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Message: WesternZagros Increases Prospective Resources to 3.5 Billion BOE's
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JUL 20, 2011 - 11:40 ET
WesternZagros Increases Prospective Resources to 3.5 Billion BOE's
CALGARY, ALBERTA--(Marketwire - July 20, 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") reports an increase of over 100 per cent in the combined mean estimate of gross unrisked prospective resources on the Company's Kalar-Bawanoor exploration block ("Block K44") to 2,192 million barrels of oil, or 3,570 million barrels of oil equivalent when oil, gas and condensate prospective resources are included (previously these estimates were 1,092 million barrels of oil, or 1771 million barrels of oil equivalent).
This latest independent audit by Sproule International Limited ("Sproule") addressed the multiple reservoirs in additional prospective areas of the Company's block, which are all located on the Garmian contract area to be covered by the amendments negotiated by WesternZagros, the Ministry of Natural Resources of the Kurdistan Regional Government ("KRG")and a wholly-owned subsidiary of Talisman Energy Inc. These amendments are awaiting approval by Oil and Gas Council of the KRG. The audit included prospects identified with Jeribe, Mio-Oligocene, Shiranish and Eocene reservoirs and two Upper Fars plays. These prospects and plays are potential follow on exploration locations for future drilling consideration. The Company continues to assess the potential of other additional prospects and plays and will continue to release audited results as they become available.
"After this fourth in the series of independently audited assessments, we're encouraged by the continuing rise in resource estimates. The recent oil discovery in the Jeribe Formation at the Sarqala-1 well and the potential in the Upper Fars reservoir at the Mil Qasim-1 well supports the prospectivity of these additional prospects and plays," said Simon Hatfield, WesternZagros' Chief Executive Officer.
Work is continuing on the Sarqala Jeribe contingent resource assessment and remaining prospective resource assessment and will be finalized upon receipt of final test fluid, engineering studies and detailed petrophysical analysis. Preparations are currently underway to secure and install the necessary equipment to undertake an extended test of the Sarqala-1 well. This includes establishing a crude storage and loading facility to permit the transfer and sale of produced oil.
WesternZagros has moved the 2,000 horsepower Viking I-10 rig to the Mil Qasim-1 site and is currently completing the necessary rig up and preparations for drilling operations to evaluate the Upper Fars reservoir. The anticipated spud date for Mil Qasim-1 is now early August, with test results expected in the fourth quarter of 2011. Success at the Mil Qasim-1 Upper Fars reservoir, combined with the results of the extended well testing planned for the Sarqala-1 Jeribe reservoir, will assist to determine the optimum location and timing for future exploration and appraisal activities required to unlock the potential of these most recently audited prospects and plays.
Sproule carried out its independent audit in accordance with the current guidelines outlined in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Pursuant to the COGE Handbook, an audit is the process whereby an independent qualified reserves auditor carries out procedures designed to allow the auditor to provide reasonable assurance that a reporting issuer's reserves data (or specific parts thereof) have, in all material respects, been determined and presented in accordance with the COGE Handbook and are, therefore, free of material misstatement.
Table 1, below, provides summary estimates of the oil, and oil equivalent resources in all of the reservoirs included in this latest Sproule audit. A detailed table providing estimates of the gross unrisked prospective oil, associated gas, gas condensate and solution gas resources in all of the reservoirs included in this latest Sproule audit is disclosed in the Company's Material Change Report dated July 19, 2011 which is available atwww.sedar.com.
Table 2 provides the cumulative total mean estimate of gross unrisked prospective resources for Block K44 to date, including estimates as previously disclosed in the Company's Material Change Reports dated December 16, 2010, January 17 and February 22, 2011, which are available atwww.sedar.com.
