Private Placement of Convertible Notes

Frontera Resources Corporation (London Stock Exchange, AIM Market - Symbol: FRR; OTCQX Market, U.S.A. - Symbol: FRTE), an independent oil and gas exploration and production company, today announced completion of a private placement of $23.5 million principal amount of its 10% Convertible Notes due July 2013 (the "Notes") and the release from escrow of the remaining $5 million in proceeds from its May 2007 private placement of convertible notes.

The resulting $28.5 million in newly available capital will be deployed to continue to advance ongoing work programs throughout Frontera's primary business units within its Block 12 license area in the country of Georgia.

Steve C. Nicandros, Chairman and Chief Executive Officer, commented:

"Frontera remains well positioned to continue to advance its focused investment programs amidst a strong commodity price environment. Our encouraging progress from operations throughout our primary business units within Block 12 continues to provide the basis for implementing aggressive work programs that are designed to continue to increase production and to realize the significant value that our historical investment has identified."

SUMMARY OF CONVERTIBLE NOTE FINANCING

   --  The Notes have been privately placed with a number of institutional
       and private investors. The Notes have been admitted to trading on
       the PORTAL system and may be traded on that market by qualified
       institutional buyers as defined under Rule 144A of the U.S.
       Securities Act of 1933. The Notes are not admitted to the AIM
       market of the London Stock Exchange ("AIM") or otherwise listed or
       dealt in on any stock exchange.

   --  The Notes have been issued at par by Frontera and will bear
       interest at 10%, payable quarterly in arrears either in cash or in
       kind at the sole discretion of the Company.

   --  The Notes are convertible into fully paid shares of common stock,
       par value $0.00004 cents per share, of Frontera ("Common Stock") at
       the option of the holder at a conversion price of U.S. $2.14 per
       share. However, if the Sale Price (as defined in the section headed
       "Further Information on the Notes" below) per share of Common Stock
       is at or below $1.71 for 10 out of any 20 consecutive Trading Days
       (as defined in the section headed "Further Information on the
       Notes" below) at any time in the 12 months following closing of the
       issuance of the Notes, the conversion price will be reset to $1.71
       per share.

   --  The Notes will be automatically converted into shares of Common
       Stock if the Sale Price of the Common Stock exceeds two times the
       conversion price for at least 20 consecutive Trading Days.

   --  Any investor who converts its notes into Common Stock before
       July 3, 2010 will receive an additional payment equal to one year
       of interest on the amount of Notes converted. At the Company's
       option, this payment can be made in cash or additional Notes.

   --  The Notes are unsecured and rank pari passu with the company's
       10% convertible notes due 2012.

   --  The Company solicited consents from holders of its 10% convertible
       notes due 2007 (the "Existing Notes") to amend the note purchase
       agreements governing such notes to permit the issuance of the Notes
       and to release remaining escrowed proceeds of $5 million from the
       May 2007 placement. In connection with the solicitation, each
       consenting holder will receive a warrant exercisable into shares of
       Common Stock of the Company in an aggregate amount equal to 7.5% of
       the number of shares of Common Stock into which such consenting
       holder's Existing Notes are convertible. The warrants will be
       exercisable for approximately 3,151,000 shares of Common Stock in
       the aggregate. Each warrant will entitle the holder to purchase one
       share of Common Stock at a price of $3.50 per share, and will
       include a cashless exercise provision. The warrants will have a
       five-year term and contain other customary terms and provisions.

RELATED PARTY TRANSACTIONS

Certain funds and accounts managed by DDJ Capital Management LLC (collectively, "DDJ") purchased an aggregate of $10 million principal amount of the Notes, convertible into 4,672,900 shares of Common Stock. These funds and accounts in aggregate own approximately 8,415,300 shares of Common Stock, representing approximately 11.6% of Frontera's issued shares, and Existing Notes convertible into 13,541,740 shares of Common Stock. In connection with the consent solicitation for the Notes, DDJ will also receive warrants exercisable for 990,850 shares of Common Stock. After this Placement, DDJ owns 19.95% of Frontera's fully-diluted share capital (assuming all outstanding vested options and warrants are exercised and all convertible securities are converted at the current conversion rates). An entity controlled by Spyros Karnessis, a director of Frontera, also purchased Notes. Stephen E. McGregor, a director of the Company, through SEM Consulting, LLC (SEM), will be paid a commission pursuant to SEM's 2001 consulting and advisory agreement with Frontera in an amount that will not exceed 2% of the face amount of the Notes. For these reasons, the transaction is classified as a related party transaction for the purposes of the AIM rules for companies.

