Frontera announced commencement of new drilling operations at the Mtsare Khevi Field within its Shallow Fields Production Unit, Block 12, in the country of Georgia.
Site preparation and mobilization of drilling equipment were completed in late August and drilling is currently underway at the Mtsare Khevi #31 development well location. The #31 well is the first of a planned twenty well program over the next twenty four months designed to exploit multiple Upper Pliocene sandstone reservoirs situated at a depth of approximately 300 meters. In addition, efforts are underway to implement a pump optimization program designed to enhance production from existing oil wells within the field. Planning is also progressing related to a previously disclosed infrastructure project designed to initiate gas sales from currently shut-in gas wells within the field.
The Mtsare Khevi Field, which Frontera operates with 100% interest, is located in the western portion of the Shallow Fields Production Unit and currently delivers approximately 90 barrels of oil per day from its shallow reservoirs. Twenty new well locations have been identified for ongoing low-cost drilling, targeting both oil and gas reservoirs and providing for reservoir pressure support through three proposed water injection wells.
The independent engineering firm of Netherland, Sewell & Associates "NSA" places a "Best Estimate" for gross original oil-in-place for the Mtsare Khevi Field of 14.9 million barrels, with a "low"-to-"high" range of 11.3-19.7 million barrels; and a "Best Estimate" for associated recoverable gross contingent and unrisked prospective oil resources of 2.1 million barrels, with a "low"-to-"high" range of 1.4-3.2 million barrels. This assessment is generally consistent with Frontera's internal estimates.
For gas, NSA places a "Best Estimate" for gross original gas-in-place for the Mtsare Khevi Field of 2.6 billion cubic feet, with a "low"-to-"high" range of 2.1-3.1 billion cubic feet; and a "Best Estimate" for associated gross contingent and unrisked prospective resources of 1.5 billion cubic feet, with "low"-to-"high" range of 1.2-1.9 billion cubic feet. Frontera's internal estimates reflect additional resource potential along the northwest trend of the field's fault block, which NSA have not yet been asked to evaluate.
The Shallow Fields Production Unit is located in the central portion of Block 12 and represents what the Company believes to be an extensive trend of low-cost, low-risk oil and gas resources. The unit contains a number of known oil fields; Mirzaani, Mtsare Khevi, Nazarlebi and Patara Shiraki, representing undeveloped or under-developed fields that have additional associated exploitation potential. The unit also contains an inventory of "look-alike" exploration prospects, the Kakabeti, Lambalo, Mkralihevi, Mlashiskhevi-Oleskhevi and Tsitsmatiani prospects, each of which contains Soviet-era wells that had hydrocarbon shows while drilling, but were never placed on production or adequately appraised. Reservoir objectives are the well-known, regional clastic reservoirs of Pliocene and Miocene age, situated at depths from 10 meters to 1,500 meters.
Further to the successful completion of the recently announced equity financing package, the new drilling campaign at Mtsare Khevi Field is part of an overall plan whereby Frontera intends to increase production from its portfolio within Block 12 from 225b/d to c.5,000b/d over the next two years,
Steve C. Nicandros, Chairman and Chief Executive Officer, commented, "The commencement of drilling operations, which began in August at the Mtsare Khevi Field, represents the launch of an exciting and extensive drilling campaign at this undeveloped, low-cost asset. Like the other assets within the Shallow Fields Production Unit, this field represents near term value realization and reserve additions for our company."
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