Frontera Resources Corporation (AIM: FRR) (OTCQX: FRTE), an
independent oil and gas exploration and production company, today
announced that it has completed a new phase of drilling operations
at the Mirzaani and Mtsare Khevi Fields within its Shallow Fields
Production Unit, Block 12, in the country of Georgia.
Highlights
-- Completed drilling, coring and logging two new discovery wells in
undeveloped areas of the Mirzaani Field.
- Mirzaani #1 well was drilled to a depth of 1,500 meters and
encountered multiple oil and gas shows throughout 146 meters of net
sandstones, in primary as well as deeper, secondary reservoir
targets.
- Mirzani #5 well was drilled to a depth of 1,125 meters and
encountered multiple oil and gas shows throughout 120 meters of net
sandstones, in primary as well as deeper, secondary reservoir
targets.
- Reservoir sections in both wells exhibited higher than expected
porosity and permeability values and yielded new geologic data that
enhances previously held views regarding potential reservoir
attributes.
- Early stage production testing operations are underway at the
Mirzaani #1 well and are about to commence at the Mirzaani #5 well.
-- Completed drilling four new oil and gas development wells at the Mtsare
Khevi Field, all of which encountered expected oil and gas reservoirs.
- Completion of gas pipeline and associated facilities has been
delayed, such that first gas sales are expected to occur late in the
first quarter of 2010.
- Multi-faceted production maintenance program has been implemented in
existing oil wells.
-- A new Competent Persons Report is being prepared for Mirzaani and
Mtsare Khevi Fields.
Mirzaani Field
Frontera's recently completed drilling campaign at the Mirzaani
Field consisted of two new wells designed to be drilled in
undeveloped or underdeveloped portions of the field. The wells
targeted primary reservoir Zones 12 and 13 and deeper, secondary
reservoir Zones 14-18 in the Lower Pliocene age Shiraki
formation.
Mirzaani #1 Well
In the southeastern portion of the field, the Mirzaani #1 well
finished drilling operations in late November of last year. The
well was drilled to a total depth of approximately 1,500 meters,
and log analysis indicated that the well penetrated approximately
146 meters of total net sandstones with average porosity values of
approximately 20-25% and a rock density indicating mainly a quartz
composition. These Lower Pliocene age Shiraki formation sandstones
are distributed among seven known field reservoir horizons, Zones
12-18, that are situated at depths between approximately 1,200
meters and 1,490 meters. Multiple oil and gas shows were
encountered while drilling.
In addition to log analysis, an important 17 meter core sample
was taken from Zone 12 in order to obtain detailed reservoir data
that is essential for optimizing the design of well completions and
quantifying reserve potential. Laboratory analysis of this first
core to be taken in the field since the 1970s was conducted during
the month of December. The core encountered approximately eight
meters of oil saturated reservoir with average porosity values of
19%. Permeabilities were in the range of 0.2 to 20 mD, with an
average value of 5 mD. The core recovery is characterized by splay
sand bars deposited in the context of a complex fluvial sedimentary
environment, indicating a more attractive depositional environment
than previously hypothesized.
The primary reservoir targets for ongoing development at the
Mirzaani Field and therefore, at the Mirzaani #1 well, are Zones 12
and 13. The deeper horizons are considered a bonus if they are
present. Accordingly, because multiple sands were encountered in
Zones 14-18 within the bonus portion of this well, a testing
program was designed to determine the prospectivity of these deeper
horizons prior to testing the well's primary targets.
In early December 2009, testing commenced on a seven-meter
interval associated with Zone 17. High reservoir formation
pressures provided an initial production rate of approximately 160
barrels of fluid per day. After testing the formation through
mid-January, it was determined that this portion of Zone 17 was
situated low on the Mirzaani Field structure at the oil/water
contact of the southeastern portion of the field, as the produced
fluids consisted of approximately 98% water and 2% oil. However,
the testing results discovered significantly higher reservoir
permeability than expected in this interval. Future development
drilling will seek to encounter Zone 17 higher on the structure
above the oil/water contact.
After testing operations were completed at Zone 17, perforations
were extended to commingle a ten-meter interval associated with
Zone 15. This resulted in increasing the oil content of the
produced fluid to 15-30% of the commingled test. A bridge plug was
set in late January to move up the hole and permit isolated testing
of a six-meter section of Zone 15 during the first week of
February.
