Frontera Expands Potential at Georgia Discovery by 5 Times

Frontera announced an update of operations related to the recent discovery of extensive gas resources in the undeveloped northwestern portion of the Mtsare Khevi Field within its Shallow Fields Production Unit, Block 12.

Testing operations associated with approximately 33 meters of gas bearing net pay have continued at the Mtsare Khevi #32 well that was drilled to a depth of approximately 370 meters in the undeveloped northwestern portion of the field. Ongoing testing of Zone I, a 14 meter section of the lowest portion of the identified pay zones, has indicated that gas deliverability from this horizon is potentially larger than recently assessed. Based on results obtained from analysis of pressure drawdown/buildup testing of the well that was conducted subsequently to the Company's announcement of October 11, 2011, reservoir modeling simulations of this new down-hole pressure data indicate that Zone I can potentially flow gas at a rate of approximately 57,000 cubic meters per day (approximately 2 million cubic feet per day), more than twice the original estimate that was based on observed flowing pressures.

Operations are now focused on testing a 9.5 meter section associated with Zone II where gas has been flow tested at a rate of approximately 2,200 cubic meters of gas per day (79 mcf per day) on a 6 mm choke and 4,900 cubic meters (173 mcf per day) on a 9 mm choke. Based on these tests, it is estimated that the absolute open flow (AOF) rate for Zone II is approximately 15,000 cubic meters per day (530 mcf/d). Over the next week, testing operations will continue on Zone II and subsequently progress up hole to Zone III in order to determine total gas deliverability from the well.

As previously announced, Frontera believes that the successful results of the #32 well may have expanded the Mtsare Khevi field's gas potential by as much as 5 times the previously identified recoverable gas estimates. Situated less than 10 km from the national gas distribution pipeline grid, the new discovery will serve to accelerate the addition of new infrastructure to commence gas sales. Construction engineering plans are currently under review in order to determine the most efficient timeline for installation.

Steve C. Nicandros, Chairman and Chief Executive Officer, commented, "Ongoing testing operations at the #32 well continue to confirm the importance of our most recent achievement at the Mtsare Khevi field within our greater portfolio of assets. Based on analysis of the results observed to date, we are excited by what this well continues to reveal about the ultimate gas potential of the field and the overall surrounding area."