WesternZagros Resources Ltd.

WesternZagros Resources Ltd.

April 27, 2016 07:30 ET

WesternZagros Increases Flexibility of Debt Facility

CALGARY, ALBERTA--(Marketwired - April 27, 2016) -


WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or the "Company") announces that an agreement has been reached with its major shareholder, Crest Energy International, LLC ("Crest"), to further amend the US$200 million unsecured credit facility provided by Crest in a loan agreement between the parties dated August 14, 2014, as previously amended on December 21, 2015 (the "Loan Agreement"). The most recent amendments extend the date by which the Company must deliver to Crest the first drawdown notice (the "Drawdown Deadline") for each tranche and reverses the ordering of the first and second tranches to better align with the Company's anticipated capital needs.

Pursuant to an amending agreement entered into by the parties (the "Amending Agreement"), the previous Drawdown Deadline for the second tranche of US$50 million has been extended from the original date of June 1, 2016 to November 1, 2016. In addition, the maturity date for this tranche has also been extended from June 1, 2018 to November 1, 2018. The previous Drawdown Deadline of the first tranche of US$150 million has been extended from May 1, 2016 to April 1, 2017, with a corresponding extension of the maturity date for this tranche from October 1, 2017 to April 1, 2019.

These changes allow the Company to reduce commitment fees and interest costs to the Company as it does not expect to need to access any loan funds until the fourth quarter of 2016. The Company expects to end the first quarter of 2016 with working capital in the range of US$28-32 million, based on current estimates of revenue and expenses for the fiscal quarter. These funds are anticipated to be sufficient to meet the current commitments of the Company for 2016. However, as approvals for the Garmian and Kurdamir development plans are pending, the anticipated level and timing of capital expenditures required by the Company remain uncertain.

All other terms of the Loan Agreement remain unamended, including the condition precedent to drawdown that nothing has occurred since the closing of the Loan Agreement on November 18, 2014 (the "Closing Date") which could reasonably be expected to have a material adverse effect on the Company (as defined in the Loan Agreement). The Amending Agreement preserves Crest's right to determine if a material adverse effect has occurred since the Closing Date at the time that any drawdown notice is provided by the Company.

The Company, along with its financial advisor, TD Securities Inc., continues its review of financing alternatives. It is the Company's current intention not to disclose developments with respect to the review process until the Board of Directors has approved a specific transaction, action plan or otherwise determines that disclosure is necessary or appropriate. The Company cautions that there are no assurances or guarantees that the review process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction. The Company has not set a definite schedule to complete its review.

About WesternZagros Resources Ltd.

WesternZagros is an international natural resources company focused on 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 statements relating to, but not limited to, expected working capital, expected capital and other commitments and the timing thereof, expectations regarding the necessity for further funding and the timing thereof, as well as the anticipated results of the review process. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", "should" or similar words suggesting future outcomes. The Company cautions readers and prospective investors in the Company's securities to not 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.

Forward looking information is not based on historical facts but rather on management's current expectations as well as assumptions made by, and information currently available to management, concerning, among other things, development plans and concepts, future capital and other expenditures (including the amount, nature and sources of funding thereof), the ability to identify appropriate financing transactions, the availability of counterparties with whom the Company can conduct a transaction, the continued ability to sell production in the domestic or export markets and the payments to be received in connection therewith, anticipated operating costs, future economic conditions, future currency and exchange rates, continued political stability, continued security in the Kurdistan Region, timely receipt of any necessary co-venturer, government or regulatory approvals, the successful resolution of any disputes and the participation of the Company's co-venturers in joint activities. In addition, budgets are based upon WesternZagros's current development plans and anticipated costs, both of which are subject to change based on, among other things, the outcome of negotiations with co-venturers and the government, the actual outcomes of well operations and the installation and commissioning of facilities, unexpected delays, availability of future financing and changes in market conditions. 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 development and production; inherent uncertainties in interpreting geological data; changes in plans with respect to capital expenditures; interruptions in operations together with any associated insurance proceedings; the uncertainty of estimates and projections in relation to timing, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, risks relating to domestic refining capacity and continuing ability to access the domestic market, risks relating to the ability to access export markets and receive payments in accordance with the PSC terms on a timely basis, the uncertainty associated with any dispute resolution proceedings, the uncertainty associated with negotiating with foreign governments and risk associated with international activity, including the lack of federal petroleum legislation and ongoing political disputes and recent terrorist activities in Iraq in particular.

Readers are cautioned that the foregoing list of important factors is not exhaustive and that these factors and risks are difficult to predict. The forward-looking statements contained in this news release are made as of the date of this news release and, except as required by law, WesternZagros does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement. See the "Risk Factors" section of the Company's Annual Information Form dated March 16, 2016 ("AIF") filed on SEDAR at www.sedar.com for a further description of these risks and uncertainties facing WesternZagros. Additional information relating to WesternZagros is also available on SEDAR at www.sedar.com, including the Company's AIF.


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