Frontera Resources Regulatory News (FRR)

18 Dec 2006 07:01

Frontera Resources Corporation18 December 2006 FRONTERA RESOURCES DEVELOPMENT OF ZONE 9, TARIBANI FIELD UNIT, GEORGIA Frontera Resources (London Stock Exchange, AIM Market - Symbol: FRR), anindependent oil and gas exploration and production company, today announces anupdate on its operations in the Taribani Field Unit, Block XII, Georgia. Summary: •Taribani field development to commence in Zone 9, Q2 2007. •Analysis of cores and logs taken from the recently drilled Dino #2 well revealed thicker sand packages and better than expected reservoir characteristics for Zone 9. •Baker Hughes' Frac-Pack completions to provide technically effective and cost efficient approach to sediment control during production operations. •Program to begin with re-entry and re-completion of Dino #2 well. •Up to twenty new wells envisaged over three year time frame. Steve C. Nicandros, Chairman and Chief Executive Officer, commented: "Our analysis of the extensive data obtained from recent drilling andgeophysical operations has provided us with the necessary confidence toprioritize and advance our plans to develop Zone 9 within the Taribani Field.The completion design solutions that have been identified, with the assistanceof Baker Hughes, to manage sediment flow during production operations encourageus that the Taribani Field Unit can realize significant value for our company." Enquiries: Frontera Resources Corporation Liz WilliamsonVice President Investor Relations and Corporate Communications(713) 585-3216lwilliamson@fronteraresources.com Brunswick Group LLPPatrick Handley / Mark Antelme+44 207 4045959 Since completion of testing operations at the Dino #2 well in August 2006,Frontera has undertaken detailed analysis of the extensive coring, logging andproduction data obtained from the well, in order to customize newwell-completion designs for future wells and prioritize plans for developingfour target reservoir horizons; Zones 9, 14, 15, 19. These new engineeringdesigns apply industry-standard solutions to the specific reservoir propertiesof the Taribani Field, in order to overcome sediment obstruction in future wellsand ensure sustainable flow from the field's reservoirs. Frontera has committed to developing Zone 9 as a consequence of drillingoperations at the Dino #2 well earlier this year in which the Companyencountered 21 meters of gross pay sands in Zone 9. As expected, the Plioceneage oil-bearing reservoir interval, Zone 9, was encountered from 2,300 meters to2,311 meters. In addition, a previously unmapped oil bearing reservoir intervalwas encountered above Zone 9 from 2,275 meters to 2,285 meters. Historically,twelve wells had evidence of oil when perforated in Zone 9, with the best well,#23, exceeding 700 BOPD during initial production. Based on recent analysis of Zone 9 reservoir data, a new well-completion designfor this horizon has been engineered in order to control sediment flow duringproduction operations. Analysis of data obtained during coring and loggingoperations of the Dino #2 well not only revealed a fractured reservoir, but alsodemonstrated that this reservoir's rock properties are particularly well suitedfor the artificial inducement of fractures to further enhance permeability. As aresult, Frontera has evolved its development well design for Zone 9 fromdrilling short-reach horizontal wells to conventional vertical wells with theaddition of Baker Hughes Frac-Pack completions. These completions are expectedto achieve similar production/recovery results obtained from drillingshort-reach horizontal wells through artificially inducing extensive additionalfracturing in the reservoir from vertical wells. Sediment control will come fromapplying packing technology whereby screens are installed and gravel is pumpedinto the well as a slurry, "packing" it behind the screen at the formation face.The gravel and screen are designed to trap the reservoir formation sedimentbefore it can enter the well and cause obstruction. While achieving the sameresult, it is anticipated that this design should provide a more technicallyeffective and cost efficient approach versus development through short-reachhorizontal drilling. In the deeper Zone 14, 15 and 19 objectives of the Taribani Field, analysis hasshown that horizontal well completions are likely best suited for thesedifferent reservoir types with the application of completion techniques thatwill likely utilize expandable liners and screens, together with otherfit-for-purpose applications, in order to control sediment flow. Timing ofbringing the deeper horizons into development is currently being finalized insequence with Frontera's plans to focus first on Zone 9. Development drilling will commence in Q2 2007 with the re-entry of the Dino #2well. New wells will follow into the Zone 9 horizon, including the drilling of anew well in 2007 at a location approximately 900 feet up-dip on the TaribaniField structure from wells that encountered the lowest known oil in the field atthis horizon. This location has been identified as a result of processing,interpreting and integrating approximately 40 kilometers of new 2D seismic data,acquired in late 2005, into the existing 3D mapping of the field. The new datarevealed the Taribani Field to be a larger structure than previously thought andconfirmed important new drilling locations high on the structure. The operational decisions outlined in today's announcement are based onextensive data from the recent drilling and geophysical activity. This data hasvalidated several important elements of Frontera's field model across fourtarget reservoir horizons. Specifically, data has confirmed the following: (1) Frontera's ability to drill a horizontal well successfully into the over-pressured reservoirs that exist within the field; (2) the presence of fractures in Zones 9, 14 and 15; (3) fracture systems can be successfully encountered via horizontal drilling methods; (4) matrix porosities in Zones 9, 14 and 15 can be higher than originally projected by Netherland, Sewell & Associates in its reservoir engineering assessments of the Taribani Field, thereby verifying a larger hydrocarbon storage capability for the target reservoirs; (5) objective reservoirs can be thicker and more numerous than originally estimated; and (6) the existence of good quality 38 degree API oil, produced under naturally high reservoir energy. 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 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. 2. The Taribani 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 situated at depths between2,200 meters and 3,500 meters. The independent consulting firm of Netherland,Sewell & Associates has assigned 118 million barrels of P3 reserves from Zones9, 14, 15 and 19 within the field. Additionally, Netherland, Sewell &Associates has assigned as much as 36 million barrels of unrisked resourcepotential associated with five deeper horizons in the field. 3. 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. 4. 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, future drilling, development and production. Amongthe important factors that could cause actual results to differ materially fromthose indicated by such forward-looking statements are future exploration anddevelopment results, availability and performance of needed equipment andpersonnel, seismic data, fluctuations in oil and gas prices, weather conditions,general economic conditions and the political situation in Georgia andneighboring countries. There is no assurance that Frontera's expectations willbe realized, and actual results may differ materially from those expressed inthe forward-looking statements. For more information, please see www.fronteraresources.com. This information is provided by RNS The company news service from the London Stock Exchange