PetroFrontier Commences Drilling HZ Well in Australia

PetroFrontier announced the spudding of its second horizontal well, MacIntyre-2, in the Southern Georgina Basin, Australia on Friday October 28, 2011, where it is currently cementing the surface conductor. MacIntyre-2 is the first follow up well to PetroFrontier's recently drilled Baldwin-2Hst1 well. PetroFrontier has also been re-evaluating its current operational program due to the upcoming wet season in Northern Australia.

Drilling Program - MacIntyre-2

MacIntyre-2 is located in the northeastern corner of EP 127 in the Southern Georgina Basin approximately 60 km northwest of PetroFrontier's first location, Baldwin-2Hst1. After drilling this well, PetroFrontier will have earned a 75% working interest in EP 127 and is the operator.

As with Baldwin-2Hst1, the primary target in MacIntyre-2 is the unconventional Basal Arthur Creek "Hot Shale", with a conventional secondary target being the Dolomitic Shoal above the Basal Arthur Creek "Hot Shale".

PetroFrontier has re-designed and re-engineered the MacIntyre-2 well based on lessons learned from drilling the Baldwin-2Hst1 well. MacIntyre-2 will be drilled as a high angle (75 degrees) pilot hole to an estimated vertical depth of 900 meters, through the Arthur Creek "Hot Shale" unit and into the Thorntonian carbonate formation. The well will then be logged and drill stem tested ("DST") if well conditions permit.

The well will then be plugged back a short distance and then deviated horizontally into the Basal Arthur Creek "Hot Shale" for approximately 1,000 meters. Drilling is expected to take approximately four weeks. Once drilled to its total horizontal distance, MacIntyre-2 will be evaluated with an extended leak off test if well conditions permit. This test is expected to provide valuable reservoir data that will be used to calculate the most efficient frac program. This new well design is expected to result in greater drilling efficiencies and cost savings.

Modified Georgina Basin Exploration Program

In early 2011, management of PetroFrontier implemented an exploration program to drill horizontal wells at Baldwin-2 then MacIntyre-2 in the Basal Arthur Creek "Hot Shale", with the installation of a Packers Plus multi-stage frac completion string in each. These completions would be similar to those being used in many North American formations, such as the Bakken formation in Saskatchewan, North Dakota and Montana. With very high mobilization costs PetroFrontier's plan has been to mobilize the fracking equipment when the drilling of MacIntyre-2 was nearing completion. MacIntyre-2 would then be fracked, followed by Baldwin-2Hst1. Thereafter, all of the fracking and drilling equipment would be released before the onset of the wet season, as this is an area where the rains can effectively shut down operations for an extended time period.

Having experienced significant delays that occurred earlier this year due to the severe wet season experienced in Northern Australia, PetroFrontier's management has had to consider changes to this plan as the onset of this year's rains may occur within the next few weeks. Indeed, the Australian Government Bureau of Meteorology has forecast an increased probability of heavier than normal rains again this season.

As a result, PetroFrontier is evaluating the potential mobilization of a service rig to the Baldwin-2Hst1 well (about 3,000 km) to arrive approximately one week before drilling operations at the MacIntyre-2 well are completed. Management is also in discussions with the two available fracking companies in Australia to secure equipment for back-to-back fracs of the two wells for the corresponding time period.

However, readers are cautioned that a number of factors will come into play before this revised plan can be successfully implemented, including the availability and mobility of fracking equipment and the actual timing of the onset of the wet season. If this revised plan cannot be accomplished, it is probable that fracking and completion operations of the two wells may be delayed for as long as four months due to the wet season, potentially causing a delay of such operations until March of 2012.

PetroFrontier's capital program remains focused on exploratory drilling opportunities around existing wellbores and it will continue to invest in its extensive land base, with plans to acquire an additional 378 kilometers of 2D seismic in EP 103. Additional seismic acquisition is also planned in EP 104 and EP 128 (subject to Northern Territory government clearances) after the wet season in March 2012.