Business Description
Frontier operates in the oilfield service industry and is currently involved in
the disposal of saltwater and other oilfield fluids in Texas. Frontier owns eight
disposal wells in Texas. Six of these disposal wells are located in the Barnett
Shale region in north central Texas and two of these wells are located in east
Texas near the Louisiana border.
The Barnett Shale region is a productive shale formation with a concentration
of successful oil and gas wells. These wells have been completed using hydraulic
fracturing and directional drilling techniques. In east Texas, the producing
oil and gas wells have typically been in place for many decades. Production
stimulation techniques such as salt water flood projects are used whereby salt
water is injected into a producing formation to accelerate the migration of
hydrocarbons to the well bore. The oil and gas wells in the Barnett Shale and
in east Texas produce commercially viable volumes of hydrocarbons in the form
of crude oil and natural gas. In addition, these wells produce significant volumes
of salt water and other fluids as a by-product of the production of hydrocarbons.
The salt water and fluids must be routinely removed from the well site on a
daily, semiweekly or weekly basis depending on the flow rate of the wells.
The significant quantity of wells in the Barnett Shale and east Texas regions
combined with the presence of salt water and other fluids in the production
process creates demand for disposal services such as those services provided
by Frontier.
Economic conditions in the oil and gas industry are subject to volatility.
The uncertain nature of these economic conditions combined with federal and
state regulatory uncertainty in the energy industry requires operators to be
flexible and adept at adjusting operations and strategy to achieve profitability.
We intend to evaluate all conditions and risks affecting our operating activities
and to respond to those conditions by employing resources in areas we believe
to have the most potential for success. Over the past year, significant declines
in the price of crude oil and natural gas have put economic pressure on oil
producers, requiring them to seek expense reductions to offset the decline in
their revenues. The oil field service industry has been and will continue to
be affected by the volatility in oil and natural gas prices, and may experience
lower revenues as oil producers’ pressure oil field service providers
for lower cost service.
The Company’s business requires capital to fund operations and growth.
Management intends to conduct operations to generate sufficient capital for
use in reduction of the Company’s outstanding debt. In order to adequately
fund operating activities, reduce current liabilities, and pay interest and
principal on the debt, we may need to secure additional capital from third parties
or other debt or equity financing sources. There can be no assurance that we
will be able to enter into additional financing arrangements on terms that are
acceptable. There are also no assurances that we will be able to achieve profitability
from our operations in the current market environment.
|