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Frontera enthused over Block 12 unit's prospects

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    Date: Wednesday 07 May 2008

    LONDON (ShareCast) - Shares in Frontera Resources, the oil and gas company that operates in the Republic of Georgia, edged higher Wednesday after an upbeat update on the operations of its Shallow Fields production unit.

    The Shallow Fields production unit operates in the central portion of Frontera’s Block 12 project in Georgia, working on four fields: Mirzaani, Mtsare Khevi, Nazarlebi Field and Patara Shiraki Field.

    Frontera said existing production operations at Mirzaani have continued to yield production of around 80 barrels per day of 28 degree API oil.

    In the past two months, five wells within the Mirzaani field have been prepared for re-entry radial drilling operations in a programme that is expected to cost around $600,000.

    Frontera estimates the remaining recoverable reserves of all categories in the Mirzaani field at 1.5m barrels, taking into account developed reserves. The company’s independent reserve engineers had previously estimated the reserves at 0.443m barrels.

    At Mtsare Khevi, a $100,000 three-well workover programme has started. Pay-out from this investment is expected to be achieved in fewer than 50 days based on current production levels at these wells.

    The company plans to re-enter five additional wells and then commence a 60-well development drilling programme. Each well is expected to cost about $100,000 to drill and complete, with the new wells expected to flow at similar rates to those seen in the recent workovers.

    At the Nazarlebi and Patara Shiraki fields, results from test drills have established the basis for a large scale, low-cost development programme in order to increase near term production and cash flow. The company believes the fields offer hundreds of potentially profitable locations.

    Referring to the operations of the Shallow Fields production unit, Frontera’s chairman and chief executive officer, Steve Nicandros, said: “Based on the results thus far and the per-barrel valuations being attributed to reserves for other public companies, we expect the unit to deliver significant value to Frontera and its shareholders for many years to come.'

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