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Table 1
Gross Unrisked Prospective Resources (1)
Kalar-Bawanoor (Garmian Block) Oil, Gas and Condensate
(as of July 19, 2011)
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Low Best High Mean
Estimate Estimate Estimate Estimate
(3) (4) (5) (6)
Prospect /
Play Reservoir Hydrocarbon P90 P50 P10 Mean
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Type MMbbl MMbbl MMbbl MMbbl
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Upper Fars
Fault Trap Upper
Play Fars Oil 60 425 1,730 705
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MMBOE(7) 798
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Upper Fars
Bawanoor Upper
Saddle Play Fars Oil 16 80 275 120
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MMBOE 282
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Zardi Complex
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Zardi Jeribe Oil 12 34 86 43
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MMBOE 54
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Mio-
Oligocene Oil 4 34 130 54
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MMBOE 184
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Eocene Oil 2 18 73 30
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MMBOE 104
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Segrdan Jeribe Oil 7 19 54 27
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MMBOE 34
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Mio-
Oligocene Oil 3 26 123 49
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MMBOE 182
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Eocene Oil 1 8 45 17
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MMBOE 69
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Tilako Jeribe Oil 2 6 14 7
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MMBOE 9
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Mio-
Oligocene Oil 0 2 9 4
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MMBOE 9
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Eocene Oil 0 1 4 2
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MMBOE 4
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Zardi Complex Sub Total Mean Oil Only - Gross Unrisked
Prospective Resources 233
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Zardi Complex Sub Total Mean MMBOE - Gross Unrisked Prospective
Resources 649
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Chwar Jeribe Oil 6 19 46 23
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MMBOE 30
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Mio-
Oligocene Oil 0 0 2 1
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MMBOE 2
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Eocene Oil 0 1 3 1
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MMBOE 4
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Alyan Mio-
Oligocene Oil 1 8 35 14
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MMBOE 27
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Eocene Oil 0 1 4 1
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MMBOE 4
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Shiranish Oil 0 1 3 1
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MMBOE 4
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Table 1 Total Mean MMBOE - Gross Unrisked Prospective Resources 1,798
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Table 1 Total Mean Oil Only - Gross Unrisked Prospective
Resources 1,099
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Table 2
Gross Unrisked Prospective Resources (1)
Kalar-Bawanoor (Kurdamir and Garmian Blocks) Oil, Gas and Condensate
(As of July 19, 2011) (2)
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Mean Estimate Oil Only Mean Estimate MMBOE
Block Play / Prospect MMbbl MMbbl
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Kurdamir
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Kurdamir 585 825
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Garmian
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Upper Fars Fault Trap Play 705 798
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Upper Fars Bawanoor Saddle Play 120 282
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Zardi Complex (Zardi, Sergdan, Tilako) 233 649
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Chwar 25 36
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Alyan 17 34
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Mil Qasim 106 121
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Sarqala 199 350
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Baran 116 292
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Qulijan 86 183
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Sub Total Kurdamir Block 585 825
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Sub Total Garmian Block 1,607 2,745
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Total Mean Estimate 2,192 3,570
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Notes to Tables 1 and 2
1. The prospective resources are the undiscovered potentially recoverable
gross volumes estimated for the indicated reservoirs, without any
adjustments for working interest or encumbrances. 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 and facility,
corporate commitment or political risks). The chance of commerciality is
the product of these two risk components. The estimates contained herein
have not been risked for chance of discovery or 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. In this case,
prospective resources are undiscovered resources that indicate
development potential in the event the discovery is commercial and
should not be construed as reserves or contingent resources.
2. The prospective resources for the Tertiary Oligocene carbonate reservoir
at the Kurdamir-1 well are as at December 14, 2010, as previously
disclosed in the Corporation's Material Change Report dated December 16,
2010, which is available at www.sedar.com. The prospective resources for
the Tertiary Eocene and Cretaceous carbonate reservoirs at the Kurdamir-
1 well, the Upper Fars reservoir at Mil Qasim, and the Jeribe reservoir
at the Sarqala-1 well are as at January 14, 2011, as previously
disclosed in the Corporation's Material Change Report dated January 17,
2011, which is available at www.sedar.com. The prospective resources for
the Oligocene, Eocene, and Cretaceous reservoirs at Qulijan, the
Oligocene and Eocene reservoirs at Baran and the Oligocene, Eocene and
Cretaceous reservoirs at Sarqala in the Kalar-Bawanoor Block ("Block
K44") are as at February 18, 2011, as previously disclosed in the
Corporation's Material Change Report dated February 22, 2011, which is
available at www.sedar.com.
