WesternZagros Resources Ltd.

TSX VENTURE : WZR


WesternZagros Resources Ltd.

February 11, 2013 07:30 ET

WesternZagros Revises Resource Estimates for Baram and Kurdamir; Results Highlight Major Potential to be Tested this Year

CALGARY, ALBERTA--(Marketwire - Feb. 11, 2013) -

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 conducted further analysis of the results from the Kurdamir-2 well and provides a revision of its resource estimates for the Oligocene reservoir in the Kurdamir Block, as well as an update for the adjacent Oligocene reservoir in the Baram prospect on the Garmian Block. On the Baram prospect, the total mean estimate of gross unrisked prospective resources ("Mean Prospective Resources") increased by over 300 percent to 423 million barrels of oil ("MMbbl"). When gas and condensate are included the Mean Prospective Resources increased by 90 percent to 496 million barrels of oil equivalent ("MMBOE"). The Company's revised estimates are related to its interpretation that the Baram prospect has the potential to contain the extension of the Kurdamir oil leg in the Garmian Block (see Figure 1). The combined Mean Prospective Resources of the Kurdamir structure in the Oligocene, Eocene, and Cretaceous reservoirs and the Baram prospect in the Oligocene and Eocene reservoirs is now 1.7 billion barrels of oil, or over 2 billion barrels of oil equivalent when gas and condensate are included, as summarized in the table below. All of the revised estimates were audited by independent reserves evaluator, Sproule International Limited ("Sproule"), on February 8, 2013.

Simon Hatfield, WesternZagros's Chief Executive Officer, commented,

"As we understand the giant Kurdamir Discovery better, we are intrigued by the potential that the Baram prospect is an extension of Kurdamir. As such, we expect Baram-1 to be a high impact well and one of the most attractive opportunities on the Garmian Block. One of the rigs we have secured is currently being prepared in North America for deployment to Baram-1 and we anticipate spudding the well in the third quarter of this year."

To view Figure 1: Top Oligocene Depth Structure Map showing proximity of Kurdamir & Baram, please visit the following link: http://media3.marketwire.com/docs/211wzr_fig1.pdf

The Company's interpretation that the Baram prospect is an extension of the Kurdamir structure will be confirmed by drilling and testing the Baram-1 exploration well in 2013. The table below illustrates the combined mean estimate of gross unrisked contingent and prospective resources for both the Kurdamir discovery and the Baram prospect based on the most recent Sproule assessment audit.

Mean Gross Resource Estimates (Unrisked)
Category Oligocene Eocene Cretaceous Category Totals
Kurdamir Baram Kurdamir Baram Kurdamir Baram Kurdamir Baram Combined TOTAL
Contingent Resources Oil (MMbbl) 390 155 545 545
Contingent Resources Oil, Gas & Condensate (MMBOE) 717 226 943 943
Discovered in Place (MMbbl) 1265 614 1879 1879
Discovered in Place (MMBOE) 1795 828 2623 2623
Prospective Resources Oil (MMbbl) 1076 423 107 11 130 1313 434 1747
Prospective Resources Oil, Gas &Condensate (MMBOE) 1263 496 138 31 206 1607 527 2134
Undiscovered in Place (MMbbl) 3486 1365 417 819 574 4477 2184 6661
Undiscovered in Place (MMBOE) 4093 1603 539 964 819 5451 2567 8018

The individual assessments for each of the categories provided in the table above are outlined in more detail as follows:

Baram Prospect - Oligocene

Table 1(a), below, provides estimates of the gross unrisked recoverable prospective resources for the Oligocene reservoir of the Baram prospect as audited by Sproule as of February 8, 2013.

Table 1(b), below, provides estimates of the gross unrisked undiscovered petroleum initially-in-place, included in this latest Sproule audit for the Oligocene reservoir of the Baram prospect.

