WesternZagros Provides Interim Update on Kurdamir-3 Testing
WesternZagros Provides Interim Update on Kurdamir-3 Testing
CALGARY, ALBERTA -- (Marketwired) -- 08/21/13 -- WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") has completed the first two drill stem tests (DST #1 and DST #2) on the Kurdamir-3 well in the Kurdistan Region of Iraq. Because these tests had unexpected results, WesternZagros is providing this interim update before the testing program is complete.
The first Kurdamir-3 test, DST #1, was conducted in a non-porous zone at a depth below the deepest oil test conducted in the Oligocene at the Kurdamir-2 well. After acidizing, this test flowed oil and spent acid at non-commercial rates. The deepest oil now encountered in the Oligocene is 2,788 metres. DST #2 was then conducted over four low-permeability intervals further up-hole, also at depths below the deepest oil test in Kurdamir-2 and flowed a mix of light crude oil and water at low rates after acidizing. DST #2 gave the first evidence of formation water the Company has seen in the Oligocene reservoir at Kurdamir. While it appears that the well has reached a transition zone or an oil-water contact at approximately the same depth as the previous lowest known oil from the Kurdamir-2 well, the results are difficult to interpret. Two more tests are planned for the upper porous zone of the reservoir - at depths that were oil-bearing in the Kurdamir-2 well. Testing will now extend to late September or October.
Simon Hatfield, Chief Executive Officer, of WesternZagros commented:
"Large oilfields like Kurdamir will often present some anomalies in the early stages of delineation, and this one is proving no exception. We were surprised by the water cut in DST #2 because we had seen evidence during drilling of oil throughout the interval. There are also unusual aspects to the position of the water across the four tested intervals in DST #2, so we are not yet certain whether we have found an oil-water contact that will be consistent across the reservoir, or a restricted compartment, sometimes known as perched water, within the oil reservoir. The next two tests of the shallower porous interval should provide a more indicative view on the oil deliverability of the reservoir. While these first two test results are not the best case scenario, we still have a large oil discovery with more work yet to be done to assess it fully."
KURDAMIR-3 INTERIM TEST RESULTS
As operator of the Kurdamir-3 well, Talisman (Block K44) B.V. has conducted two DSTs in the deepest zones of the Oligocene reservoir at Kurdamir-3 and now plans to move up-hole to conduct two additional drill stem tests.
DST #1 and #2 were conducted in the lower part of the Oligocene reservoir which exhibited poorer reservoir characteristics (including fewer fractures) than the main porous zone tested in Kurdamir-2. Both tests were conducted at depths below the base of DST #6 in the Kurdamir-2 well which produced light oil at 3,450 barrels per day and 8.8 mmcf/d of natural gas. DST #3 and #4 will now be conducted in the upper part of the porous zone of the Oligocene which was oil-bearing in Kurdamir-2 and which is more than 87 meters below the depths of the gas-oil contact as seen in Kurdamir-2.
DST #1 was conducted over a perforated interval of 12 metres, between 2,776 and 2,788 metres, across a fracture zone below the base of the reservoir with the objective of proving new lowest known oil. After acidizing the interval, the zone produced a limited amount of oil and spent acid.
DST #2 was conducted over four perforated intervals within a gross interval of 105 metres from 2,614 to 2,719 metres. After acidizing the zones, the well produced 38-degree API oil at low rates with an average water cut of 65 per cent.
The Company is evaluating the test results. Preliminary interpretation indicates that DST #2 may have spanned an oil-water contact or encountered a transition zone. However, due to the oil produced in DST #1, the Company is also evaluating whether this water zone may be restricted in extent due to compartmentalization of the reservoir. Figure 1 is an enlarged portion of a seismic section through the Kurdamir-3 well where it penetrates the Oligocene reservoir. The alternative interpretations of an oil-water contact or restricted water zone ("perched water") are shown. Additional test data and the interpretation of the 3D seismic recently acquired over Kurdamir will assist in this evaluation. Regardless of the foregoing, the interim test results from Kurdamir-3 have increased the risk associated with the undiscovered Prospective Resource assessment that the Company carries for the Kurdamir Oligocene reservoir.
To view Figure 1, click the following link: http://media3.marketwire.com/docs/wzr.jpg.
The Baram-1 well, on the north portion of the Garmian Block, was spudded on August 13, 2013 and has drilled ahead to the first casing depth at 816 metres. The Company expects to reach planned total depth of 3,800 metres by the end of 2013. This well is exploring whether the Baram structure is a separate structure from Kurdamir or a potential extension of the oil leg discovered in the Oligocene reservoir of the Kurdamir structure onto the northern portion of the Garmian Block. If the extension is confirmed, the Company believes that this could be the highest impact well of the 2013 drilling program, with the potential to add substantial contingent resources in both the Garmian Block and in the Kurdamir Block. In this case, the interim results of Kurdamir-3 testing increase the risk associated with the undiscovered Prospective Resource assessment for the Baram-1 well. Alternatively, the Baram structure may be separated from the Kurdamir structure by a fault, in which case the Kurdamir-3 well results have no material impact on the chance of success of Baram-1.
WesternZagros will host a conference call on Thursday August 22, 2013 to discuss the Kurdamir-3 testing results to date. The investment community is invited to participate in the conference call, which will begin at 7:00 A.M. Mountain Standard Time (9:00 AM Eastern Standard Time). You may participate in the call by telephone at 416-340-8410 or toll free at 1-866-225-2055.
A replay of the conference call will be available on the Company website, www.westernzagros.com, following the call. Also, a replay may be accessed by telephone at 905-694-9451 / 800-408-3053.
About WesternZagros Resources Ltd.
WesternZagros is an international natural resources company focused on 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. 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 22, 2013 ("AIF") which is available on SEDAR at www.sedar.com.
In addition, statements relating to "contingent resources" contained herein are deemed to be forward-looking statements, as they reference a potential discovery of contingent resources and if discovered, there is an implied assessment, based on certain estimates and assumptions, that the resources described can be economically produced in the future. Terms related to resource classifications referred to herein are based on the definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook which are as follows. "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). The potential contingent resources referred to herein have not yet been discovered and have not been risked for the chance of development. There is no certainty that any portion of the contingent resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the contingent resources. The contingent resources estimates presented are gross volumes for the indicated reservoirs, without any adjustment for the Company's working interest or encumbrances. A barrel of oil equivalent (BOE) is determined by converting a volume of natural gas to barrels using the ratio of 6 million cubic feet (Mcf) to one barrel. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. The Company's Statement of Oil and Gas Information contained in the AIF contains additional detail with respect to the Company's resource assessments and includes the significant risks and uncertainties associated with the estimates and the recovery and development of the resources, and, in respect of contingent resources, the specific contingencies which prevent the classification of the resources as reserves.
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
WESTERNZAGROS RESOURCES WAS RECOGNIZED AS A TSX VENTURE 50(R) COMPANY IN 2012 AND 2013. TSX VENTURE 50 IS A TRADE-MARK OF TSX INC. AND IS USED UNDER LICENSE. Contacts: WesternZagros Resources Ltd. Greg Stevenson Chief Financial Officer (403) 693-7007
WesternZagros Resources Ltd. Tony Kraljic VP Business Development (403) 693-7011
WesternZagros Resources Ltd. Lisa Harriman Manager of Investor Relations (403) 693-7017 email@example.com www.westernzagros.com