WesternZagros Resources Ltd. ("WesternZagros" or "the Company") (TSX VENTURE:WZR) today reported its results for the three month period ended September 30, 2008, key highlights and activities to date.
- Operations at the Sarqala-1 well are proceeding. The well is being sidetracked and is at a depth of 3,388 metres. Drilling delays and unexpected events were experienced during the third quarter as a result of encountering shallower overpressure at a depth of approximately 2,300 metres and, subsequently, becoming stuck in the hole at a depth of 3,567 metres. WesternZagros anticipates drilling results for Sarqala-1 to be available in late December 2008. As a result, gross well costs are anticipated to be $31 million to $34 million, prior to any testing.
- Construction of the Company's second well location at Kurdamir-1 is close to completion. WesternZagros plans to spud Kurdamir-1 in early 2009 utilizing the rig the Company has under long-term contract.
- WesternZagros continues to add to its inventory of drillable prospects through the interpretation of the data acquired through its Phase I and II seismic program.
- As at September 30, 2008, WesternZagros had $159.4 million in cash and cash equivalents. Equipped with a strong balance sheet, WesternZagros is well-positioned to weather the current conditions in the financial markets and the Company will be prudent and maintain flexibility in the deployment of capital. WesternZagros anticipates exiting 2008 with working capital of approximately $130 million.
- For the three month period ended September 30, 2008, WesternZagros incurred capital expenditures of $20.1 million related to its 60 percent funding requirement for its Production Sharing Contract ("PSC") activities and certain payments required under the PSC.
- WesternZagros had a net loss of $1.0 million for the quarter, mainly comprised of the general and administrative costs incurred by the Company.
- In support of the Company's corporate social responsibility efforts in Kurdistan, WesternZagros has drilled 10 water wells in the Garmian region of Kurdistan; assisted the local Sulaymaniya Ground Water Directorate in completing an assessment of sources of water and in refurbishing its water well drilling rig in support of a city water supply project; and has provided much needed assistance in repairing local schools.
Political Update
In late September 2008, Iraq's parliament unanimously passed a law governing provincial elections. With the passage of the law, elections to select provincial and local leaders across Iraq can move forward. Under the agreement, only elections in Kirkuk will be postponed. With the approval of the law by parliament, it proceeds to Iraq's presidency council headed by President Jalal Talabani. WesternZagros believes the passage of the elections law is a significant breakthrough, demonstrating that political compromise and progress is taking place in Iraq. Political discussions are ongoing with respect to the Federal Petroleum Law although timing for ultimate approval of this law is still unknown.
