Introduction

Frontera's strategy from inception has been to seek early opportunities in known hydrocarbon bearing basins around the world where historic, political or economic conditions have caused significant oil and gas plays to be underdeveloped. To date, the Company has focused its activities almost exclusively on the onshore Kura Basin situated between the Caspian Sea and the Black Sea in the nations of Azerbaijan and Georgia, as shown on the map below.

Frontera's current activities are focused on the exploration and development of the large geographic area associated with Block 12 in Georgia. As of the end of 2006, the company has invested approximately $100 million in its research and operations in Block 12. With this investment, Frontera has undertaken an extensive series of studies, geologic field work and operational work programmes that has resulted in the identification of two major geologic plays within the block that contain significant reserve potential that the Company intends to pursue to commercial production. The Company has focused its efforts toward the goal of establishing commercial production from one of the seven existing fields in Block 12 and it has identified an extensive inventory of prospects for potential new field discoveries.

Hisorically, this work has principally involved the acquisition, processing and interpretation of new 2D and 3D seismic data; reprocessing of historic seismic and well log data; undertaking new and extensive geological field work; carrying out new reservoir engineering studies in some of the existing fields which has entailed workovers of existing wells and the drilling of new wells; other integrated geologic and engineering studies designed to identify prospectivity for new field discoveries within Block 12; and upgrading existing production, transport and export facilities.