Frontera has announced results for the quarterly period ended September 30, 2008 and provided a review and update of its operations in Block 12, Georgia.
Shallow Fields Production Unit
Taribani Field Unit
Basin Edge Play Unit
Steve C. Nicandros, Chairman and Chief Executive Officer, commented, "Despite unanticipated challenges presented by Russia's invasion of Georgia in August, Frontera's operations since mid-year have marked a continued period of progress and growth.
"Development drilling operations within the Shallow Fields Production Unit have successfully provided the basis for an increasing oil production profile. This work has also defined opportunity for developments that are generally larger than originally anticipated and has revealed the new possibility to add gas reservoir development to our commercialization agenda. As a result, we are optimistic that this business unit will continue to add important near-term value to our company.
"At the Taribani Field Unit, analysis of production and reservoir performance data over the past several months has permitted us to reach important new milestones in evolving the technical efficiency and resulting commercial strength of our ongoing development program. Based on investments to date related to frac-stimulation of Zone 9 reservoirs, we now understand that we can improve the efficiency of future fracs as well as add additional reservoirs to individual frac-stimulation well completions.
"These advancements now provide us with confidence in our ability to frac and produce Zones 9, 14 and 15 from a single wellbore in future development wells, thereby allowing us to more cost effectively accelerate development of this large field. While recent geopolitical events in Georgia contributed to a delay in commencing planned drilling operations at the Taribani South #1 well in September, this provided an opportunity to incorporate ongoing technical analysis into current development plans such that we have altered our planned drilling schedule in favor of implementing a more efficient program.
"At the Basin Edge Play Unit, our ongoing technical analysis of results from recent drilling operations and associated depth migration of extensive geophysical data continues to enhance our view of the giant reserve potential that this business unit contains. However, economic conditions presented a tight and expensive service sector climate throughout the third quarter of this year, providing a challenging atmosphere for the procurement of equipment necessary to complete our exploration drilling plans at the Lloyd #1 well. As market conditions improve, our desire is to return to drilling this important prospect during the second quarter of 2009.
"Our rigorous approach to securing liquidity has ensured a strong working capital position as we continue our work programs. Nevertheless, we recognize that recent turbulence in the international financial markets and the dramatic decline in oil prices may present challenges to execution of our future funding strategy, in particular through project financing and internally generated cash flow. While we continue to pursue available sources of capital for continued growth, we are cautious in the management of our discretionary work programs in consideration of the possibility that financial markets may remain sluggish and that lower oil prices may also persist for the near term.
"Overall, amidst the current international economic environment, we remain encouraged with respect to the results we have seen from operations in each of our business units. Accordingly, as we move forward to the end of this year and into 2009, we will continue to responsibly manage our growth with a focus on increasing near-term production from development drilling while ensuring that associated costs are in line with current market conditions."
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