International Frontier Resources Corporation

International Frontier Resources Corporation

January 05, 2005 16:30 ET

International Frontier Resources Corporation: Shareholder Update


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: INTERNATIONAL FRONTIER RESOURCES CORP.

TSX VENTURE SYMBOL: IFR

JANUARY 5, 2005 - 16:30 ET

International Frontier Resources Corporation:
Shareholder Update

CALGARY, ALBERTA--(CCNMatthews - Jan. 5, 2005) - International Frontier
Resources Corporation (TSX VENTURE:IFR)

Dear Shareholders,

This letter to shareholders provides a summary of 2004 operations
together with an update on current operations and a forecast for 2005.

Northwest Territories

Construction is now finished on a 50 mile access road to the Summit
Creek B-44 and Sah Cho L-71 locations and an ice bridge across the
Mackenzie River. On January 1st the winter road to Norman Wells was
opened and the Akita drilling rig and Nabor's completion rig are enroute
to location. It will take ten days to transport and set up equipment to
allow for drilling and testing operations expected to commence on
January 10th, 2005.

Summit Creek B-44 Production Test

The testing program is designed to test up to six intervals in the
Devonian formation. The objective of the production test is to identify
hydrocarbon type, extended flow rates and reservoir pressures. The
program is scheduled to take 75 days, costs are estimated between $17
and $18 million, of which $3 million is attributed to road and lease
construction costs.

The testing program will determine the extent to which the Summit Creek
Wilma structure hosts commercial reserves. Results of the testing
program will be released by the operator upon completion and evaluation
of all data.

Sah Cho L-71 Exploratory Wildcat Well

The well is targeting a total depth of 12,139 feet (3,700 m) which is
2,083 feet deeper than the Summit Creek B-44 well. The drilling program
incorporates a new mud system, top drive drilling unit and larger
intermediate casing. The program was designed so that if drilling
problems or unfavorable weather conditions are encountered the well can
be reentered next winter at minimum cost.

The L-71 well is being drilled on the Betty structure located
approximately five miles from the Wilma structure. Initial
interpretation of new 2D seismic data indicates the Betty structure
appears to be larger than the Wilma structure.

The well will test three prospective formations; the primary objective
is the Devonian formation encountered in the Summit Creek B-44 well,
secondary objectives exist in the shallow Cretaceous formation (+/- 4000
feet) and the deeper Mount Kindle formation.

It will take 65 - 80 days to drill to total depth and drill stem test
prospective reservoirs. Costs are estimated between $18 and $19 million,
of which $3 million has similarly been allocated to road and lease
construction costs.

The L-71 well is testing one of a number of un-drilled structures
identified on 2D seismic. If results are positive the Company has a good
inventory of un-drilled structures to explore and develop in future
years thus providing shareholders with on-going exposure to high-impact
reserves.

NWT Operations January 05 to January 06

It is hard to predict operations beyond 2005. Preliminary plans are to
shoot additional seismic on EL-397 (5%), EL-416 (7.65%) and EL-423 (5%).
The consortium is currently discussing posting a bond to extend EL-416
for one year. If a bond is lodged a well is required in Q-1, 06 to
extend the License for a second 4-year term.

The consortium have not yet agreed a work program for 2006 however the
Company has budgeted $3 million for its share of anticipated seismic,
production testing and drilling expenditures in Q1- 2006.

Sidox Alderson Pilot Project

Phase one of a six well pilot project on the Alderson (100%) oil pool
was completed in December. Results were technically positive, oil rates
were increased by an average 60% and water cuts were reduced by 20%.
After ninety days the wells returned to pre-Sidox rates of 60 BOPD.

Application costs in phase one averaged $25,000 per well, and due to the
shortened effect of Sidox (90 days versus 150 days in Russian tests) the
results of phase one were sub-economic. However, with the benefit of the
experience obtained in phase one, a second Sidox application was done on
one well at Alderson for a cost of $11,500. Results are being monitored.

In addition, further field testing is required to extend the Sidox
effect beyond ninety days. To that end pressure maintance, variability
of chase injection volumes and tubular versus annular applications will
be examined and implemented where required.

In an effort to obtain additional data points, (i.e. different
reservoirs with different rock physic properties) the Company recently
bid $1.1 million at a public auction for a package of oil wells that the
IFR team felt were suitable for Sidox testing. Unfortunately the bid was
not successful. With historically high oil prices, the market for
acquiring oil properties is very competitive.

In addition to continued efforts to identifying suitable properties for
acquisition, the Company has reached agreement with a royalty trust
whereby it will test a well owned by the trust for a ninety day period
at the Company's sole cost. If production testing is positive a joint
venture equity agreement will be entered into to a) work over other
wells owned by the trust and b) jointly acquire producing wells.

Finance

In 2004 the Company completed financings raising net proceeds of $9.7
million.

Capital expenditures in 2004, which are subject to year end
determination, were;

- $1.6 million for drilling & seismic in the NWT.

- $310,000 refundable deposit for EL-423 NWT.

- $1.3 million for production acquisitions at Alderson & Ferguson.

- $350,000 for equipment & facilities at Alderson & Ferguson.

- $200,000 Sidox application costs.

- $285,000 related costs associated on the Sidox joint venture.

The Company has budgeted for its share of the following NWT capital
expenditures;

- Sah Cho L-71 drilling and testing costs in Q1- 2005.

- Summit B-44 production testing program in Q1- 2005.

- 2D seismic program in Q3 - 2005.

- Two wells in Q1 - 2006.

In addition $2 million has been budgeted for production acquisitions and
$2 - $3 million for new business opportunities in 2005. As of January
5th, 2005 the Company has a cash balance of $11.5 million and no debt.

At December 31st there were 31.4 million shares outstanding, fully
diluted 42.5 million. Shares reserved for conversion of warrants issued
in 2004 are;

- 1,915,000 shares at $1.15 per share expiring January 2005. (1)

- 3,032,000 shares at $1.50 per share expiring June 30, 2005.

- 1,359,875 shares at $1.75 per share expiring June 30, 2005.

- 205,000 shares at $1.75 per share expiring June 30, 2005.

Note (1) a large portion of these shares are currently being issued
pursuant to exercise of warrants.

If all of the $1.50 and $1.75 shares noted above are issued additional
proceeds of $7.3 million would be realized.

The Company is working on a couple of new projects that will hopefully
materialize in the first half of 2005; shareholders will be advised once
formal agreements are signed.

Yours truly,

Pat Boswell

President

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    International Frontier Resources Corporation
    Pat Boswell
    President
    (403) 215-2780