Frontera has announced the continuation of its development drilling program at the Mtsare Khevi Field within its Shallow Fields Production Unit, Block 12, in the country of Georgia.
Following a brief pause in development drilling operations at the end of last year in order to observe and study results from the thirteen wells that had been drilled through December, the Mtsare Khevi #27 development well was recently drilled and completed and is currently being placed into production. This well is part of an ongoing program designed to continue to increase production and expand development drilling into the northwestern portion of the Mtsare Khevi Field's structure. Results from wells drilled in this portion of the field have yielded the best sustainable daily production rates from the historical drilling campaign to date, averaging 30-40 barrels per day per well from one of three objective horizons.
Since development drilling operations commenced in August 2008, drilling operations have targeted three reservoir objectives within the Upper Pliocene age Akchagil formation as part of a rolling development program. All 14 wells drilled to date have reached total measured depths of approximately 355 meters (1,170 feet) and each has encountered multiple hydrocarbon bearing zones situated between 200 and 315 meters in depth. Well log analysis continues to indicate approximately 20-30 meters of gross pay in each well.
Since the start of the development drilling campaign, nine wells have been categorized as oil wells with initial rates from single horizons as high as 40 barrels per day of 21 to 28 degree API oil. In addition, five wells have been categorized as gas wells with initial rates of as much as 1.2 million cubic feet of gas per day.
Daily production from the field is currently approximately 140 barrels per day of oil and is expected to continue to increase as a result of ongoing operations. With the continuation and increase of sustainable production, permanent processing facilities are currently being constructed within the field. Additionally, as five wells to date are considered to be reserved for future gas production, a study is underway to determine the feasibility of commercializing this resource, as the local gas sales grid is situated within five kilometers of the field.
The Mtsare Khevi Field is located in the western portion of Block 12 with multiple objective reservoirs situated at depths between 200 meters and 1,100 meters. The field was discovered and partially delineated with multiple exploration wells from 1989 to 1994, but never developed and produced. After completing a field study in 2007 that indicated this field potentially contains as much as 5 million barrels of recoverable oil reserves, Frontera designed a plan to bring the shallow reservoirs from the Akchagil formation into production.
Additional reserve potential exists in deeper Miocene age sandstone horizons that have previously tested and flowed oil. This potential is currently under study and will become a focus of future operations to fully develop the Mtsare Khevi Field. Rigs and equipment sourced from within Georgia are being utilized to undertake the currently ongoing development program.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented, "With the completion of our most recent development well and progression of field processing facility installation at the Mtsare Khevi Field, results continue to reveal a profitable development profile such that we are increasingly confident that this field will continue to provide important near term value creation for our company."
Frontera's 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 undeveloped oil and gas reserves. Containing four discovered yet undeveloped or underdeveloped fields that have additional exploration potential, objectives are considered to be traditional, well-known reservoirs of Pliocene and Miocene age that are situated at depths from 10 meters to 1,500 meters.
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