WesternZagros Resources Ltd.
TSX VENTURE : WZR

WesternZagros Resources Ltd.

August 13, 2012 07:30 ET

WesternZagros Successfully Closes the Crest Strategic Investment and the Amended Garmian PSC

CALGARY, ALBERTA--(Marketwire - Aug. 13, 2012) -

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WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") has closed its previously announced strategic investment with Crest Energy International LLC ("Crest") whereby Crest has purchased from WesternZagros, through a non-brokered, private placement, 40,714,286 Common Shares of the Company at a price of Cdn$1.40 per share for gross proceeds of $57 million. Crest now holds approximately 9.88 percent of the Company's issued and outstanding Common Shares. The Common Shares issued to Crest are subject to a contractual hold period until March 29, 2013, pursuant to the terms of the investment agreement (the "Agreement") entered into between the Company and Crest on August 6, 2012.

In addition, WesternZagros has concluded the successful execution of the Amended Garmian Production Sharing Contract ("PSC") with respect to the Third Party Participant ("TPP") assignment in the Garmian Block. WesternZagros received approximately Cdn$83 million from Gazprom Neft Middle East B.V. The Amended Garmian PSC also provides for a reconciliation of approximately Cdn$27 million with the Kurdistan Regional Government which has been completed. The net amount retained by WesternZagros is Cdn$56 million.

Eric Stoerr, of Crest, has been appointed to the WesternZagros Board of Directors. Mr. Stoerr has more than 19 years of experience in commodities related businesses and banking including investment and commercial banking, commodity trading and business development. Prior to managing Crest's investments in energy and natural resources, Eric Stoerr was Managing Director at The Royal Bank of Scotland, North American Energy Finance Group. He holds a BSc in Business Administration from Skidmore College, Saratoga Springs, NY and a Masters in Business Administration from Tulane University, New Orleans, LA.

Fred Dyment, Chairman of the Board of WesternZagros, welcomed Mr. Stoerr, stating, "we are very pleased by Crest's support and confidence in WesternZagros as evidenced by this financing. The entire Board looks forward to working with Eric in the future."

The proceeds of the private placement will be used to fund the Company's share of costs for further testing on its Kurdamir-2 well, 3D seismic on the Kurdamir discovery, drilling of the Kurdamir-3 well, 3D seismic on the Sarqala discovery and other planned exploration and appraisal activities on the Garmian Block, as well as for general corporate purposes. Pursuant to the Agreement, WesternZagros has granted certain rights to Crest to participate for its pro-rata share in future equity issuances.

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 the use of proceeds of the private placement. 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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