3. Low Estimate is considered to be a conservative estimate of the quantity
that will actually be recovered. It is likely that the actual remaining
quantities recovered will exceed the low estimate. If probabilistic
methods are used, there should be at least a 90 percent probability
(P90) that the quantities actually recovered will equal or exceed the
low estimate.
4. Best Estimate is considered to be the best estimate of the quantity that
will actually be recovered. It is equally likely that the actual
remaining quantities recovered will be greater of less than the best
estimate. If probabilistic methods are used, there should be at least a
50 percent probability (P50) that the quantities actually recovered will
equal or exceed the best estimate.
5. High Estimate is considered to be an optimistic estimate of the quantity
that will actually be recovered. It is unlikely that the actual
remaining quantities recovered will exceed the high estimate. If
probabilistic methods are used, there should be at least a 10 percent
probability (P10) that the quantities actually recovered will equal or
exceed the high estimate.
6. Mean Estimate is the average from the probabilistic assessment.
7. Barrels of oil equivalent (BOEs) include oil, solution gas, associated
gas and condensate. BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 Mcf: 1 bbl has been used and is
based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the
wellhead.
This resource disclosure coincides with the filing on SEDAR at www.sedar.com of a material change report, which includes the following additional information: a further description of the information used in the assessment of prospective resources, the risks and level of uncertainty associated with the discovery and recovery of the resources, the risks and uncertainties relating to the development of any discovered resources, and the significant positive and negative factors relevant to the estimates.
About WesternZagros Resources Ltd.
WesternZagros is a publicly-traded, Calgary-based, international oil and gas company engaged in acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. The Company, through its wholly-owned subsidiaries, holds a Production Sharing Contract ("PSC") with the Kurdistan Regional Government ("KRG") in the Kalar-Bawanoor Block of the Kurdistan Region of Iraq which covers a 2,120 square kilometre exploration block and it is on trend with, and adjacent to, a number of prolific historic oil and gas discoveries. WesternZagros holds a 40 percent working interest, the KRG holds a 20 percent working interest (the costs of which are carried by WesternZagros) and a wholly-owned subsidiary of Talisman Energy Inc. holds the remaining 40 percent working interest. Subsequent to March 31, 2011, the Company concluded negotiations with the Ministry of Natural Resources of the KRG and Talisman to amend the PSC that governs the Company's exploration activities in the Kalar-Bawanoor Block. Once approved, the amendments will divide the contract area of the PSC into two contract areas, each under a separate production sharing contract. The Company is awaiting formal approval of both the Kurdamir and Garmian PSC's from the Oil and Gas Council of the KRG and execution of the PSC's by the KRG. Additional information concerning the terms of the PSC and proposed amendments can be found in the Corporation's Annual Information Form dated April 13, 2011, which is available atwww.sedar.com.
The location of the Tilako, Zardi, Segrdan, Chwar and Alyan prospects, the Upper Fars Fault Trap Play and Bawanoor Saddle Play in the Kalar-Bawanoor Block is as indicated in the map below:
http://media3.marketwire.com/docs/720wzr_map.jpg
This news release contains certain forward-looking information relating, but not limited, to operational information, future drilling, testing and production plans and the timing associated therewith. Forward-looking information typically contains statements with words such as "anticipate", "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. 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, future capital and other expenditures (including the amount, nature and sources of funding thereof), continued political stability, timely receipt of any necessary government or regulatory approvals, and the timely receipt of any insurance proceeds due to the Company. 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), risks associated with resource estimates, 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.
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
FOR FURTHER INFORMATION PLEASE CONTACT:
WesternZagros Resources Ltd.
Greg Stevenson
Chief Financial Officer
(403) 693-7007
or
WesternZagros Resources Ltd.
Lisa Harriman
Investor Relations
(403) 693-7017
investorrelations@WesternZagros.com
www.WesternZagros.com
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