Plans call for completion of Zone 15 testing, after which Zones
12 and 13 will also be tested. Results will then establish the
basis for designing commingled frac completions for these horizons.
Based on analysis to date, Frontera believes that planned frac
completions of the Mirzaani #1 well's primary reservoir targets
should yield a combined rate of as much as 120-160 barrels of oil
per day.
Mirzaani #5 Well
In late December 2009, the Mirzaani #5 well commenced drilling
in the undeveloped northwestern portion of the field known as
Mirzaani Field Northwest. It is the third well in the recently
completed Mirzaani drilling campaign that was initiated by the
Mirzaani #2 well's discovery of the northwest extension of the
field in early 2009. The Mirzaani #5 well is located approximately
600 meters to the northwest of the Mirzaani #2 discovery well and
completed drilling operations during the third week of January. It
will commence production testing during the first week of
February.
Drilled as an appraisal well to last year's discovery, results
to date from the Mirzaani #5 well have served to successfully
confirm and enhance the prospectivity associated with Mirzaani
Field Northwest. The well was drilled to a total depth of 1,125
meters, and log analysis indicates that the well captured
approximately 120 meters of total net sandstones with a range of
porosity values between 15-22%. The well encountered oil and gas
bearing sands in the primary Zone 13 reservoir target at depths
between 835 meters and 910 meters. In addition, multiple oil and
gas bearing sands were also encountered in Zones 14-17 at depths
between 910 meters and 1,120 meters. In the northwestern field
extension, these Lower Pliocene age Shiraki formation sandstones
are situated at depths between approximately 700 meters and 1,200
meters. As a result, as with the Mirzaani #1 well, a testing
program has been designed to determine the prospectivity of these
deeper horizons prior to testing the well's primary targets.
Testing will begin with perforation of an 18-meter interval
associated with Zone 17.
In addition to log analysis, a 12.5 meter core sample was taken
from Zone 13 in order to obtain detailed reservoir data for this
formation. Together with the Zone 12 core taken from the Mirzaani
#1 well, this core provides important new data for the field's
primary reservoir targets. Laboratory analysis of the core is
currently underway. However, preliminary analysis shows that the
core encountered seven meters of good quality, oil-saturated
reservoir. The core also revealed a fluvial bar braided stream
depositional environment. A meandering channel sequence can be
recognized with the presence of several point bars. These
observations provide the basis for a more attractive depositional
environment than previously hypothesized.
Plans call for completion of Zone 17 testing, after which Zones
16 and 13 will also be tested. Results will then establish the
basis for designing commingled frac completions for these horizons.
Based on analysis of results obtained to date, Frontera believes
that planned frac completions should yield a combined rate of as
much as 200-250 barrels of oil per day.
A further announcement will be made upon completion of the
testing program at both Mirzaani #1 and #5.
Discovered in 1932, the Mirzaani Field has historically produced
approximately 7 million barrels of oil, but contains many undrilled
locations across the structure. The Mirzaani #1, #2 and #5 wells
are the newest wells to be drilled in the field since 1972. In
2006, Frontera acquired approximately 100 kilometers of new seismic
data over the field area as part of an effort to re-map and
identify new potential associated with the field. Based on analysis
of data to date, Frontera estimates Mirzaani Field to contain over
50 million barrels of prospective resources within the Shallow
Fields Production Unit. A new independent reserve report is
currently being assembled for the Mirzaani Field.
Mtsare Khevi Field
At the Mtsare Khevi Field, the #29 well was commenced in late
December 2009 and completed in January. It encountered the expected
oil and gas reservoirs and is currently being tested to assess both
oil and gas potential. This well was the fourth in a recent
four-well campaign designed to add to the existing inventory of oil
and gas wells in the field. Eighteen wells have now been drilled as
part of the Mtsare Khevi development drilling campaign that began
in August 2008. The development is designed to produce oil from
Zones I and II throughout the field and gas from Zone III, all from
reservoirs associated with the Akchagil formation, situated between
200 meters and 350 meters in depth.
Oil production operations at the field are focused on
maintaining and increasing current daily production rates. During
the months of December and January, in order to mitigate natural
well decline rates and enhance the low recovery characteristics of
the Akchagil's oil bearing reservoirs, Frontera continued its
ongoing pump optimization programs and successfully frac-stimulated
two wells.
