Frontier Resources International plc

LSE : FRGP


January 28, 2013 02:01 ET

Oman Update

                                                                                                28 January 2013
                                                                                                   GB00B3K9ML24
                                     Frontier Resources International Plc
                                          ("Frontier" or the "Company")
                                  
                                                  Oman Update
                                                       
The  Board  of Directors of Frontier Resources International (ISDX: FRGP), the Middle East and Southern  Africa
focused exploration company is pleased to announce that on 25 November 2012, his Majesty Sultan Qaboos,  issued
a  royal decree endorsing the recently signed Exploration and  Production Sharing Agreement  (EPSA) over  Block
38 in southern Oman.

As  part  of  its  initial evaluation of the block and in preparation for the Company's move to  London's  AIM,
Frontier  retained  SLR  Consulting to prepare a Competent Persons Report (CPR) on the area.  The  Company  now
wishes to announce that this report has been completed and the Executive Summary is reproduced without material
amendment as an Appendix to this announcement.

Jack Keyes, CEO of Frontier said, "We are gratified to hear that HM Sultan Qaboos has endorsed our EPSA. The CPR
gives  Block 38 an estimated original oil in place (OOIP) of 10,865 MMboe and we believe that Block 38 contains
an untested salt basin analogous to the other proven salt basin of Oman and we are looking forward to exploring
this very interesting area next year".

APPENDIX

The  text  below  has  been extracted, without amendment, from the Competent Persons  Report  prepared  by  SLR
Consulting.

EXECUTIVE SUMMARY

Frontier Resources (Oman) Ltd, a wholly owned subsidiary of Frontier Resources International Plc has signed  an
Exploration  and Production Sharing Agreement (EPSA) with the Government of the Sultanate of Oman  for  a  100%
interest in Block 38, the Mudayy Block. The EPSA is a six year agreement comprising two three year phases.  The
Block  covers  an area of 17,425 sq kms and is located in the Dhofar region of southwest Oman in  the  southern
part  of  the Rub Al Khali Basin. To the west lies the Republic of Yemen and to the east is the prolific  South
Oman  Salt Basin. Block 38 has had only three wells drilled and is considered prospective for oil and gas given
the production from the nearby Block 6 operated by Petroleum Development Oman.

Based  on  the  evaluation of vintage seismic, well data and regional geologic studies the  Block  contains  an
untested  salt  basin potentially analogous to the other proven salt basins of Oman. Primary  targets  are  the
carbonate  stringers embedded in Ara Group salts lying at depths of between 3,000 and 5,000  meters.  Secondary
targets  include  the  shallower  Haima Play which had minor oil shows during  drilling  and  the  deeper  Buah
Formation which has proven to be gas productive elsewhere in Oman.

Frontier  will conduct geophysical and geological studies during the first phase of the agreement to  determine
the  range of drilling opportunities that may be available. This information will then be used to design  a  3D
seismic  survey the results of which will lead to the drilling of a well if a suitable structure is identified.
The  Company  plans  to  immediately start the reprocessing of older seismic data and acquire  aerogravity  and
magnetic surveys early in 2013 in preparation for the 3D seismic.

The percentage interests evaluated are shown below:

                                                                                              
Asset               Operator       Interest      Status            Expiry Date  Area          Comments
                                                                                              
                                                                                             
Block 38            Frontier       100%          Exploration          2015      17,425 km2   Commencement  of
                                                                                             exploration in
                                                                                             2013
                                                                                             


The  permit  contains  prospective  resources.  Drilling programmes  are  required  to  prove  the  prospects
identified. The oil initially in place (OIIP) is calculated based on extrapolation of the analysis in  Terken
et.  al.  (2001). This paper gives values for hydrocarbon generation, expulsion and trapping  efficiency  for
specific areas of the Omani basins. These values can be used as analogues for estimating the trapped resource
in Block 38. The gross low, best, and high estimates are the probable volumes of recoverable oil based on the
lead  size distribution of prospects identified by Phillips, a previous operator of Block 38, an estimate  of
the  total  recoverable hydrocarbons generated by a Huqf source system in the Ghudun Basin and  the  recovery
factor  for the analogous Harweel Cluster Field operated by PDO in the adjacent Block 6. The net attributable
is based on Frontier Resources 100% interest.


The Prospective Resource Summary for Block 38 Permit is shown below:

                                                       
            Oil & Liquids Prospective Resources in MMbbls for a Cluster of Prospects Block 38 Asset
                                                      Gross Low       Gross Best     Gross High         
    Asset         OIIP       Risk      Recovery        Estimate        Estimate       Estimate      Operator
                 MMbbls     Factor      Factor          MMbbls          MMbbls         MMbbls           
                                                                                          
   Block 38      10,865      19%         18%              23              140            372        Frontier

 Total for                                                                                          
 Oil &           10,865                                   23              140            372      
 Liquids                                                                                  
 
 
 Source: N.O'Neill
 
Note: OIIP is oil initially in place

Risk  Factor  for  Prospective  Resources  means the chance of probability  of  discovering  hydrocarbons  in
sufficient  quantity  for them to be tested to the surface. This then is the chance  or  probability  of  the
Prospective Resources maturing into a Contingent Resource.

Recovery  Factor is the estimated percentage of OIIP that would be recoverable under appropriate  development
projects such as the analogous Harweel Cluster of fields operated by PDO in the adjacent Block 6.

The Gross Best Estimate is the mean of prospect sizes identified by Phillips.

MMbbls = millions of barrels

A moderate investment of USD2.6m in forensic geochemistry and data acquisition using new technology, airborne
FTG  (Full Tensor Gravity), could significantly reduce the exploration risk by demonstrating the presence  of
halite (salt rock) in the Ghudun Basin. The presence of halite is an indirect indicator for Huqf source  rock
presence  in  the  basin. The FTG survey results could also help to focus subsequent exploration  efforts  on
priority  areas.  This could reduce the cost of the 3D seismic survey by reducing the area  of  investigation
significantly. The  proposed 3D seismic survey over the reduced area of 500km2 is  estimated  to  cost USD8m.
Without FTG the cost of this 3D survey could be significantly higher.  The seismic survey will help to define
prospects. A well to drill and test the best prospect is estimated to cost about USD10m. The Block  38  Permit
represents an opportunity to develop an onshore oil and gas play similar to PDO's successful Harweel  Cluster
of  fields where production commenced in 2004. Development costs for Block 38, including full scale  enhanced
oil  recovery  (EOR), are likely to be high because, in addition to the many development  wells  required  to
produce the light sour oil expected from the intra-salt carbonate stringers there will be a need for oil  and
gas  processing and sour gas EOR injection facilities. However the development costs can be supported by  the
oil volumes which are of sufficient scale based on the analogous Harweel Cluster of fields operated by PDO in
the adjacent Block 6. There is insufficient data to estimate a net present value for the Block 38 asset.


We  have estimated the degree of uncertainty inherent in the measurements and interpretation of the data  and
have  calculated  a range of resources and risk factors in accordance with the SPE, WPC, AAPG  &  SPEE,  2007
standard.

The Directors of Frontier are responsible for the contents of this announcement.

Contact Details:
Frontier Resources International Plc.
Jack Keyes, CEO
Telephone: +1 (281) 920-0061

Ric Piper, Chairman
Telephone: +44 7966 381974

ISDX Corporate Adviser
Peterhouse Corporate Finance Limited
Duncan Vasey or Mark Anwyl
Telephone:+44 (0) 20 7220 9796
 
 
 

Contact Information

  • Frontier Resources International plc