PetroFrontier updated its proposed drilling operations.
Proposed Operations on EP 103 and EP 104, Northern Territory, Australia
PetroFrontier and a co-owner each own a 50% working interest in EP 103 and EP 104 (comprising approximately 5.71 million gross acres), Northern Territory, Australia. PetroFrontier and the co-owner are also parties to a joint operating agreement ("JOA") governing their operations in EP 103 and EP 104, under which PetroFrontier is the operator.
Pursuant to the JOA, PetroFrontier has proposed a 20 well horizontal multi-stage fracturing drilling program (the "20 Well Program") designed to test the regionally distributed unconventional Basal Arthur Creek shale zone on EP 103. PetroFrontier has been advised that the co-owner has elected not to participate in the 20 Well Program. Therefore, PetroFrontier will take steps to carry out the 20 Well Program as an "exclusive operation" pursuant to the JOA. As a result, PetroFrontier will pay 100% of the costs of the 20 Well Program and will be entitled to 100% of the production from any resulting discovery, unless the non-participating co-owner wishes to reinstate its rights therein by paying its share of all liabilities and expenses incurred in the exclusive operations plus a premium of 400% on the co-owner's 50% share of the cost of drilling and testing.
Pursuant to the JOA, PetroFrontier also intends to propose a vertical well drilling program on EP 103 and EP 104 to evaluate conventional targets both above and below the Basal Arthur Creek shale zone as well as the horizontal viability of the Basal Arthur Creek shale zone itself. Non-participation by the co-owner in the 20 Well Program does not preclude it from participating in this or other exploration programs proposed for EP 103 and EP 104 by PetroFrontier as operator. No wells have yet been approved for EP 104.
First Two Wells to be Drilled in Northern Territory, Australia
The first well to be drilled by PetroFrontier will be the first horizontal well ("Baldwin-2") on EP 103 to be drilled as a part of the 20 Well Program. Baldwin-2 will be a twin to the existing "Baldwin-1" well. Baldwin-1 will be the pilot hole for the horizontal leg of Baldwin-2 into the Basal Arthur Creek shale zone. Baldwin-2 also includes conventional targets above the Basal Arthur Creek shale zone.
The second well expected to be drilled by PetroFrontier (but not part of the 20 Well Program) will be a horizontal well ("MacIntyre-2") in EP 127, Northern Territory, Australia where PetroFrontier holds a 75% working interest and is also the operator. MacIntyre-2 will be a twin to the existing "MacIntyre-1" well. MacIntyre-1 will be the pilot hole for the horizontal leg of MacIntyre-2 into the Basal Arthur Creek shale zone. MacIntyre-2 also includes conventional targets above the Basal Arthur Creek shale zone.
PetroFrontier's co-owner in EP 103 and EP 104 has no interest in EP 127 or in the adjacent permit, EP 128 (where PetroFrontier also has 75% operated working interest). EP 127 and EP 128 comprise approximately 7.85 million gross acres.
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