of an extensive 3D seismic survey within its onshoreexploration and production license in the eastern portion of the country ofGeorgia known as Block XII. Taribani Field Unit - Drilling Operations In February 2006, Frontera began a three-well drilling program to reenterexisting wells in the Taribani Field to determine whether sustainable commercialproduction could be established from undeveloped oil bearing horizons. Fronterabelieves targeted horizons can be effectively developed and produced with theuse of conventional horizontal drilling, completion and associated productionengineering techniques the company has tailored specifically for the TaribaniField. Extensive data collection and production testing results from thethree-well program will collectively provide Frontera with the necessarytechnical data needed to determine whether or not the Taribani Field can becommercially developed. In April 2006, Frontera completed horizontal drilling operations at the firstwell in the three-well program, the Dino #2. This well was designed to evaluatemultiple horizons within the field, with a primary objective of a finalhorizontal completion into Zone 15 at a total depth of approximately 2,700meters. Once the horizontal portion was completed, an extended testing program commencedon the Dino#2, which is expected to continue through the end of August. Testingis being conducted at a pre-determined series of production parameters toevaluate the potential long-term sustainable flow rates from the well. To date, information obtained from the Dino #2 well has successfully validatedseveral important elements of Frontera's hypothetical field model regardingcommercial viability of the Taribani Field. Specifically, data has confirmed:(1) Frontera's ability to successfully drill a horizontal well into theover-pressured reservoir environment that exists within the field; (2) thepresence of fractures in Zones 9, 14 and 15; (3) that the orientation ofreservoir fracture systems can be successfully encountered via horizontaldrilling methods; and, (4) matrix porosities in Zones 9, 14 and 15 are higherthan originally projected in the company's third party reservoir engineeringassessments, thereby verifying a larger hydrocarbon storage capability for thetarget reservoirs. The current testing program will provide insights for several remaining elementsof Frontera's hypothesis for the Taribani Field and will contribute to thecompany's final determination of commerciality there. Specifically, long-termtesting of the Dino#2 will help determine: (1) whether theconfirmed presence of fractures is sufficiently interconnected such thattargeted reservoirs can be efficiently drained through sustained, long-termcommercial production; (2) whether potential production of sediments canbe successfully controlled during a long-term testing program so that the wellcan be continuously produced; and, (3) what the optimal sustainable flow ratefrom the well proves to be. After competing drilling operations on the Dino #2 well, Frontera moved theF-200 rig to the Well #23 location within the Taribani Field, where drillingcommenced on May 30, 2006 with an objective of a Zone 9 horizontal completion.However, after two unsuccessful attempts to sidetrack from the existing wellbore the company decided to temporarily suspend operations at Well #23 andinstead drill a new well at this location. Since necessary materials were notimmediately on hand to commence the drilling of a new well, Frontera moved therig to the Niko #1 well location within the Taribani Field where drilling willbegin in early July. The Niko #1 well is designed to evaluate multiple horizons within the field,with a horizontal completion into Zone 19 as its primary objective at a totaldepth of approximately 2,900 meters. Frontera expects the Niko #1 well will becompleted within 40 days and then undergo a 90-day testing program similar tothe program currently underway at the Dino #2 well. Prior to finishing the Niko#1 well, the company plans to procure additional materials to return to the Well#23 location and continue operations there. Located in eastern Georgia within Frontera's license area known as Block 12, theTaribani Field is a large, undeveloped oil field covering an area ofapproximately 80 square kilometers with productive horizons situated in Mioceneand Pliocene age reservoirs. These reservoirs are at depths between 2,200 metersand 3,500 meters. The independent consulting firm of Netherland, Sewell &Associates has assigned 118 million barrels of P3 reserves from Zones 9, 14, 15and 19 within the field. Additionally, Netherland, Sewell & Associates hasassigned as much as 36 million barrels of unrisked resource potential associatedwith five deeper horizons in the field. Basin Edge Play Unit - Seismic Operations In 2005, the company acquired approximately 165 kilometers of 2-D seismic overthe Basin Edge Play Unit's "C" prospect. Processing and interpretation of thisseismic data revealed a large independent four-way structural closure ofapproximately 55 square kilometers in size. As a result, Frontera chose toprioritize and focus on this sizable prospect within the broader