Accordingly, as required by the AIM rules for companies, the directors of Frontera (with the exception of Messrs. McGregor and Karnessis who abstained), having consulted Frontera's nominated adviser, Morgan Stanley & Co. International plc, consider that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned. Morgan Stanley & Co. International plc has placed reliance in this matter on the commercial assessments by Frontera and its directors of the private placement of the Notes on the terms agreed.

FURTHER INFORMATION ON THE NOTES

By note purchase agreements dated July 3, 2008, Frontera agreed to issue and sell $23.5 million aggregate principal amount of 10% Convertible Notes due July 2013 (the "Notes") to the purchasers named in the agreements (the "Purchasers").

Interest is payable on the principal amount of the Notes at a rate of 10% per annum from the date each Note is issued until maturity (unless earlier converted, redeemed or repurchased). Interest is payable quarterly in arrears on each March 31, June 30, September 30 and December 31 or the next succeeding business day with the first interest payment date being September 30, 2008. Interest is payable in cash or, at Frontera's option in its sole discretion, by issuing additional Notes on the relevant interest payment date in the aggregate principal amount of the interest to be paid.

If an event of default (as defined in the note purchase agreement) occurs and is continuing, Frontera is obliged to pay interest (in cash or in further Notes) on any overdue principal or interest on a quarterly basis at the higher rate of 13% per annum.

Pursuant to the note purchase agreements, Frontera has given representations, warranties and covenants to each of the Purchasers about various matters including the Notes, Frontera, its subsidiaries and its and their business and assets.

The notes will be convertible into fully paid shares of Common Stock at the option of the holder at a conversion price of $2.14 per share. However, if the Sale Price per share of Common Stock on AIM is at or below $1.71 for any 10 days in 20 consecutive Trading Days at any time in the twelve months following closing of the initial issue of the Notes, the conversion price will be reset to $1.71 per share. The notes will automatically convert into Common Stock if prior to maturity (unless earlier redeemed or repurchased), the Sale Price exceeds two times the conversion price for 20 consecutive Trading Days.

If, at the time of Conversion, shares of the Common Stock are admitted to dealings on the AIM market of the London Stock Exchange PLC ("AIM"), Frontera has agreed to apply for the shares of Common Stock issued on conversion to be admitted to dealings on AIM. Frontera has agreed to comply with all requirements of London Stock Exchange PLC in connection with such application.

Any investor who converts its notes into Common Stock before July 3, 2010 will receive an additional payment equal to one year of interest on the amount of Notes converted. At the Company's option, this payment can be made in cash or additional Notes.

Frontera has agreed not to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except in accordance with the terms of the note purchase agreement and the Notes and to cancel all Notes acquired by it pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of the agreement, and not to issue Notes in substitution or exchange for any such cancelled Notes.

The note purchase agreement provides for events of default. On the occurrence of an event of default, the holders of 50% or more of the outstanding notes (excluding any notes held or owned by Frontera) may, during the continuance of the event of default, serve notice declaring all or any part of Frontera's obligations immediately due and payable. Events of default include in summary: failure of Frontera to pay any principal, when due, and the failure to pay any interest, fees or expenses or its other obligations with respect to the Notes when due, and such failure continues for 10 days thereafter; any representation or warranty made by Frontera proves to have been false or incorrect in any material respect on any date on or as of which it was made, and Frontera fails to cure the effect of such false or incorrect representation or warranty within thirty days after receipt of written notice from the Purchasers (other than Frontera) holding 50% or more of the Notes; and certain events with respect to Frontera, any of its subsidiaries, or Frontera Eastern Georgia Ltd including, in summary, bankruptcy, insolvency reorganisation or relief of debtors; failure to comply with certain covenants which continues for 30 days after receipt of written notice; certain categories of default in respect of indebtedness.

