International Frontier Resources Corp. [IFR-TSXV, IFRTF-OTC] shares were down 36.6% Monday July 23 after the company released an operational update from its onshore oil and gas drilling project in Mexico.
International Frontier recently said its Mexican joint venture Tonalli Energia was granted the right to operate, develop and produce hydrocarbons at the 7.2 km2 Block 24 [the Tecolutla block], which is located in the Tampico-Misantla Basin in the state of Veracruz.
Those rights were granted through a licensing contract with the Mexican government, the company has said. Tonalli secured the drilling authorization permit from Mexico’s National Hydrocarbons Commission for its TEC-10 directional well. Block 24 is subject to an incremental royalty of 31.22%.
The producing carbonate oil reservoir in the Tecolutla block is the El Abra formation. The company said 3D seismic has been acquired over the entire block and seven existing vertical wells have been drilled by PEMEX (Mexico’s state-owned petroleum company) to bring the field into production.
On Monday, International Frontier said Tonalli has finalized the completion of three intervals in the first evaluation well, TEC-10. Perforation and stimulation of the TEC-10 well commenced in late June, targeting multiple zones in 138 metres of gross El Abra reef.
“The information obtained by drilling TEC-10 has provided the necessary information to develop the remaining resources of the Tecolutla field with additional wells and workovers,” said Curtiss Hess, International Frontier’s Vice-President, of Exploration. “Our understanding of the El Abra reservoir has greatly improved and Tonalli is in the process of developing a horizontal drilling development strategy based on this knowledge,” he said.
However, on Monday, International Frontier shares fell 36.6% or $0.074 to 13 cents on volume of 809,707. The stock is trading in a 52-week range of 16 cents and 35 cents.
While it said production testing is on-going, the company released the following results from each of the three intervals in the first evaluation well.
Interval A was completed between 2433.5 and 2442.5 metres to test for the presence of oil at depth where strong oil shows were encountered while drilling. Interval A recovered a small amount of oil and had limited inflow.
Interval B was completed between 2394.5 and 2410.5 metres. Interval B also recovered a small amount of oil and had limited inflow.
Interval C was completed between 2349.5 and 2353 metres in the highest porous interval in the TEC-10 well. For the first three days of the test, the well flowed at an average rate of 384 barrels per day of fluid at an oil cut of 5% or less. During the last 12 hours [until approximately 5 a.m. MST today] the flow rate has averaged 480 barrels per day of fluid with a 12% oil cut with a current well head pressure of 300 psi. Tonalli will continue to test and to observe flow rates and oil cuts.
Meanwhile, International Frontier said Tonalli is examining the next steps regarding TEC-10 and has commenced planning for the drilling of the first horizontal well, TEC-11 and a workover of the TEC-7 well. Tonalli expects these activities to take place in the late fourth quarter of 2018 and first quarter of 2019, pending regulatory approvals.