Jul 08, 2004
Report to Shareholders
The following will provide an update on operations:
Sidox Pilot Project
On June 28th a five well Sidox pilot project commenced on the Company operated Brook's oil pool. To gain a better understanding of field applications we had the Russian scientists that developed the Sidox technology attend our first field application. Given the importance of this pilot project we decided to spare no costs on field application, i.e. we somewhat gold plated the first application. Now that we have a better understanding of the field application process we are working on ways to reduce application costs.
Prior to the application of Sidox the Brooks oil pool produced 200 barrels per day of emulsion consisting of 60 barrels oil and 140 barrels of water. Oil & water rates will be monitored over the course of the six month pilot project; these rates will be compared to the previous six month production history to confirm if Sidox is a commercial venture.
Based on internal economics we need to see a minimum 25% increase in net oil rates to achieve an acceptable rate of return. The upside is to duplicate the Russian field tests that saw a 105% increase in net oil rates and for a possible increase in oil recoveries.
Northwest Territories Project
Shareholders have expressed concerns on keeping Wilma Summit Creek B-44 well results confidential for a two year period. For clarity, under National Energy Board policies an operator can, if they so chose, keep well results confidential for two years and seismic data confidential for five years. While releasing results may not be material to larger companies in the consortium it is material to IFR therefore we will seek partner approval to release information on the B-44 well in September.
On the operations side, the consortium is currently agreeing a work program for next winter. To date, a 220 kilometer 2D seismic program has been agreed for this summer. Subject to NWT regulatory approvals the seismic program is scheduled to commence in late July with completion scheduled for mid September. The program is expected to cost $9.5 million of which IFR's share is $506,000.
The first tranche of a 6 million unit private placement at $0.80 per unit has been completed; the second tranche is schedule to close on or before July 16th. Upon closing the second tranche a total of $4.8 million will be raised. If all series A ($1.15) and series B warrants ($1.50) are exercised additional funds of $7.95 million will be raised. Proceed from the private placement will be spent on the NWT project and on the acquisition of additional producing oil properties that meet our criteria for Sidox testing.
IFR currently has 19 million shares issued; a further 6.6 million shares will be issued upon closing of the private placement. Reserved for future issuance are 1.6 million stock options, 6 million shares for the exercise of series A&B warrants and 2 million shares for the Sidox performance warrants.
Thank you for supporting International Frontier. We will endeavor to keep you updated on our progress.
INTERNATIONAL FRONTIER RESOURCES
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