Frontera in Discussions Regarding Possible Block 12 Farm out

Source: 9/3/2018, Location: Asia

AIM-listed Frontera Resources has provided the following update regarding its operations in Georgia. The Company has announced that it has entered into Non-Disclosure and Data Exchange Agreements with two industry majors and is currently progressing with technical work and commercial discussions regarding possible transactions involving a farmout or joint operating arrangement within its Block 12 holdings in Georgia.

Whilst these discussions are at an early stage, they have taken a significant step forward with both interested parties having attended extended site surveys and management meetings. As a result of these discussions and to assist with data analysis, the Company has been conducting extended well tests to better establish production capabilities. The Company will keep the market updated as these discussions unfold.

As previously announced on 8 May 2018 and 21 May 2018, the Company started Extended Well Testing ('EWT') of comingled production from Zones 14 and 15 in Taribani wells T-45 and Dino-2, situated within onshore Block 12 in Georgia. The intention was to combine the two zones and test the combined flow of Zones 14 and 15 for a period of approximately 60 days, then stimulate Zone 9 and produce from all zones together. In order to better establish the long term comingled production capabilities from Zones 14 and 15, having previously announced a successful initial flow test, the decision has been made to continue well testing the two zones for a further period before perforating and stimulating Zone 9. A successful long term production test for Zone 9 has already been established from our work in T-45 and Dino-2 prior to sidetracking these wells for Zones 14 and 15 completion.

As previously announced on 19 July 2018, the Company commenced the EWT of Zone 19 at T-39 well in Taribani.

The intention was that Zone 19 of the Eldari B reservoir be perforated, tested and, in order to further enhance the well deliverability, produced together with Zones 9, 14 and 15 of the Eldari A reservoir, once flowing pressure of Eldari A and B reservoir targets are equalised. The Company successfully continues testing of Zone 19 and will update market in due course.

At this stage the Company has continued to see consistent oil and gas delivery from the relevant wells but is not yet in a position to report volumes until such time as the longer term tests are completed as described above.

As previously announced on 25 May 2018, the Company has successfully secured funding for the drilling (by way of well sidetracking) of the Niko-1 well in Taribani to a target Zones 9, 14, 15 with intention of producing these zones together. Negotiations are in progress to amend the Niko-1 well funding contract such that it allows the Niko-1 well to be sidetracked/drilled and completed in Zone 19 and subsequently tested and produced in a similar manner as Taribani well T-39. The Company will provide an update in due course regarding final outcome.

Zaza Mamulaishvili, President and Chief Executive Officer, commented: 'We are very pleased to see that successfully completed recent drilling campaign and initial flow rates from all currently drilled three wells have demonstrated commercial oil deliverability from Zones 14 and 15 of the Eldari A and Zone 19 of the Eldari B formations.

'Due to the current technical and commercial discussions with industry majors, which may lead to a farmout or joint operating arrangement in specific areas within Block 12 with respect to both oil and natural gas, the Company has changed the initial well testing program such that the current production test from Zones 14, 15 and 19 will continue for a longer period of time than what was anticipated before and additional tests could potentially be performed. We look forward to updating the market as we progress with our work.'

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