WesternZagros Resources Ltd. has completed a revised resources assessment of its Kurdamir Oligocene reservoir in the Kurdistan Region of Iraq and there are no material changes. On the Garmian Block, declaration of commerciality has been filed, the Baram-1 exploration well has discovered light oil, albeit in low permeability reservoir, and the Hasira-1 well has thus far confirmed the extension of the Sarqala oil discovery in the Jeribe reservoir.
- Operational updates on the Kurdamir and Garmian Blocks include:
- Independently audited revised assessments of gross unrisked mean contingent and prospective resources for the Oligocene reservoir in the Kurdamir Block are materially unchanged following the Kurdamir-3 well results.
- The Company has filed a declaration of commerciality of the Sarqala Discovery and is advancing development plans with the Kurdistan Regional Government.
- The Baram-1 well discovered a gross interval of 73 metres of light oil in the Oligocene reservoir and this indicates a gross hydrocarbon column in excess of 500 metres if it extends to the crest of the Baram structure. The well will be suspended pending further evaluation.
- The Hasira-1 well confirmed light oil in the Jeribe reservoir and the well is preparing to drill ahead into the deeper Oligocene reservoir.
- A 30 day extended well test in the Kurdamir-2 well is scheduled for March to better assess the Oligocene reservoir performance.
- A workover of the Sarqala-1 well is scheduled for March to increase the production capability above the current capacity of 5,000 barrels of oil per day.
"The revised assessment, once again, confirms that the Kurdamir Discovery is a giant field containing contingent resources of almost a billion barrels of oil equivalent, a significant oil and gas resource," said Simon Hatfield, WesternZagros's Chief Executive Officer. "We look forward to submitting a declaration of commerciality on the Kurdamir Block and moving towards development of this exceptional resource."
"On the Garmian block, we're encouraged that the Baram-1 well discovered light oil in the Oligocene. We are evaluating the Baram-1 test results, logs, and core data and integrating with the 3D seismic data to assess the potential of the discovery. We are also encouraged that Hasira-1 has confirmed the extension of the Sarqala oil discovery in the Jeribe reservoir. The Hasira-1 well will now drill into the Oligocene and we are looking forward to the results. "
"The development of the Garmian Block is advancing as we have filed the declaration of commerciality, based on the Sarqala Discovery, with the Kurdistan Regional Government. This is the first step in taking WesternZagros from a frontier explorer to a cash flow-generating company. As the Kurdistan Region moves towards crude oil exports through the newly constructed pipeline, we foresee our high quality, light oil as a valued component to the Kurdish export blend."
Revised Resources Estimate - Kurdamir Block
WesternZagros has re-evaluated the contingent and prospective resource estimates for the Oligocene reservoir in the Kurdamir structure based on new information obtained from the drilling of the Kurdamir-3 appraisal well and the interpretation of 3D seismic data. The revised resources assessment has been audited by our independent reserves evaluator, Sproule International Limited ("Sproule"), as of February 10, 2014 resulting in no material change.
The revised mean estimate of gross unrisked contingent resources ("Mean Contingent Resources") rose to 750 million barrels of oil equivalent ("MMBOE") as compared to 717 MMBOE in the last resource estimate of February 8, 2013 (the "2013 Assessment"), an increase of 5 percent. On an oil basis, the Mean Contingent Resources are now 386 million barrels of oil ("MMbbl") versus 390 MMbbl in the 2013 Assessment, an adjustment of less than one percent. The combined Mean Contingent Resources estimates for the Oligocene and Eocene reservoirs in the Kurdamir Block are now 976 MMBOE and 541 MMbbl of oil.
The revised mean estimate of gross unrisked prospective resources ("Mean Prospective Resources") for the Oligocene reservoir at Kurdamir is now 1,084 MMbbl of oil, effectively unchanged from the 2013 Assessment of 1,076 MMbbl of oil.
Baram-1 Well - Garmian Block
The Baram-1 well targeted a prospect with the potential of approximately 300 MMBOE of gross prospective resources in the Oligocene reservoir. An open-hole test of this reservoir at Baram has confirmed a gross interval of 73 metres of light oil that flowed 42 degree API oil and water at an approximate rate of 600 barrels per day. The wireline log and test data obtained indicate the test was conducted across an oil water contact in low permeability reservoir. Despite the indications of low permeability in the reservoir, the position of the interpreted oil water contact indicates the presence of a gross hydrocarbon column in excess of 500 metres if it extends to the crest of the Baram structure. The well will be suspended while the Company integrates the wireline log and test results with the 3D seismic interpretation across the structure. Based on the result of this analysis, the Company will make a determination on whether to pursue additional appraisal operations on Baram.
Hasira-1 Well - Garmian Block
The Hasira-1 well has two objectives, an appraisal of the Sarqala-1 discovery in the Jeribe reservoir and the exploration of the deeper Oligocene reservoir. The well is targeting gross prospective resources of 25 to 50 MMBOE in the Jeribe and 25 to 50 MMBOE in the Oligocene. Wireline log interpretations and an open-hole test in the Jeribe reservoir has confirmed the presence of oil and similar reservoir properties as observed in Sarqala-1. The open-hole test flowed oil to surface. However, due to mechanical issues, the test was prematurely suspended before the well had cleaned up. The mechanical issues have been resolved, casing has been set across the Jeribe interval, and the well is now preparing to drill ahead to the deeper Oligocene reservoir. Upon reaching total depth, a testing program will be determined for the Oligocene reservoir. Additional testing in the Jeribe may be conducted subject to the Oligocene test results.
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