PetroFrontier has spudded its first well, "Baldwin-2", in the Southern Georgina Basin in the Northern Territory, Australia. PetroFrontier began drilling Baldwin-2 on the morning of Wednesday August 3, 2011, Australian Central Standard Time.
Baldwin-2 is located in the southwestern part of EP 103 in the Southern Georgina Basin. PetroFrontier has a 100% working interest in EP 103 and is the operator. The primary target in Baldwin-2 is the unconventional Basal Arthur Creek "hot" shale, with conventional secondary targets being the Hagen Member and Dolomitic Shoal above the Basal Arthur Creek "hot" shale and the Thorntonia located just below. Management believes that the Arthur Creek "hot" shale is potentially analogous to the Bakken play found in Saskatchewan, Canada and North Dakota, USA. PetroFrontier has re-evaluated existing wellbores on its lands and believes the unconventional Basal Arthur Creek "hot" shale is prospective for hydrocarbons over most of its land holdings. PetroFrontier's capital program for 2011 continues to focus on exploratory drilling opportunities around these existing wellbores.
Baldwin-2 will be air drilled vertically to an estimated depth of 900 meters to test the Thorntonia formation for prospective hydrocarbon shows. The well will then be extensively logged, plugged back and deviated horizontally for approximately 1,000 meters into the Basal Arthur Creek shale. This is expected to take approximately three weeks, at which time PetroFrontier will suspend the well temporarily and move to drill the MacIntyre-2 well, located in the northeastern corner of EP 127. Once it is drilled, MacIntyre-2 will be frac'd and completed using multi-stage open hole techniques. The rig and frac crew will subsequently return to Baldwin-2 to conduct a similar completion program on that well.
According to a report (the "Ryder Scott Resource Report") prepared by Ryder Scott Company Canada (independent oil and natural gas reservoir engineers), dated November 1, 2010, the unrisked, undiscovered, prospective (recoverable) resource, based on a best (P50) scenario, for the unconventional Basal Arthur Creek shale zone in EP 103 and EP 127 may contain approximately 13.2 billion barrels and 2.7 billion barrels (gross) of oil respectively.
The Ryder Scott Resource Report on the resource potential of the Southern Georgina Basin describes the prospective (recoverable) portion of "Undiscovered Resources", as defined by the Canadian Oil and Gas Evaluation Handbook and does not represent an estimate of reserves. The Ryder Scott Resource Report is compliant with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are presented as unrisked prospective oil resources. The term unrisked means that no geological risk (play risk) has been incorporated in the hydrocarbon volume estimates.
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