WesternZagros Resources Ltd

Drilling operations at the Corporation’s first exploration well, Sarqala-1, commenced on May 8,

2008. Sarqala-1 encountered a number of operational delays related to overpressured zones which

required the use of anomalously high drilling mud densities (up to 2,380 kilograms per cubic metre or 19.9

pounds per gallon). Some of the zones were pressurized to near formation fracture pressures resulting in

time consuming well control operations. Additional delays also occurred related to lost circulation zones

that were controlled with the addition of specialized mud products. Drilling progress was further impacted

by encountering thicker halite (salt) deposits in the Lower Fars Formation than originally prognosed. This

resulted in the reservoir target zones being approximately 250 metres deeper than prognosed.

Sarqala-1 was drilled to a depth of 4,357 metres. The well penetrated through the Lower Fars,

Jeribe and Euphrates Formations and recorded numerous indications of oil and gas in these formations.

Analysis of the oil recovered from the drilling mud indicates the oil is light (34 to 35 degrees API) and

sweet (less than one percent sulphur).

While conducting wireline logging operations across the intervals with recorded shows, the

equipment encountered a wellbore obstruction which prevented logging. WesternZagros successfully

drilled through the obstruction but, subsequently, the drilling assembly became stuck in the hole. During

recovery operations the drill string parted. Recovery operations were unsuccessful and in March 2009 the

well was suspended pending the evaluation of the feasibility and merits of future drilling options on

Sarqala-1.

Despite the disappointment that Sarqala-1 did not penetrate all the reservoir targets, nor obtain

wireline logs across the Jeribe and Euphrates reservoir targets, WesternZagros views the numerous

indications of oil and gas encountered at Sarqala-1 as positive. The Corporation also considers that these

indications enhance the prospectivity of the PSC lands as they reduce the risk that any undiscovered

resources may be gas instead of oil. In addition, the thick halite (salt) deposits in the Lower Far Formation

also enhance the prospectivity of the block as they reduce the risk associated with top seal of the

reservoir target intervals.

Kurdamir-1, WesternZagros’ second wildcat exploration well, is located on a separate anticlinal

structure approximately 30 kilometres northeast of Sarqala-1. The prognosed total depth for this well is

3,900 metres. Kurdamir-1 will target the Oligocene and Pilaspi/Jaddala intervals in the Tertiary, and the

Shiranish and Upper Qamchuqa intervals in the Cretaceous. Well site construction for Kurdamir-1 was

completed in the fourth quarter of 2008 and WesternZagros plans to spud the well by May 2009 after the

drilling rig has been moved from Sarqala-1.

Although the prognosed total depth of Kurdamir-1 is less than Sarqala-1, WesternZagros has

reviewed its drilling program and has planned for two intermediate casing strings to mitigate the risk of

similar overpressure and lost circulation issues as encountered at Sarqala-1. WesternZagros, and its coventurers

Talisman and the KRG, continue to incorporate other key learnings from Sarqala-1 to identify

and mitigate possible drilling issues that could be encountered while drilling Kurdamir-1.

Many other details of cours among others the following

WesternZagros’ capital and operating budget for 2009 is approximately $34 million. This reflects

the operational delays and associated costs related to overpressured zones encountered by Sarqala-1, the

costs for drilling Kurdamir-1 and associated supervision and local office costs in support of drilling

operations.

Completion of the seismic interpretation, the results of Sarqala-1 and Kurdamir-1 and the general

financial market conditions will all impact future drilling decisions and, as such, WesternZagros will review

and update its budget as these factors evolve. WesternZagros will also continue to monitor the political

developments in Iraq, particularly as they relate to the Federal Petroleum Law, before committing to

capital expenditures beyond the minimum commitments required under its PSC. WesternZagros currently

has no plans to drill any additional wells in 2009 following the completion of Kurdamir-1, and is considering

the possibility of a third party utilizing the drilling rig contracted to WesternZagros following Kurdamir-1