Upon a change of control (as defined in the note purchase agreement) each Purchaser has the right to require Frontera to purchase such Purchasers' Notes at a purchase price in cash equal to 150% of the principal amount thereof plus accrued and unpaid interest if any to the date of purchase.

"Change of control" means the occurrence of any one of the following: (1) any "person" or "group" of related persons (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 and the rules and regulations ("Exchange Act") ) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have "beneficial ownership" of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the voting stock of Frontera (or its successor by merger, consolidation or purchase of all or substantially all of its properties and assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any voting stock of Frontera held by a parent entity, if such person or group "beneficially owns" (as defined above), directly or indirectly, more than 50% of the voting power of the voting stock of such entity); (2) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Frontera (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of Frontera was approved by a vote of 66 2/3% of the directors of Frontera then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; (3) the sale, conveyance, lease, assignment, transfer or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties and assets of Frontera and its Subsidiaries taken as a whole to any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act); or (4) the adoption by the stockholders of Frontera of a plan or proposal for the liquidation or dissolution of Frontera.

"Sale Price" means, on any date, the closing sale price per share, or if no closing sale price is reported, the average bid and asked prices or, if more than one in either case, the average of the average bid and average asked prices, on such date as reported in transactions for the Common Stock on the principal securities exchange on which the shares of Common Stock are traded without reference to after-hours or extended market trading. If the shares of Common Stock are not listed for trading on a securities exchange and not reported by the London Stock Exchange on the relevant date, the "sale price" shall be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by the National Quotation Bureau or similar organization. If the shares of Common Stock are not so quoted, the "sale price" will be the average of the mid-point of the last bid and asked prices for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by Frontera for this purpose. If the Sale Price of the shares of Common Stock is quoted in a currency other than United States dollars, then the Sale Price shall be converted to United States dollars as of the date of determination using an exchange rate for such currency to United States dollars quoted by Bloomberg or any successor entity at the close of trading on such date of determination.

"Trading Day" means a day during which trading in securities generally occurs on the London Stock Exchange or, if the applicable security is not listed on the London Stock Exchange or the OTCQX, on the principal other securities exchange on which the applicable security is then listed or, if the applicable security is not listed on a securities exchange, on the principal other market on which the applicable security is then traded.

Morgan Stanley & Co. International plc is acting exclusively for Frontera and is not acting for any other person and will not be responsible to any person other than Frontera for providing the protections afforded to its clients or for providing advice on the transactions or arrangements referred to in this announcement. The Notes were placed only to qualified institutional buyers and accredited investors in reliance on an exemption from the registration requirements under the Securities Act of 1933.

Notes to editors:

1. Frontera Resources Corporation is an independent Houston, Texas, U.S.A.-based international oil and gas exploration and production company whose strategy is to identify opportunities and operate in emerging markets around the world. Frontera has operated in Georgia since 1997 where it holds a 100 percent working interest in a production sharing agreement with the government of Georgia. This gives Frontera the exclusive right to explore for, develop and produce oil and gas from a 5,060 square kilometer area in eastern Georgia known as Block 12. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market - Symbol: FRR and via the Over-the-Counter Market, U.S.A. - OTCQX Symbol: FRTE. For more information, please see www.fronteraresources.com.

2. This release contains certain forward-looking statements, including, without limitation, expectations, beliefs, plans and objectives regarding the potential transactions, potential drilling schedule, well results and ventures discussed in this release, as well as reserves, future drilling, development and production. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: future exploration and development results; availability and performance of needed equipment and personnel; seismic data; evaluation of logs and cores from wells drilled; fluctuations in oil and gas prices; weather conditions; general economic conditions; and the political situation in Georgia and neighboring countries. There is no assurance that Frontera's expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements.

3. Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 32 countries. For further information about Morgan Stanley, please visit www.morganstanley.com. Enquiries: +44 20 7425 8000.