| October 27, 2011 |
| WesternZagros Sells First Oil to Market and Provides Drilling Update |
CALGARY, ALBERTA--(Marketwire - Oct. 27, 2011) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") has received payment for its first sale of crude oil to the domestic market in the Kurdistan Region of Iraq. First oil production from the Sarqala-1 extended well test was achieved on October 18, 2011, and first lifting occurred by truck today.
"Production start-up marks a new chapter in the Company's history, as WesternZagros takes its first steps to become an exploration and production company, rather than a pure exploration company," said Simon Hatfield, Chief Executive Officer of WesternZagros. "We are appreciative of the process established by the Kurdistan Regional Government's Ministry of Natural Resources, which requires pre-payment directly to WesternZagros for the contracted volumes. We also appreciate the close coordination with the Ministry in starting the test. Thanks to the diligence of our in-country operations personnel, the start-up was conducted in a safe, responsible manner and ahead of schedule."
Production started at approximately 2,000 barrels of oil per day ("BOPD") and is anticipated to increase towards 5,000 BOPD in the near future. WesternZagros has signed an initial sales contract for delivery of approximately 33,500 barrels of oil priced in the range of US$50 to US$60 per barrel. WesternZagros plans to use the information gathered from the extended well test in determining future appraisal and development activities, including the potential for increasing production beyond 5,000 BOPD. Horizontal completions may be considered to take advantage of the demonstrated high deliverability of the Jeribe reservoir.
Mil Qasim-1 Exploration Well Update
WesternZagros has successfully set 13-5/8"casing at 1,615 metres at Mil Qasim-1, the Company's third exploration well. The rig is currently drilling ahead at 1,800 metres in the targeted Upper Fars Reservoir. Following a delayed spud date, drilling is now proceeding on time and on budget. The mean estimate of the gross unrisked prospective resources for this reservoir is 106 million barrels of oil. Further updates will be provided as operations progress. WesternZagros is the operator of the Mil Qasim-1 well.
Kurdamir-2 Exploration Well Update
WesternZagros reports that the Kurdamir-2 exploration well has spudded on October 25, and is anticipated to be completed by June 2012. The well is being drilled on the flank of the Kurdamir structure approximately two kilometres from the Kurdamir-1 discovery well. The combined mean estimate of the gross unrisked prospective resources for the Oligocene, Eocene and Cretaceous reservoirs being targeted by the Kurdamir-2 well is over 585 million barrels of oil. Talisman (Block K44) B.V. ("Talisman")is the operator of the Kurdamir-2 well.
HSE Milestone
On today's date, WesternZagros's operations celebrate having worked one full year without a lost time incident. The dedication to safety demonstrated by all of the Company's employees and contractors has produced a work safety culture ranked as world class.
About WesternZagros Resources Ltd.
WesternZagros is an international natural resources company engaged in acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. WesternZagros, through its wholly-owned subsidiaries, holds two Production Sharing Contracts ("PSCs") with the Kurdistan Regional Government ("KRG") in the Kurdistan Region of Iraq. WesternZagros holds a 40 percent working interest in both the Garmian and Kurdamir PSCs. The KRG holds a 40 percent working interest in the Garmian Block to be assigned at a future date and has a 20 percent carried interest in both the Garmian and Kurdamir PSCs. Talisman holds the remaining 40 percent working interest in the Kurdamir PSC. WesternZagros's shares trade in Canada on the TSX Venture Exchange under the symbol "WZR".
This news release contains certain forward-looking information relating, but not limited, to operational information, future drilling and testing plans, future well designs and completions and future production rates and the timing associated therewith. Forward-looking information typically contains statements with words such as "anticipate", "plan", "estimate", "expect", "potential", "could", or similar words suggesting future outcomes. The Company cautions readers not to place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros. Readers are also cautioned that disclosed test rates and AOFs may not be indicative of ultimate production levels. In addition, the forward-looking information is made as of the date hereof, and the Company assumes no obligation to update or revise such to reflect new events or circumstances, except as required by law.
Forward-looking information is not based on historical facts but rather on management's current expectations and assumptions regarding, among other things, plans for and results of drilling activity and testing programs, future capital and other expenditures (including the amount, nature and sources of funding thereof), continued political stability, and timely receipt of any necessary government or regulatory approvals. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by WesternZagros including, but not limited to, risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; interruptions in operations together with any associated insurance proceedings; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity. For further information on WesternZagros and the risks associated with its business, please see the Company's Annual Information Form dated April 11, 2011, which is available on SEDAR at www.sedar.com.
In addition, statements relating to "prospective oil resources" contained herein are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources described can be economically produced in the future. Terms related to resource classifications referred to herein are based on the definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook. "Prospective resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market, facility, corporate commitment or political risks). The chance of commerciality is the product of these two risk components. The estimates referred to herein have not been risked for either the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources. All resource estimates presented are gross volumes for the indicated reservoirs, without any adjustment for working interest or encumbrance. The mean estimate of prospective oil resources presented for the Mil Qasim interval above is for the Upper Fars (106 million barrels (MMbbl)) interval. The mean estimate presented above for the Upper Fars is the average from the probabilistic assessment that was completed; the low estimate (P90) is 7 MMbbl, the best estimate (P50) is 63 MMbbl and the high estimate (P10) is 265 MMbbl.
The Company's material change report filed on SEDAR at www.sedar.com and dated January 17, 2011, contains additional detail on the information used in the resource assessment for Mil-Qasim and includes the risks and level of uncertainty associated with the recovery and development of the resources and the significant positive and negative factors relevant to the estimates. The combined mean estimate of prospective oil resources presented for the Kurdamir reservoirs above are for the Oligocene (280 million barrels (MMbbl)) reservoir, the Eocene (124 MMbbl) reservoir and the Cretaceous (181 MMbbl) reservoir. The mean estimate presented above for the Oligocene reservoir is the average from the probabilistic assessment that was completed; the low estimate (P90) is 85 MMbbl, the best estimate (P50) is 260 MMbbl and the high estimate (P10) is 560 MMbbl. The mean estimate presented above for the Eocene reservoir is the average from the probabilistic assessment that was completed; the low estimate (P90) is 18 MMbbl, the best estimate (P50) is 86 MMbbl and the high estimate (P10) is 273 MMbbl. The mean estimate presented above for the Cretaceous reservoir is the average from the probabilistic assessment that was completed; the low estimate (P90) is 59 MMbbl, the best estimate (P50) is 152 MMbbl and the high estimate (P10) is 340 MMbbl. The Company's material change reports filed on SEDAR at www.sedar.com and dated December 16, 2010 (with respect to the Oligocene reservoir at Kurdamir) and January 17, 2011 (with respect to the Eocene and Cretaceous reservoirs at Kurdamir), contain additional detail on the information used in the resource assessments for Kurdamir and include the risks and level of uncertainty associated with the recovery and development of the resources and the significant positive and negative factors relevant to the estimates.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE. |
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