WesternZagros Resources Ltd.
TSX VENTURE : WZR

WesternZagros Resources Ltd.

August 07, 2012 07:30 ET

WesternZagros Secures C$57 Million Strategic Investment From Crest and Receives Funds From Gazprom Neft

CALGARY, ALBERTA--(Marketwire - Aug. 7, 2012) -

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WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") has signed a strategic investment agreement (the "Agreement") with Crest Energy International LLC ("Crest"). Under the Agreement, Crest will purchase, through a non-brokered, private placement, 40,714,286 Common Shares of the Company at Cdn$1.40 per share for gross proceeds of Cdn$57 million. This price represents an approximate 10 percent premium to the August 4, 2012 closing share price. When this private placement is completed, Crest will own just under 10 percent of the Company's issued and outstanding Common Shares.

In addition, WesternZagros confirms receipt of approximately Cdn$83 million from Gazprom Neft Middle East B.V. ("Gazprom Neft B.V.") with respect to the Amended Garmian Production Sharing Contract ("Amended Garmian PSC") and the Third Party Participant assignment in the Garmian Block ("Garmian TPP"). The Amended Garmian PSC also provides for an approximately Cdn$27 million reconciliation with the Kurdistan Regional Government ("KRG") with the net amount retained by WesternZagros being Cdn$56 million.

Headlines:

  • WesternZagros announces Crest will purchase 40,714,286 Common Shares in the Company at Cdn$1.40 per share for gross proceeds of Cdn$57 million at an approximate 10% premium to the August 4 closing price.
  • Following closing, Crest will own just under 10 percent of WesternZagros and a representative from Crest will join the Company's board of directors.
  • As a result of this private placement to Crest, TAQA will have the right to purchase up to approximately 10.14 million additional Common Shares from the Company at Cdn$1.40 in order to maintain its current ownership interest of approximately 19.9 percent.
  • WesternZagros received an approximate amount of Cdn$83 million in back costs from Gazprom Neft B.V. in connection with the Garmian TPP assignment, with net Cdn$56 million retained by WesternZagros after reconciliation with the KRG.

WesternZagros's Chief Executive Officer, Simon Hatfield commented:

"The Crest financing and the Garmian TPP assignment will help us to pursue a number of attractive opportunities by accelerating our drilling programs. Securing this funding facilitates our next stage of growth and development. Crest is an excellent investor for WesternZagros. The firm is already active in Kurdistan and is a founding member with the United States Kurdistan Business Council. The Council has a mandate to promote economic opportunities and support the development of the Kurdistan Region as a secure, stable, and economically prosperous area of Iraq."

Crest and its affiliates make investments in and operate global projects including investments in the oil and gas sector in the Kurdistan Region of Iraq. Under the terms of the Agreement, a representative from Crest will join WesternZagros's board of directors. In addition, WesternZagros has granted certain rights to Crest to participate for its pro-rata share in future equity issuances. In addition to the statutory four month hold period, the Common Shares issued under the Agreement will be subject to a contractual hold period until March 29, 2013. WesternZagros has also agreed that a representative of Crest will join the Company's board of Directors.

Eric Stoerr of Crest, added "This investment in WesternZagros reflects our continued interest in investing in oil and gas companies with strong management teams and significant resource potential in the MENA (Middle East-North Africa) region. Crest provides financial stability for WesternZagros to build on the success they have had to date in proving the resource potential in Kurdistan."

Completion of the private placement is subject to certain customary conditions and regulatory authorizations, including the approval of the TSX Venture Exchange. The Company expects the closing to occur on or around August 10, 2012.

Pursuant to the Amended and Restated Investment Agreement dated June 3, 2012 among the Company, Abu Dhabi National Energy Company PJSC ("TAQA") and TAQA International B.V. and as a result of this private placement to Crest, TAQA will have the right to purchase up to approximately 10.14 million additional Common Shares from the Company at Cdn$1.40 in order to maintain its current ownership interest of approximately 19.9% of the issued and outstanding Common Shares.

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".

About Crest Investment Company

Crest is an affiliate of Crest Investment Company, a Houston, Texas-based principal investment company specializing in energy investments, including projects in the Middle East. Through its affiliate, Gulf LNG America, LLC, Crest Investment Company holds an investment in Range Energy Resources (CNSX:RGO), a public company that has an indirect 24.95 percent working interest in a company with an ownership interest in a Production Sharing Contract in the Khalakan Block located in the Kurdistan Region of Iraq.

Crest Investment Company is one of twelve founding board members of the United States-Kurdistan Business Council ("USKBC"), a non-profit trade association launched in February 2012 and based in Washington, DC. The organization is dedicated to facilitating trade and commerce for U.S. companies in the Kurdistan Region of Iraq and to strengthening ties between the private sector in the U.S. and Kurdistan Region of Iraq. The USKBC seeks to highlight the unique opportunities for companies to invest in Kurdistan, to make it easier for companies to secure their investments, and to aid in the success of their operations.

This news release contains certain forward‐looking information relating, but not limited, to the closing of the private placement and anticipated timing thereof. 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, timely receipt of all necessary stock exchange approvals, 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, 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.

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