Efforts to commence gas production and associated sales from the
field are also advancing. Progress continues to be made towards the
design and completion of new pipeline infrastructure for the
transportation of as much as 100,000 cubic meters of gas per day
(590 boepd) to an existing gas pipeline network within twelve
kilometers of the field. Completion of the pipeline and associated
facilities has been delayed due to unanticipated engineering design
modifications required by the regional gas distributor. First gas
sales are now expected by the end of the first quarter.
The Mtsare Khevi Field is located in the western portion of
Block 12 with multiple objective reservoirs situated at depths
between 200 meters and 1,100 meters. The field was discovered and
partially delineated with multiple exploration wells from 1989 to
1994, but never developed and produced. After completing a field
study in 2007 that indicated this field potentially contains as
much as 5 million barrels of recoverable oil reserves, Frontera
designed a plan to bring the shallow reservoirs from the Akchagil
formation into production. Additional reserve potential exists in
deeper Miocene age sandstone horizons that have previously tested
and flowed oil. This potential is currently under study and will
become a focus of future operations to fully develop the Mtsare
Khevi Field. Rigs and equipment sourced from within Georgia are
being utilized to undertake the currently ongoing development
program. A new independent reserve report is currently being
assembled for the Mtsare Khevi Field.
Steve C. Nicandros, Chairman and Chief Executive Officer,
commented:
"The successful results obtained so far from the Mirzaani #1 and
#5 wells have moved us closer to realizing commencement of a
significant increase in oil production from the Mirzaani Field. The
quantity and quality of sands discovered in each of these wells and
the evolution of our geologic model for the field have exceeded our
original expectations, and we believe they confirm the presence of
significant undeveloped reserves from this existing field.
At the Mtsare Khevi Field, despite delays associated with the
installation of infrastructure related to gas sales, we look
forward to initiating gas sales by the end of the first quarter
such that the field will generate meaningful near term cash flow
for our company from both oil and gas production.
Overall, the results achieved from our recent drilling campaign
have served to reinforce our belief that the successful completion
of these work programs will increase daily production from current
levels of approximately 200 barrels per day to as much as
approximately 1,000 barrels of oil equivalent per day from the
Shallow Fields Production Unit."
Frontera's Shallow Fields Production Unit is located in the
central portion of Block 12 and represents what the company
believes to be an extensive trend of low-cost, low-risk oil and gas
reserves. Containing four discovered yet undeveloped or
underdeveloped fields that have additional exploration potential,
objectives are considered to be traditional, well-known reservoirs
of Pliocene and Miocene age that are situated at depths from 10
meters to 1,500 meters.
Notes to editors:
1. 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 around the world. Frontera has operated
in Georgia since 1997 where it holds a 100 percent working interest
in a production sharing agreement with the government of Georgia.
This gives Frontera the exclusive right to explore for, develop and
produce oil and gas from a 5,060 square kilometer area in eastern
Georgia known as Block 12. Frontera Resources Corporation shares
are traded on the London Stock Exchange, AIM Market - Symbol: FRR
and via the Over-the-Counter Market, U.S.A. - OTCQX Symbol: FRTE.
For more information, please visit www.fronteraresources.com. For
more information regarding Frontera's work at the Shallow Fields
Production Unit, please visit:
www.fronteraresources.com/Operations.php?link_id=43.
2. Information on Reserve Estimates: The prospective resources
estimates contained in this announcement were determined in
accordance with the petroleum resource definitions adopted by the
Society of Petroleum Engineers (SPE), World Petroleum Council (WPC)
and the American Association of Petroleum Geologists (AAPG) in
2000. Prospective resources are those quantities of petroleum which
are estimated, on a given date, to be potentially recoverable from
undiscovered accumulations. 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 the statements in this
announcement and the prospective resources estimates associated
with the Mirzaani Field and Mtsare Khevi Field. These estimates are
being reviewed by Netherland, Sewell & Associates and will be
released as soon as practicable.
3. This release may contain certain forward-looking statements,
including, without limitation, expectations, beliefs, plans and
objectives regarding the potential drilling schedule, well results
and other matters discussed in this release, as well as reserves,
future drilling, development and production. Among the important
factors that could cause actual results to differ materially from
those indicated by such forward-looking statements are: future
exploration and development activities; availability and
performance of needed equipment and personnel; the company's
ability to raise capital to fund the planned exploration and
development programs; seismic data; evaluation of logs, cores and
other data from wells drilled; 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/Investors.php?link_id=23.
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.
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