CALGARY, ALBERTA--(Marketwire - March 26, 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 a major oil discovery in the Oligocene reservoir at the Kurdamir-2 exploration well in the Kurdistan Region of Iraq.
The Kurdamir-2 well has reached the intermediate casing depth of 2,812 metres, and has drilled through the Oligocene interval. Wireline logs indicate a porous zone of 140 metres thickness within the Oligocene interval, between 2,422 and 2,562 metres, all of which is hydrocarbon bearing. Within this hydrocarbon zone, well log data indicates 22 metres of gross natural gas pay above 118 metres of gross oil pay. No evidence of water has been encountered within the Oligocene interval.
"We are excited to learn that the Kurdamir and adjacent Topkhana structures have a common oil leg in the Oligocene reservoir with the potential of containing a giant oil and gas field. We're even more excited by the fact that we don't yet know the full extent of the resources that the Oligocene, alone, contains," said Simon Hatfield, WesternZagros's Chief Executive Officer. "Our 100% drilling success rate continues with this major oil discovery. The Kurdamir-2 discovery is the third high-impact discovery on our Blocks in ten months and is an important confirmation of our queue of high-quality, light oil exploration opportunities. In particular, our view is that this discovery significantly improves the oil potential of the deeper, as yet undrilled reservoirs in Kurdamir-2 and also those prospects adjacent to Kurdamir on our Garmian Block."
When the well reached a depth of 2,477 metres, a drill stem test was conducted of the open hole from the base of the 13 5/8" liner at 2,315 metres to 2,477 metres, which included 55 metres of the Oligocene porous zone. This test was conducted across the interpreted gas-oil contact at 2,444 metres and tested 22 metres of gas pay in contact with 33 metres of oil pay. The test achieved a flow rate of 7.3 million cubic feet per day of gas and a stabilized flow rate of 950 barrels per day of 47 degree API mixture of light oil and condensate over the final seven hours of the main flow period. This rate was achieved through a 56/64 inch choke at an average flowing well head pressure of 650 pounds per square inch and without any stimulation. There was no observed decline and no formation water was recovered during the testing. The deeper Oligocene oil pay will not be tested at this time due to time constraints, as the well is required to drill and evaluate the deeper Cretaceous by the end of June 2012. The Company interprets these results as an additional successful confirmation of a significant oil column underlying the gas cap in the Oligocene reservoir. (The first confirmation was provided in Kurdamir-1 as disclosed in the Company's news release of December 16, 2010.)
The Company interprets that since the test was conducted across the gas-oil contact, and the fact that gas flow impedes oil flow, the results do not represent the true oil rate potential of this interval. According to analysis by an independent third party engineering expert, the 33 metres of oil pay tested to date is capable of flowing at rates of 4,000 barrels per day if isolated from the gas pay and stimulated. The Company is working with the operator, Talisman (K44) B.V. ("Talisman"), to examine options for additional cased hole testing focused on the full 118 metres of gross oil pay in the Oligocene after the well has met the PSC commitments. The co-venturers are also planning a 3D seismic program and a further appraisal well to help determine the ultimate size of the Oligocene reservoir.
These interim results from the Kurdamir-2 well are significant for two reasons. 1. The 327 metres of Oligocene hydrocarbon column that was proven in the Kurdamir-1 well, has now increased significantly to at least 420 metres (i.e. from the top of the Oligocene reservoir in Kurdamir-1 well at 2,142 metres to the base of the gross oil pay in the Kurdamir-2 well at 2,562 metres.) As no oil-water contact has been encountered in Kurdamir- 2, the maximum thickness of the oil column is not yet known. 2. The bottom of the known oil column extends down to at least 2,562 metres, which is significantly deeper than the limit of closure of the Kurdamir structure as mapped from seismic data. This finding, in turn, supports the observation that the Oligocene reservoir is involved in a considerably larger trap and that Kurdamir and the neighbouring Topkhana structure share a common oil leg.
To view the two illustrations associated with this release, please visit the following link: http://media3.marketwire.com/docs/777001.pdf
The Kurdamir-2 test and wireline log data will be analyzed to update contingent and prospective resource estimates for the Oligocene which, in the Company's views, are likely to materially increase. Once confirmed by the Company's independent auditors, this update will be publicly released. Prior to these latest results, the independently audited unrisked mean estimates for the contingent resources in the Oligocene reservoir of the Kurdamir structure were 920 billion cubic feet of gas, 35 million barrels ("MMbbl") of condensate and 30 MMbbl oil, plus an unrisked mean estimate of 280 MMbbl prospective oil resources as of December 14, 2010.
The Kurdamir-2 exploration well was spudded on October 25, 2011 and is operated by Talisman. The well is located approximately two kilometres northeast of the Kurdamir-1 discovery well and is targeting the Oligocene, Eocene and Cretaceous reservoirs on the flank of the structure where the combined potential oil interval is likely at maximum thickness. The combined audited unrisked mean estimate for all three reservoirs on the Kurdamir structure is 585 MMbbl of prospective oil resources as at January 14, 2011. WesternZagros and Talisman each have a 40 percent working interest in the Kurdamir Block with the Kurdistan Regional Government ("KRG") holding the remaining 20 percent.
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, 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 potential production rates may not be indicative of ultimate production levels or recovery. 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 current Annual Information Form, which is available on SEDAR at www.sedar.com.
In addition, statements relating to "contingent resources" and "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. "Contingent resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent resources have an associated chance of development (economic, regulatory, market and facility, corporate commitment or political risks). The estimates referred to herein have not been risked for the chance of development. There is no certainty that the contingent resources will be developed and, if 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 contingent resources. All resource estimates presented are gross volumes for the indicated reservoirs, without any adjustment for working interest or encumbrance.
As released on January 17, 2011, and prior to these latest drilling and testing results, the combined mean estimate of prospective oil resources presented for the Kurdamir reservoirs are for the Oligocene (280 million barrels (MMbbl)) reservoir, the Eocene (124 MMbbl) reservoir and the Cretaceous (181 MMbbl) reservoir. The mean estimate of prospective oil resources 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 of prospective oil resources 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 mean estimates of contingent resources presented above for the Oligocene reservoir at Kurdamir are the averages from the individual probabilistic assessments for gas, condensate and oil that were completed prior to these latest drilling and testing results and first disclosed on December 16, 2010; for gas, the low estimate (P90) is 505 billion cubic feet (Bcf), the best estimate (P50) is 850 Bcf and the high estimate (P10) is 1,420 Bcf; for condensate, the low estimate (P90) is 22 MMbbl, the best estimate (P50) is 33 MMbbl and the high estimate (P10) is 48 MMbbl and for oil, the low estimate (P90) is 0.7 MMbbl, the best estimate (P50) is 6.5 MMbbl and the high estimate (P10) is 60 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, the significant positive and negative factors relevant to the estimates and, in respect of contingent resources,the specific contingencies which prevent the classification of the resources as reserves.
WESTERNZAGROS RESOURCES WAS RECOGNIZED AS A TSX VENTURE 50(R) COMPANY IN 2012. TSX VENTURE 50 IS A TRADE-MARK OF TSX INC. AND IS USED UNDER LICENSE.
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