Steve C. Nicandros, Chairman and Chief Executive Officer, commented, “We have been delighted with the results from the continued efficient, low-cost development progress that has been made to date in our Mtsare Khevi Field operations. As this field continues to come to life, results are supporting our belief in the substantial value contained within this asset.”

Frontera Resources provides an update of its ongoing development drilling program at the Mtsare Khevi Field within its Shallow Fields Production Unit, Block 12, in the country of Georgia.

Progress has continued in the development of the Mtsare Khevi Field since drilling operations commenced in August. Since the last operations update in November, three wells have been drilled in addition to the ten wells previously announced, each targeting the Upper Pliocene age Akchagil formation as part of a rolling development program. All 13 wells drilled to date have reached total measured depths of approximately 355 meters (1,170 feet) and each has encountered multiple hydrocarbon bearing zones situated between 200 meters and 315 meters in depth.

Well log analysis continues to indicate approximately 20-30 meters of gross pay in each well. Since the start of the development drilling campaign, ten wells have been tested as oil wells with initial rates from single horizons as high as 40 barrels per day of 21 degree to 28 degree API oil. In addition, two wells located high on the field structure have tested gas with initial rates of as much as 1.2 million cubic feet of gas per day.

The Akchagil formation of the Mtsare Khevi Field has three main reservoirs for development: Horizons I, II and III. The wells drilled to date are first being brought into production from Horizon I, the deepest of these reservoirs, with each well undergoing planned production and optimization tests over a 30-60 day period prior to being placed on production. Daily production from the field is currently approximately 130 barrels per day. Production is expected to increase as a result of ongoing efforts that include optimization of pump performance and the addition of perforations to currently producing horizons.

In addition, work plans are in progress to co-mingle production from the shallower Horizons II and III, which is expected to significantly enhance production. The company is also examining the feasibility of adding gas development to the commercialization agenda for the Mtsare Khevi Field, given the discovery of gas. Rigs and equipment sourced from within Georgia are being utilized to undertake the ongoing development program.

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 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.

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