Mr. Steve Hanson reports

IFR PROVIDES OPERATION UPDATE AT TECOLUTLA

International Frontier Resources Corp. has provided an operations update on its Mexican joint venture, Tonalli Energia, and its onshore oil and gas block Tecolutla.

At Tecolutla, Tonalli has finalized the completion of three intervals in its 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.

Production testing is continuing with the following results to date from each interval:

• Interval A was completed between 2,433.5 m and 2,442.5 m to test for the presence of oil at the 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 2,394.5 m and 2,410.5 m. Interval B also recovered a small amount of oil and had limited inflow.
• Interval C was completed between 2,349.5 m and 2,353 m 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 per cent or less. During the last 12 hours (until approximately 5 a.m. MT today) the flow rate has averaged 480 barrels per day of fluid with a 12-per-cent oil cut with a current well head pressure of 300 pounds per square inch. The entire testing period has occurred through a 12/64th-inch choke. Tonalli will continue to test to observe flow rates and oil cuts.

Although there was limited inflow from Interval A and Interval B with the minor stimulations, Tonalli encountered oil at these lower depths which indicates potentially a lower oil water contact and a larger gross rock volume within Tecolutla that is charged with hydrocarbons. Interval A is approximately 70 metres lower than the lowest previously produced interval within the El Abra reef at Tecolutla. FMI log data indicate abundant natural fractures at these lower depths that may connect this tighter Lower El Abra to the higher reservoir quality Upper El Abra.

Since reaching total depth, Tonalli has utilized the modern well logs from TEC-10 to perform a prestack depth migration of the 3-D seismic volume to give a more precise image of the top of the El Abra. This PSDM seismic has provided an explanation of the TEC-10 well results by identifying localized karsting or sink-hole type features along the top of the El Abra. These localized karsting features are filled with non-reservoir shales and mudstones that do not contain hydrocarbons. Tonalli's interpretation of the PSDM seismic and the TEC-10 well logs indicate that the directionally drilled TEC-10 well encountered a small vertical karst feature at the prognosed top of the El Abra formation then exited this karst lower in the El Abra. This resulted in TEC-10 encountering non-reservoir shales and mudstones at depths where Tonalli expected the El Abra reef to be structurally high and have good reservoir quality.

The porous Interval C in TEC-10 was encountered after the well exited the karst feature and is structurally located at a similar elevation to perforations in the offset TEC-6 well. Based on the observed water cut, it is believed that Interval C of the TEC-10 well encountered a partially depleted portion of the El Abra reservoir, which is inside the drainage radius of this offset well. Future wells in Tecolutla will be planned to be outside the drainage area of existing wells and to avoid localized karst features. The PSDM seismic has also given the company a more precise image of the reef edge which matches its original interpretation of the reef edge and further confirms the areal extent of the reef. Tonalli is confident that there is significant remaining oil in the reservoir that can recovered with horizontal wells that are strategically located.

"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," stated Curtis Hess, 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."

Tonalli is examining the next steps regarding TEC-10 and has commenced planning for the drilling of the first horizontal well and a workover of the TEC-7 well. Tonalli expects these to take place in the late fourth quarter of 2018 and Q1 2019 pending regulatory approvals.

Tonalli has recently entered into a crude oil commercialization agreement with Pemex. At this time, Tonalli does not intend to produce from any wells in the Tecolutla field until appropriate production and water disposal facilities are constructed, and after the next well is drilled successfully.

Through its joint venture, IFR was one of the first foreign companies to participate in Mexico's historic reform of the oil and gas sector. The Tecolutla block was awarded to Tonalli as part of the first round and third call of Mexico's oil and natural gas mature fields bid round, the first in almost 80 years.

About International Frontier Resources Corp.

International Frontier Resources is a Canadian publicly traded company with a demonstrated record of advancing oil and gas projects. Through its Mexican subsidiary, Petro Frontera SAPI de CV, and strategic joint ventures, it is advancing the development of petroleum and natural gas assets in Mexico. The company also has projects in Canada and the United States, including the Northwest Territories and Montana.

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