Basin Edge PlayUnit that is located in the northeastern portion of Block 12. Consequently, in March 2006, Frontera acquired a new 80 square kilometer 3Dseismic survey over its Basin Edge Play Unit's "C" prospect that wassuccessfully completed on June 20th. This data is now being processed and willsubsequently undergo a detailed interpretation effort that will be integratedinto existing mapping before year end. Drilling operations at the Basin EdgePlay Unit's "C" prospect are planned for 2007. Frontera also recently acquired approximately 170 kilometers of 2D seismic dataover a second prospect within the Basin Edge Play Unit, known as the "B"prospect. Interpretation of this data is currently ongoing. The "C" and "B" prospects are two large exploration prospects Frontera hasmapped with Jurassic, Cretaceous and Tertiary age reservoir objectives. Targetedreservoirs are anticipated to be situated at depths of between 2,000 meters and2,500 meters. The reservoir engineering firm of Netherland, Sewell andAssociates, Inc. has assigned unrisked resource potential in excess of onebillion barrels of recoverable reserve potential to these two explorationprospects. Steve C. Nicandros, Frontera's Chairman and Chief Executive Officer, commented: "We are encouraged by the continued progress of our various business units fromwithin our operations in Georgia. At the Taribani Field Unit, the results to date from the Dino #2 well haveconstructively increased our understanding of the Taribani Field. Moreover, wewere very fortunate to have obtained critical confirmation of several keyelements of our hypothetical field model so early in our planned three-welldrilling program. We must now complete the testing program that is currentlyunderway at the Dino #2 well and continue our planned drilling program such thata complete and methodical analysis of the collective results can help usdetermine whether the Taribani Field can be commercially developed. We alwaysknew there was a mechanical risk associated with re-entering wells that are over30 years old and this has been demonstrated in our experience at Well #23.Nevertheless, we are very satisfied we were able to quickly move the F-200 rigto the Niko #1 well and simultaneously begin acquiring the necessary materialsto thereafter return to the Well #23 location. At our Basin Edge Play Unit, the successful completion of the 80 squarekilometer 3D seismic survey over our 'C' prospect marks another importantmilestone within this business unit that keeps us on track to drill this largestructure next year. The data quality from the recently completed survey isexcellent and we look forward to the exciting new insights it will bring to thisimportant prospect." About Frontera Frontera Resources Corporation is an independent Houston, Texas, U.S.A.- basedinternational oil and gas exploration and production company whose strategy isto identify and operate opportunities in emerging markets around the world.Frontera has operated in Georgia since 1997 where it holds a 100 per centworking interest in a production sharing agreement with the government ofGeorgia. This gives Frontera the exclusive right to explore for, develop andproduce oil and gas from a 5,060-square-kilometer area in eastern Georgia knownas Block 12. For more information, please see www.fronteraresources.com . For moreinformation regarding Frontera's operations at the Taribani Field Unit, pleasesee www.fronteraresources.com/operations/taribanifieldunit.php . For moreinformation regarding Frontera's operations at the Basin Edge Play Unit, pleasesee www.fronteraresources.com/operations/basinedge.php . For more information regarding Netherland, Sewell and Associates, please seewww.netherlandsewell.com . This release contains certain forward-looking statements, including, withoutlimitation, expectations, beliefs, plans and objectives regarding the potentialtransactions, potential drilling schedule and ventures discussed in thisrelease, as well as reserves and future production. Among the important factorsthat could cause actual results to differ materially from those indicated bysuch forward-looking statements are future exploration and development results,availability and performance of needed equipment and personnel, the finalresults of the processing of seismic data, fluctuations in oil and gas prices,weather conditions, general economic conditions and the political situation inGeorgia and neighboring countries. There is no assurance that Frontera'sexpectations will be realized, and actual results may differ materially fromthose expressed in the forward-looking statements. The reserve information in this press release was determined by the independentconsulting firm of Netherland, Sewell & Associates in accordance with thepetroleum resource definitions adopted by the Society of Petroleum Engineers(SPE), World Petroleum Council (WPC) and the American Association of PetroleumGeologists (AAPG) in 2000. Enquiries Citigate Dewe Rogerson (+44 20 7638 9571) Analyst enquiries: Nina Soon Media enquiries: Martin Jackson / George Cazenove This information is provided by RNS The company news service from the London Stock Exchange