CALGARY, ALBERTA--(Marketwire - Oct. 31, 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 successfully completed its testing program in the Eocene reservoir, the second of three target intervals in the Kurdamir-2 exploration well in the Kurdistan Region of Iraq. The testing proved an oil discovery in the naturally fractured limestones of the Eocene Formation. This adds to the previously announced major discovery of oil in the Oligocene reservoir which was the primary target of the well.
A single cased hole test was performed over a net perforated interval of 108 metres and resulted in the flow of light, 45 degree API oil at sub-commercial flow rates. No water leg was encountered and no formation water was recovered during the test. Following an acid fracture stimulation, the well flowed back a mixture of oil, emulsion and spent acid. This is the first test of the Eocene and the Company will engage in further study to optimise completion techniques in order to unlock this resource.
The Company does not expect its earlier Eocene mean estimate of gross unrisked prospective oil resources of 278 million barrels ("MMbbl") to change appreciably from these test results. The base of the perforated Eocene reservoir interval is interpreted to be approximately 220 metres below the seismically mapped four-way structural dip closure of the Kurdamir structure, which suggests that in a similar manner as the Cretaceous and Oligocene, the Eocene is also involved in a larger trap.
Commenting on the Eocene test results, WesternZagros's Chief Executive Officer Simon Hatfield said:
"Proving a light oil discovery in the Eocene at Kurdamir-2 was our main objective for this test. This test result provides another piece of evidence that Kurdamir and the neighbouring Tophkana structure share a common oil accumulation in the Eocene reservoir. We are now undertaking further work to better understand the reservoir characteristics and the drilling, completion and stimulation techniques that will be required to make the Eocene a viable commercial reservoir in the future."
The Eocene reservoir has the potential to be an attractive oil resource addition to the main Kurdamir Oligocene hydrocarbon resource. The combined audited unrisked mean estimate for all three reservoirs on the Kurdamir prospect is 1,609 MMbbl of prospective oil resources as at May 31, 2012, 17 percent of which (278 MMbbls), is attributed to the Eocene. The Company does not expect this number to change materially.
As previously reported in March 2012, the first drill stem test on the Kurdamir-2 well resulted in a major oil discovery in the Oligocene interval. The well was then drilled to a total depth of 4,000 metres in June 2012. In addition to the oil-bearing intervals encountered in the Oligocene and Cretaceous reservoirs, hydrocarbon shows and wireline logs indicated the presence of a gross hydrocarbon-bearing interval of approximately 275 metres of fractured limestones and marls in the Eocene Formation, which was the focus of the recent testing program.
Preparations are currently underway to conduct a multi-cased-hole testing program on the primary zone of interest in this well, which is the 118 metres of gross oil pay already discovered in the Oligocene that accounts for 72 percent of the prospective oil resources in the Kurdamir prospect. The operator, Talisman (Block K44) B.V., and WesternZagros are aligned on planning a 3D seismic program over the Kurdamir and Topkhana structures and a further appraisal well (Kurdamir-3) to assess the ultimate size of the Kurdamir discovery. WesternZagros and Talisman each have a 40 percent working interest in the Kurdamir Block, with the Kurdistan Regional Government 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 a 40 percent working interest in 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 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. 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 March 26, 2012 (the "AIF"), 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 which are as follows. "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. The combined prospective resource estimate referenced was independently audited as of May 31, 2012 (Tertiary Eocene), April 20, 2012 (Tertiary Oligocene) and January 14, 2011 (Cretaceous) and is the gross volume for the indicated reservoirs, without any adjustment for the Company's working interest or encumbrances. The Company's Statement of Oil and Gas Information contained in its Annual Information Form dated March 26, 2012 ("AIF") and Material Change Reports dated April 23, 2012 and June 6, 2012 ("Material Change Reports") filed on SEDAR at www.sedar.com contain additional detail with respect to the resource assessments and include the significant risks and uncertainties associated with the estimates and the recovery and development of the resources. In addition, the combined mean estimate of prospective resources referenced is an arithmetic sum of the mean estimates for the three individual reservoirs on the Kurdamir structure and each such individual mean estimate is the average from the probabilistic assessment that was completed for the reservoir. Readers should refer to the AIF and the Material Change Reports for a detailed breakdown of the high (P10), low (P90) and best (P50) estimates for each of the individual reservoir assessments.
WESTERNZAGROS RESOURCES WAS RECOGNIZED AS A TSX VENTURE 50® COMPANY IN 2012. TSX VENTURE 50 IS A TRADE-MARK OF TSX INC. AND IS USED UNDER LICENSE.
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