Low
Estimate(7
) Best
Estimate(8
) High
Estimate(9
) Mean
Estimate(10
)
Table 1(a) Prospect Reservoir Hydrocarbon P90 P50 P10 Mean
Gross Unrisked Type MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf
Prospective Resources(1), (3) Baram Tertiary Oligocene Oil 72 320 906 423
Garmian Block Oil, Gas Solution Gas 70 330 955 440
and Condensate MMBOE(11) 84 375 1065 496
As of Feb 8, 2013 Baram Total Mean MMbbl Oil Only - Gross Unrisked Prospective Resources 423
Baram Total Mean MMBOE - Gross Unrisked Prospective Resources 496
Low Estimate(7 ) Best Estimate(8 ) High
Estimate(9
) Mean Estimate(10 )
Table 1(b) Prospect Reservoir Hydrocarbon P90 P50 P10 Mean
Gross Undiscovered Type MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf
Petroleum (Oil and Gas) Baram Tertiary Oligocene Oil Initially-In-Place 285 1143 2768 1365
Initially in Place (Unrisked) (1),(5) Solution Gas Initially-In-Place 290 1175 2915 1425
Garmian Block MMBOE(11) 333 1339 3254 1603
As of Feb 8,
2013
Baram Total Mean MMbbl Oil Only - Gross Unrisked Undiscovered Petroleum Initially-In-Place 1365
Baram Total Mean MMBOE - Gross Unrisked Undiscovered Petroleum Initially-In-Place 1603

Kurdamir Discovery - Oligocene

Based on a recalculation of Oligocene contingent and prospective resources, the contingent and prospective resources for the Kurdamir Oligocene reservoir that were disclosed in the Company's Material Change Report dated January 28, 2013, have been revised by the Company and audited by Sproule. This recalculation stems from changes in two reservoir parameters including new data obtained from the analysis of oil samples from DST 6 in the Kurdamir-2 well. The revision results in a minor reduction in the contingent resources and an increase in the prospective resources categories for the Kurdamir Block, as outlined below.

Kurdamir Block Mean Gross Resource Estimates (Unrisked)
Category Oligocene Eocene Cretaceous Category Total
Contingent Resources Oil (MMbbl) 390 155 545
Contingent Resources Oil & Gas (MMBOE) 717 226 943
Prospective Resources Oil (MMbbl) 1076 107 130 1313
Prospective Resources Oil & Gas (MMBOE) 1243 138 206 1607

Tables 2(a) and 2(c), below, provide revised estimates of the gross unrisked recoverable contingent and prospective resources for the Oligocene reservoir of the Kurdamir structure as audited by Sproule as of February 8, 2013.

Tables 2(b) and 2(d), below, provide revised estimates of the gross unrisked discovered petroleum initially-in-place, included in this latest Sproule audit of the Oligocene reservoir of the Kurdamir structure.

The tables also include the unchanged resource estimates for the Eocene and Cretaceous reservoirs.

