Frontera Resources provides update on the Ud-2 well in the Mtsare Khevi Gas Complex
Thursday, Jan 25, 2018
Frontera Resources Corporation (AIM: FRR), the European focused oil and gas exploration and production company, is pleased to provide an update regarding interim results on testing of the Ud-2 well, situated inside the 950km2   Mtsare Khevi Gas Complex area, located in onshore Block 12, Georgia.

Sustained deliverability of natural gas from the Gareji formation has been confirmed during Stage 2 of the current stimulation and testing program. The flowing interval, for Stage 2 testing, which is situated between 2519m - 2554m has indicated the presence of commercial gas within the Miocene-aged Gareji reservoir.

State Oil and Gas Service Company has performed analysis of the flowed natural gas. Chemical composition is shown below:

Methane - 94.58%

Ethane - 2.50%

Propane - 1.90%

Nitrogen - 0.43%

Others - 0.59%

Lower Calorific value - 9230 kcal/m3 (State standard: not less than 7600 kcal/m3)

Higher Calorific value - 9910 kcal/m3

The natural gas quality satisfies all requirements of the applicable GOST standard and corresponds to the applicable regulations of the State Standard 5542-87, which makes it acceptable for distribution through Georgia's natural gas grid.

As previously announced on 28 November 2017, residual formation debris ('skin damage') from historical drilling operations was encountered together with natural gas flow during Stage 1 flowback operations while testing Miocene aged Gareji reservoir interval situated between 2600m - 2620m.

Debris-free natural gas flow has now been successfully established following the modifications to the perforation, stimulation and flowback design for Stage 2 operations, while testing Miocene aged Gareji reservoir interval situated between 2519m - 2554m.  For reference, Stage 1 was completed with 15 metric tons of proppant whereas Stage 2 included a 20 metric tons of proppant stimulation.

Post Stage 2 stimulation analysis has determined that the contributing intervals to current natural gas production are less than 15% of the perforated and stimulated wellbore section situated between 2519m - 2554m.  When combined with reservoir and production analysis, it has been concluded that a larger and more advanced mechanical stimulation will greatly enhance natural gas production rates from the targeted interval.

The next phase of testing operations will now focus on establishing larger commercial gas production volumes from the Stage 2 testing interval.

While continuing testing of the second interval of the Miocene aged Gareji reservoir, situated between 2519m - 2554m, additional pressure pumping equipment is being mobilized to conduct a mechanical stimulation with 70 metric tons of proppant and improve well performance.  The planned stimulation effort will utilize technology and scale in order to increase reservoir contact, improve near wellbore conductivity, and enhance gas production from all 100% of the perforated and stimulated Stage 2 testing section.

Based on the Netherland, Sewell & Associates resource estimate, the Gareji and the Maykop reservoirs of the Mtsare-Khevi Gas Complex are estimated to contain 5.8 Trillion Cubic Feet of recoverable gas, whereas the Gareji reservoir of Taribani complex contains 3.2 Trillion Cubic Feet of recoverable gas.

Zaza Mamulaishvili, President and Chief Executive Officer, commented:

"I am absolutely delighted to report about an early and potentially very material success at the second of the three testing intervals at Ud-2 well.

"We eagerly await next phase of a scaled up mechanical stimulation and post stimulation flow rate of the second testing interval but I believe the early results of the testing already both prove a material sustained deliverability of the Ud-2 well and provide significant confirmation as to the Block 12 potential of the Gareji reservoir, development of which will be transformational for the Company and Georgia's energy industry.

"I look forward to the results of the extended Ud-2 well test and to updating shareholders in due course."

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