| February 16, 2012 |
| WesternZagros Declares an Oil Discovery at Mil Qasim-1 and Provides an Operational Update |
CALGARY, ALBERTA--(Marketwire - Feb. 16, 2012) -
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 made an oil discovery in the Upper Fars Formation at the Mil Qasim-1 exploration well in the Kurdistan Region of Iraq.
Mil Qasim-1 Discovery Well (Garmian Block)
Lower Bakhtiari and Upper Fars Formations
Mil Qasim-1 was drilled to a total depth of 2,425 metres in December 2011 ahead of time and on budget. The well encountered a gross hydrocarbon bearing interval of approximately 800 metres containing numerous sandstones (each in the range of 2-13 metres thick) in the Lower Bakhtiari and Upper Fars Formations. Hydrocarbon shows and wireline logs indicate the presence of oil in the Upper Fars Formation and this was the focus of the testing program. Hydrocarbon shows and wireline logs also indicate the potential for additional oil in the Lower Bakhtiari Formation, but testing of this interval has been deferred to a later date.
The testing program has resulted in the flow of light, 43 to 44 degree API oil to surface from low permeability sandstone reservoirs and natural fractures in the Upper Fars Formation. No H2S and no formation water were identified during testing. Four tests were conducted in the Mil Qasim-1 well. Test 1 was an open hole test, Tests 2 to 4 were cased hole tests.
Test 1 was conducted over the open hole section between the depths of 2,129 metres and 2,168 metres. Test 1 resulted in a flow of 44 degree API gravity oil with no formation water, at an average rate of 108 barrels of oil per day ("bopd") over a two day period using an 8/64" choke with a flowing well head pressure of 1,606 psi. Initial reservoir pressure was calculated to be 6,405 psi.
Test 2 was conducted over a gross perforated interval of 49 metres between the depths of 2,054 metres and 2,103 metres. Although Test 2 successfully flowed limited amounts of oil to surface, the test failed to evaluate the potential of the reservoir interval due to ineffective perforations.
Test 3 was conducted over a gross perforated interval of 167 metres between 1,799 metres and 1,966 metres. Test 3 resulted in a flow of 44 degree API oil with no formation water, at an average rate of 488 bopd over a one day period using a 48/64" choke with a flowing well head pressure of 113 psi. Initial reservoir pressure was calculated to be 5,338 psi. Test 3 analysis conducted by an independent third party engineering expert indicates that this interval has the potential to produce at over 1,000 bopd if formation damage can be mitigated by stimulation or use of alternative drilling techniques. The Company is considering additional measures to enhance future flow from this interval.
Test 4 was conducted over a gross perforated interval of 107 metres between the depths of 1,636 metres and 1,743 metres. Test 4 resulted in a flow of 43 degree API oil and an emulsion at an estimated rate of 250 barrels per day ("bpd") over a one day period. Test 4 was conducted using a 32/64" choke with a flowing well head pressure of 90 psi.
These drill-stem testing operations were concluded on February 14, 2012. However, upon approval from the Kurdistan Regional Government, WesternZagros plans to immediately conduct an extended well test over the Test 4 interval to further clean-up the well and gain additional information on its long term deliverability. The Company will conduct additional analysis to determine how to increase flow rates and unlock the considerable potential of the low permeability, naturally fractured sandstones of the Upper Fars Formation.
Upper Bakhtiari Formation
The Mil Qasim-1 well also encountered hydrocarbon shows in a high porosity conglomerate and sandstone interval of approximately 25 metres thickness in the Upper Bakhtiari Formation at a depth of approximately 500 metres. The Company is actively researching lower cost drilling solutions to evaluate this shallow zone later this year as it is encouraged by the existence of numerous highly productive water wells drilled in the Upper Bakhtiari Formation in the southern Garmian area that have typical flow rates of 6,000 bpd.
Commenting on the test results, WesternZagros Chief Executive Officer Simon Hatfield said, "The data gained while testing Mil Qasim-1 significantly contributes to our improving knowledge of the Upper Fars Formation. We're encouraged that we have flowed oil from multiple zones in the Upper Fars with no identified formation water and we are optimistic that these reservoirs can achieve economic flow rates in the future. The next two wells that WesternZagros plans to drill in the area, Sarqala-2 and Hasira-1, although being drilled for deeper targets, will also provide additional information on the Upper Fars reservoirs and the extent of the Mil Qasim discovery. The light oil discovered in Mil Qasim underscores the importance of our Blocks as a source of high quality light oil from the Kurdistan Region of Iraq."
Kurdamir-2 Exploration Well (Kurdamir Block)
The 13 5/8" intermediate casing in the Kurdamir-2 exploration well has been set and cemented at 2,315 metres in the Lower Fars top seal above the Oligocene reservoir. The well is on track to drill and test the Oligocene reservoir as expected by the end of the first quarter of 2012.
Sarqala-1 Extended Well Test ("EWT") (Garmian Block)
Following the installation of additional tank storage capacity, production continues at an average rate of 5,000 bopd. Sarqala crude is being processed in local refineries under the auspices of the Ministry of Natural Resources.
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 with the Kurdistan Regional Government in the Kurdistan Region of Iraq. 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.
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