Low Estimate(7 ) Best Estimate(8 ) High
Estimate(9
) Mean Estimate(10 )
Prospect Reservoir Hydrocarbon P90 (1C ) P50 (2C ) P10 (3C ) Mean
Type MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf
Kurdamir Tertiary Oligocene Oil 210 365 599 390
Solution Gas 205 380 650 410
Table 2(a)
Gross Unrisked
Associated Gas(6) 855 1220 1685 1250
Contingent Condensate 30 49 71 50
Resources (1),(2) MMBOE(11) 417 681 1059 717
Kurdamir Block Oil, Gas
and Condensate
Kurdamir Tertiary Eocene Oil 69 138 263 155
As of Feb 8, 2013 Solution Gas 115 245 480 280
Associated Gas 90 130 180 130
Condensate 2 3 5 3
MMBOE 105 204 378 226
Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Contingent Resources 545
Kurdamir Total Mean MMBOE - Gross Unrisked Contingent Resources 943
Low Estimate(7 ) Best Estimate(8 ) High
Estimate(9
) Mean Estimate(10 )
Prospect Reservoir Hydrocarbon P90 P50 P10 Mean
Type MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf
Kurdamir Tertiary Oligocene Oil Initially-In-Place 874 1242 1678 1265
Table 2(b)
Gross Discovered
Petroleum
Solution Gas Initially-In-Place 853 1298 1835 1325
(Oil and Gas) Initially in
Place (Unrisked) (1),(4)
Gas Initially-In-Place 1301 1824 2451 1856
Kurdamir Block MMBOE(11) 1233 1762 2393 1795
As of Feb 8, 2013 Kurdamir Tertiary Eocene Oil Initially-In-Place 344 572 928 614
Solution Gas Initially-In-Place 565 1040 1730 1100
Gas Initially-In-Place 130 185 255 185
MMBOE 460 776 1259 828
Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Discovered Petroleum Initially-In-Place 1879
Kurdamir Total Mean MMBOE - Gross Unrisked Discovered Petroleum Initially-In-Place 2623
Low
Estimate(7
) Best
Estimate(8
) High
Estimate(9
) Mean Estimate(10 )
Prospect Reservoir Hydrocarbon P90 P50 P10 Mean
Type MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf
Kurdamir Tertiary Oligocene Oil 309 1018 1861 1076
Solution Gas 310 1050 2030 1125
Table 2(c) MMBOE(11) 361 1193 2199 1263
Gross Unrisked Prospective Kurdamir Tertiary Eocene Oil 31 91 202 107
Resources(1), (3) Solution Gas 50 160 350 185
Kurdamir Block Oil, MMBOE 39 118 260 138
Gas and Condensate Kurdamir Cretaceous Oil 38 108 243 130
As of Feb 8, 2013 Solution Gas 75 225 525 275
Associated Gas(6) 65 140 260 155
Condensate 2 4 8 4
MMBOE 63 173 382 206
Kurdamir Sub Total Mean MMbbl Oil Only - Gross Unrisked Prospective Resources 1313
Kurdamir Sub Total Mean MMBOE - Gross Unrisked Prospective Resources 1607
Low Estimate(7 ) Best Estimate(8 ) High
Estimate(9
) Mean Estimate(10 )
Prospect Reservoir Hydrocarbon P90 P50 P10 Mean
Type MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf MMbbl/Bcf
Kurdamir Tertiary Oligocene Oil Initially-In-Place 1161 3620 5463 3486
Table 2(d)
Gross Undiscovered
Petroleum (Oil and
Solution Gas Initially-In-Place 1166 3694 5959 3642
Gas) Initially in Place MMBOE(11) 1355 4236 6456 4093
(Unrisked) (1),(5) Kurdamir Tertiary Eocene Oil Initially-In-Place 153 388 708 417
Kurdamir Block
As of Feb 8, 2013
Solution Gas Initially-In-Place 250 680 1275 730
MMBOE 195 501 921 539
Kurdamir Cretaceous Oil Initially-In-Place 223 512 1014 574
Solution Gas Initially-In-Place 430 1095 2165 1215
Associated Gas Initially-In-Place 115 235 425 255
MMBOE 314 734 1446 819
Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Undiscovered Petroleum Initially-In-Place 4477
Kurdamir Total Mean MMBOE - Gross Unrisked Undiscovered Petroleum Initially-In-Place 5451

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.

Notes to Tables 1(a), 1(b), 2(a), 2(b), 2(c) and 2(d):

  1. The resources presented are the gross volumes estimated for the indicated reservoirs without any adjustments for the Company's working interest or encumbrances. For a description of the production sharing terms under the PSCs, see the Company's Annual Information Form dated March 26, 2012 available at www.sedar.com.
  1. 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). These estimates have not been risked for the chance of development. There is no certainty that the contingent resources will be developed and, if they are 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. The Company's material change report dated January 25, 2013, which is available at www.sedar.com, contains additional detail on the specific contingencies which prevent the classification of these contingent resources as reserves.
  1. 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. These estimates have not been risked for the chance of discovery or for 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
  1. Discovered Petroleum Initially-In-Place (equivalent to discovered resources) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations on Company lands prior to production. The petroleum type for this property is crude oil and natural gas. The recoverable portion of discovered petroleum initially-in-place includes production, reserves, and contingent resources; the remainder is unrecoverable (see Table 2(b); there are no reserves or production for this reservoir).
  1. Undiscovered Petroleum Initially-In-Place (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, as of a given date, to be contained in accumulations yet to be discovered on Company lands. The petroleum type for this property is crude oil and natural gas. The recoverable portion of undiscovered petroleum initially-in-place is referred to as prospective resources; the remainder is unrecoverable (see Table 2(d)). These are the gross undiscovered initially-in-place volumes estimated for the reservoirs in the Kurdamir structure below the lowest known oil. The undiscovered petroleum initially-in-place has not been risked for chance of discovery.
  1. The gross unrisked contingent resources for gas reflect reductions for condensate recovery, surface losses, and fuel gas.
  1. 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.
  1. 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.
  1. 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.
  1. Mean Estimate is the average from the probabilistic assessment.
  1. Barrels of oil equivalent (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.

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 future drilling and appraisal plans, and the timing associated therewith, as well as predicted production rates. 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.

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.

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

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