Frontera Resources Regulatory News (FRR)

8 Apr 2008 07:01

Frontera Resources Corporation08 April 2008 FRONTERA RESOURCES CORPORATION Houston, Texas U.S.A. - April 8, 2008 OPERATIONS UPDATE, BASIN EDGE PLAY UNIT Frontera Resources Corporation (London Stock Exchange, AIM Market - Symbol: FRR;OTCQX Market, U.S.A. - Symbol: FRTE), an independent oil and gas exploration andproduction company, today announced an update of operations at the Lloyd #1 wellat its Basin Edge Play Unit, Block 12, Georgia. In the most recent Operations Update of February 19, 2008 for drillingoperations at the "C" Prospect, it was reported that drilling operations at theLloyd #1-Sidetrack #1-3 were in progress with the expectation of reaching thetop of the primary objective Cretaceous formations at a measured depth ofapproximately 2,950 meters. As previously reported, the well was originallysidetracked (Sidetrack #1-2) in December 2007 in an effort to more optimallyencounter the well's Cretaceous age primary geologic formation targets and alsoto appraise the Tertiary age geologic formations in an up-dip position to whereoil and gas shows were encountered low on the structure in the original wellbore. Sidetrack #1-3 was commenced in February 2008 in order to overcomechallenging drilling conditions encountered within the Eocene formation, whichis expected to lie stratigraphically directly above the primary Cretaceoustarget. Since February, ongoing analysis determined that the challenging drillingconditions associated with the Eocene formation are most likely attributable tothe highly tectonized nature of this formation. Sidetrack #1-3 commenceddrilling from a measured depth of approximately 2,200 meters and againencountered encouraging hydrocarbon shows in the Tertiary section of the well,but after reaching approximately 2,600 meters, difficult drilling conditionswere once again encountered. With the primary objective Cretaceous interval expected to be within 300 meters,a new sidetrack (Sidetrack #1-4) commenced from a depth of about 2,500 metersand progressed to a depth of approximately 2,700 meters. Hydrocarbon shows werealso seen in the #4 sidetrack. However, the well once again encountered wellbore instability within the Eocene formation. Based on the difficult drilling conditions associated with the Eocene formation,a formation that was not originally expected to be encountered within the "C"Prospect, a new approach to drilling this section of the well has been designed. As a result, appropriate changes have been made to well plan design forcontinued drilling and it has been concluded that it will be necessary toreplace the existing drilling rig and associated equipment in favor of a new rigwith capabilities and specifications that are better suited for the drillingchallenges that we have encountered. This is being done with a focus onefficiently and successfully reaching our primary Cretaceous objective withinthe "C" Prospect. Based on this, efforts are currently underway to mobilize anew rig to continue operations in June. Steve C. Nicandros, Chairman and Chief Executive Officer, commented: "Since February, Frontera's drilling operations at the 'C' Prospect havecontinued to be encouraging based on the ongoing analysis of mud logs, cuttings,cores, electronic logs and other technical data. Given that we are so close toour primary Cretaceous objective, we have deemed it prudent to evolve ourapproach to completing this important exploration well. Despite theunexpectedly difficult drilling conditions that have put us within 300 meters ofour anticipated primary objective, we remain extremely encouraged about what wehave discovered thus far with our work at the 'C' Prospect. In this context,the overall effort on the part of our integrated exploration and operations teamhas been very commendable and we believe the revisions we have now made to ouroverall plan will allow us to successfully reach our objectives on thisimportant prospect. " Basin Edge Play Unit, "C" Prospect - Lloyd #1 Well Background In December 2007, the Lloyd #1 well was drilled to a measured depth ofapproximately 3,000 meters. While drilling, the Lloyd #1 well encounteredmultiple potential reservoirs as well as multiple hydrocarbon shows throughoutthe Tertiary age section of the well. In particular, 60 feet of conventionalgeologic core was cut from a 200-foot thick Middle Miocene sandstone interval.The core, which consisted of almost 100% sandstone, documented extensivevertical and sub-vertical fractures that contained live oil. In addition,subsequent well log analysis of this same stratigraphic interval indicated thatoil was present in zones believed to be primary matrix reservoir. Within the Tertiary age section, drilling also revealed the unexpected presenceof important additional lower-Tertiary age geologic formations within the "C"Prospect. These formations, which consist of Oligocene and Eocene age rocks,are known to contain prolific reservoirs in fields that are situated on-trend tothe west and south of the "C" Prospect within the upper Kura Basin. The deepestand oldest interval encountered was of Eocene age, which is expected to besituated stratigraphically directly above the Cretaceous age formations that arethe primary target objectives within the "C" Prospect. Based on analysis of drilling and logging results, it was determined that thewell was drilling through highly dipping lower-Tertiary age rocks and, whencalibrated to 3D seismic data, it was noted that the Lloyd #1 well bore was on atrajectory further down-dip, or lower on the flank of the "C" Prospectstructure, than originally desired. As a result, a new up-dip drillingtrajectory (Sidetrack #1-2) from 1,600 meters within the original Lloyd #1 wellbore was drilled. This was done in order to try to more optimally encounter thewell's Cretaceous age geologic formation targets and also appraise the Tertiaryage geologic formations in an up-dip position to where oil and gas shows wereencountered low on the structure. In early February of this year, Sidetrack #1-2 reached the top of the middleEocene formation at a measured depth