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Operations Update

Released 07:00 07-Apr-2016

RNS Number : 4597U
Frontera Resources Corporation
07 April 2016
 

 

Houston, Texas, U.S.A. - 7 April 2016

 

Frontera Resources Corporation

("Company")

 

Operations Update: Successful Stimulation Campaign In Georgia

and Issue of Equity

 

Frontera Resources Corporation (AIM: FRR), an independent oil and gas exploration and production company, today announces an operations update for its work in the South Kakheti Gas Complex's Oil Window initiative, situated within its upstream portfolio in the country of Georgia, as well as a new issue of equity in support of ongoing operations.

 

Oil Window Operations Update:  As previously announced on 21 March 2016, operations commenced and have now been completed within the central portion of the South Kakheti Gas Complex related to a multi well frac campaign.  Early results from these operations have demonstrated that the Company's most recent well-completion designs have provided successful reservoir stimulations to wells that were not able to previously produce.  In addition, in the case of a producing well, existing production has been successfully increased by a factor of approximately five times. 

 

Specifically, in the case of wells T-33 and T-36 that were drilled in 1979 during the Soviet era and abandoned because they were deemed to be "dry holes", Frontera's hybrid-unconventional reservoir analysis resulted in well-stimulation/completion designs that have achieved production of approximately 15-20 bbls per day, per well from wells that never produced in the past.  Most significant is the Company's technical conclusion that since the applied stimulations were relatively small in size  and only focused on a single oil bearing zone (Zone 9), this result now provides an important calibration whereby internal modeling now indicates that with future larger size stimulations production can be increased significantly, per well, for only this Zone 9.  

 

In the case of a currently producing well, Niko#1, the applied well-stimulation/completion design resulted in an increase in production from approximately 15 bbls per day to 80 bbls per day from only Zone 9.   Once again, since the applied stimulation was relatively small in size and only focused on a single oil bearing zone, internal modeling now indicates that future larger stimulation designs can also be expected to deliver significantly larger results. 

 

With the addition of this most recent frac campaign to a larger database of wells that the Company has fraced over time, technical results from campaign to campaign have demonstrated a successful learning curve that the Company believes is the basis for large-scale development.  With this in mind, the next related frac campaign is anticipated to commence within the next 90 days. 

 

Overall, the successful results from the most recent campaign have served to further refine and validate technical assumptions related to Frontera's progress towards large-scale exploitation of the significant associated oil-in-place volumes related to this area of the Complex.  As previously announced, Frontera has designed a 175 well plan for the central portion of the Complex that will employ multi-zone vertical well completions.  This plan is anticipated to exploit approximately 690 million bbls of original oil in place associated with Netherland, Sewell & Associate's independent assessment related to the area of current Oil Window operations at the Complex.

 

Issue of Equity: 120,000,000 new ordinary shares in the Company ("New Ordinary Shares") have been issued to certain strategic service providers of the Company for procurement of approximately $750,000 of oil field services to be provided to the Company in its ongoing operations including workover, drilling, logging, completion and transportation services.

 

Application will be made for the New Ordinary Shares to be admitted to trading on AIM, which is anticipated to occur on or around 12 April 2016 ("Admission").  The New Ordinary Shares will rank pari passu with existing shares of common stock of the Company.

 

Following Admission, the Company will have 3,896,363,695 ordinary shares in issue with voting rights. The Company does not hold any ordinary shares in treasury and accordingly there are no voting rights in respect of any treasury shares. The aforementioned figure of 3,896,363,695 ordinary shares may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company, under the disclosure requirements applicable to the Company.

 

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

 

"The results of our most recent stimulation campaign at the South Kakheti Gas Complex's Oil Window are extremely exciting.   The technology that we have successfully employed with our low-cost in-house stimulation capabilities have allowed us to yield results that are consistent with technical analogues of hybrid-unconventional reservoir plays in the United States that have been successfully developed in a similar manner.  

 

It is technically significant to appreciate that we have achieved such good results from small-scale stimulations into our most recent single-zone completions. Based on the results we have achieved, we now feel technically confident to scale-up the size of our stimulation designs in order to achieve considerably larger production outcomes.  When combined with planned multiple zone completions, we believe that this provides the basis for developing the giant oil-in-place volumes that our historical work has identified. "

 

Enquiries:

 

Nominated Adviser:

Cairn Financial Advisers LLP

61 Cheapside, London EC2V 6AX

Avi Robinson / Jo Turner

+44 (0) 20 7148 7900

 

Broker:

Cornhill Capital Limited

Nick Bealer

+44 (0) 207 710 9610

 

Financial PR:

Buchanan

Helen Chan

+44 (0) 20 7466 5000

helenc@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 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.  Definitions related to other terms can be found within independent reports posted on Frontera's website.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Operations Update - RNS