WesternZagros Raises Concern Doubts on Iraq Woes

Source: Reuters 4/12/2011, Location: Middle East

WesternZagros Resources Ltd, which is engaged in exploring and producing crude oil and natural gas in Iraq, raised doubts about its ability to operate as a "going concern" unless it secures additional funding.

WesternZagros is one of the 40 foreign companies that have invested in the semi-autonomous northern region of Iraq, Kurdistan, and holds a production-sharing contract with the regional government.

The company said the funding depends partly on the resolution of the contract negotiations and the ability to export from the semi-autonomous region.

Some companies began exporting oil from Kurdistan in February after years of wrangling between Kurdistan and Iraq, but the key issue of payments has still not been resolved.

Getting more funding will also depend on the resolution of the remaining political disputes in the war-torn country and the results of the company's exploration activities, WesternZagros said in a statement.

An Iraqi government official had said earlier in April that Iraq and Kurdistan are likely to reach an agreement in the second half of 2011.

WesternZagros, which posted a net loss of $5.7 million, or 3 cents a share last year, said it had an accumulated a deficit of $45.5 million at end of 2010.

There is no assurance that sufficient funds will be available in the future, said the company, which has a market value of about $130 million.

WesternZagros shares closed at 6 Canadian cents on the Toronto Stock Exchange.


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