of approximately 2,600 meters, and similarhydrocarbon shows were encountered in a position approximately 440 meters up-dipto those encountered in the top of the Eocene formation within the Lloyd #1original well bore. Hydrocarbon shows and potential reservoir were observedbased on analysis of cuttings and mud logs. Drilling in Sidetrack #1-2 alsoconfirmed the up-dip presence of the same lower-Tertiary age geologic formations(Oligocene and Eocene) that were encountered down dip in the original well bore. After completing logging runs, intermediate 9-5/8" casing was set to a depth ofapproximately 2,533 meters within the middle Eocene formation. Upon resumptionof drilling from this depth, unexpectedly difficult drilling conditions wereencountered that resulted in extremely slow rates of penetration andunacceptable well bore instability. Analysis determined that these conditions were most likely attributable to thehighly tectonized nature of the middle Eocene formation and the angle at whichthe well was being drilled. As a result, a new sidetrack (Sidetrack #1-3) witha lower well bore angle commenced drilling from a measured depth ofapproximately 2,200 meters. While encouraging hydrocarbon shows were seenwithin the #3 sidetrack, after reaching approximately 2,600 meters, difficultdrilling conditions were once again encountered. With the Cretaceous interval expected to be within 300 meters, a sidetrack(Sidetrack #1-4) commenced from a depth of about 2,500 meters and progressed toa depth of approximately 2,700 meters, the well was once again overcome bywell-bore instability in the Eocene formation. Hydrocarbon shows were also seenin the #4 sidetrack. Based on the difficult drilling conditions associated with the Eocene formation,a formation that was not originally expected to be encountered within the "C"Prospect, a new approach to drilling this section of the well has been designed. As a result, appropriate changes have been made to well plan design forcontinued drilling and it has been concluded that it will be necessary toreplace the existing drilling rig and associated equipment in favor of a new rigwith capabilities and specifications that are better suited for the drillingchallenges that we have encountered. This is being done with a focus onefficiently and successfully reaching our primary Cretaceous objective withinthe "C" Prospect. Based on this, efforts are currently underway to mobilize anew rig to continue operations in June. As previously stated, analysis of the 3D seismic data related to the "C"Prospect prior to commencement of drilling indicated that the primary targetreservoir objectives, identified on the basis of seismic attributes, could occurat depths from 2,000 meters to 3,700 meters. Data thus far gathered from theLloyd #1 well continues to support this model. The recently discovered up-dippresence of the Oligocene and Eocene sections within the Lloyd #1-Sidetrack #1-2provides further confirmation that the geology is relatively intact andcontinuous within the "C" Prospect and that the primary objective Cretaceoussection still lies ahead within the originally predicted depth intervals. Frontera's Basin Edge Play Unit is located along the northern border of Block 12and represents what the company believes is one of the newest and potentiallymost prolific exploration plays in the Upper Kura Basin. Netherland, Sewell andAssociates estimate total unrisked resource potential to be in excess of onebillion barrels of recoverable oil within the unit's two major prospects ("B"and "C"). Of this total, prior to the acquisition of new seismic data suggestingan even larger structure, the "C" Prospect was estimated to contain as much as300 million barrels of recoverable oil from primary reservoir targets and asmuch as 250 million barrels from secondary reservoir objectives. Frontera'sprimary reservoir targets are located in the Cretaceous age carbonate rocks,with secondary reservoir targets in the Tertiary age clastic rocks as well asJurassic carbonates. Enquiries: Frontera Resources CorporationLiz WilliamsonVice President, Investor Relations and Corporate Communications(713) 585-3216 lwilliamson@fronteraresources.com Brunswick Group LLPPatrick Handley / Mark AntelmeLondon: +44 207 4045959 Notes to Editors: 1. Frontera Resources Corporation is an independent Houston, Texas, U.S.A.-based international oil and gas exploration and production company whosestrategy is to identify opportunities and operate in emerging markets around theworld. Frontera has operated in Georgia since 1997 where it holds a 100 percentworking 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. Formore information regarding Frontera's Basin Edge Play Unit, please see: http://www.fronteraresources.com/operations/basinedge.php. 2. The reserve information herein was determined by the independent consultingfirm of Netherland, Sewell & Associates in accordance with the petroleumresource definitions adopted by the Society of Petroleum Engineers (SPE), WorldPetroleum Council (WPC) and the American Association of Petroleum Geologists(AAPG) in 2000. 3. This release contains certain forward-looking statements, including, withoutlimitation, expectations, beliefs, plans and objectives regarding the potentialtransactions, potential drilling schedule, well results and ventures discussedin this release, as well as reserves, future drilling, development andproduction. Among the important factors that could cause actual results todiffer materially from those indicated by such forward-looking statements are:future exploration and development results; availability and performance ofneeded equipment and personnel; seismic data; evaluation of logs and cores fromwells drilled; fluctuations in oil and gas prices; weather conditions; generaleconomic conditions; and the political situation in Georgia and neighboringcountries. There is no assurance that Frontera's expectations will be realized,and actual results may differ materially from those expressed in theforward-looking statements. This information is provided by RNS The company news service from the London Stock Exchange