Frontera announce farmout of Taribani Field and Taribani Field Complex in Georgia
Frontera Resources Corporation (London Stock Exchange, AIM Market – Symbol: FRR), an independent oil and gas exploration and production company, is pleased to announce that its wholly-owned subsidiary, Frontera Resources Georgia Corporation, has signed a farmout agreement with Varang Exploration Limited (“Varang Exploration”), a wholly owned subsidiary of a privately held independent natural resources investment group, for the farmout of up to a 50% working interest in Frontera’s Taribani Field and Taribani Field Complex, situated within Block 12 in Georgia.
In consideration for the transaction, Frontera will receive a carry on its future expenditure on the Taribani Field and the greater Taribani Field Complex of up to approximately US$36 million, for the costs associated with a seven well drilling program over three phases. Frontera will continue to act as managing Operator for all planned operations. The Company will retain 100% working interest throughout the balance of its Block 12 holdings.
During Phase I, Varang Exploration will hold a 40% working interest in return for funding 100% of the costs associated with the completion of three wells (estimated to be approximately US$17 million) over a period of 18 months. These wells are designed to continue exploitation of the Taribani Field’s main reservoir objectives, as well as other associated horizons situated within a potentially prospective 1,000 meters geologic column situated between 2,000 meters and 3,000 meters in depth.
Specifically, operations will include the re-entry, sidetrack and frac-completion of the Niko #1 well. When the Niko #1 well was originally drilled and tested, it flowed at a peak rate of 960 bopd and produced 10,400 barrels during its 40 day production test. However, production was suspended as a result of a poor completion and failed packer. Today, reservoir performance modeling by Frontera from this planned operation calculates a “most-likely” case of approximately 1,000 bopd. In addition, Phase I operations will include side track of the T-#31 and T-#16 wells in order to apply frac-completions to Zones 14 and 15. Based on the Company’s reservoir performance modeling, it is anticipated that these two wells can achieve daily production rates of 300 bopd per well.
During Phase II, at Varang Exploration’s option, once Phase I is completed, over a period of six months, it will hold an additional 10% working interest in return for funding 100% of the costs associated with the drilling of a new well (estimated to be approximately US$7 million). The new well, T-#46, will be drilled at a mutually agreed location at the Taribani Field with a frac-completion in the same target zones as T-#31 and T-#16, with similar anticipated results.
During Phase III, at Varang Exploration’s option, once Phases I & II are completed, over a period of 18 months, it will hold a 50% interest in the greater Taribani Field Complex in return for funding 100% of the costs associated with three wells (estimated to be approximately US$12 million). Specifically, operations will include the twinning and frac-completion of existing well I-#13a at the Iori Field, penetrating Zones 9-25 to a TD of 1,800 meters; the twinning and frac-completion of existing well B-#16a at the Baida Field, penetrating Zones 14-25 to a TD of 1,100 meters, and; the twinning and frac-completion of existing well K-#7a at the Kila Kupra Field, penetrating Zones 9-19 to a TD of 2,100 meters.
This agreement is subject to the approval of the Georgian government and includes standard representations and warranties given by both parties.
The Taribani Field Complex is an area that encompasses approximately 1,400 square kilometers and includes the discovered yet undeveloped Taribani, Kila Kupra, Baida and Iori fields within Block 12. Internal preliminary analysis suggests that there could be as much as 18 billion barrels of oil in place throughout this complex.
The Taribani Field proper is a large oil accumulation with 788 million barrels original oil in place (“OOIP”) independently assessed by Netherland, Sewell & Associates (“NSA”) in 2005 for Zones 9, 14, 15 and 19. NSA assigns a 15% recovery factor giving “Technical Possible Reserves” of 118 million barrels for the field. An additional 36 million barrels are assessed as un-risked Prospective Resources in five deeper zones in the field.
Source: Frontera Resources Corporation<