WesternZagros Resources Ltd. dropped the most in more than three years after the Canadian oil explorer said initial results from a test well in Iraq failed to meet expected flow rates.
The shares fell 27 percent to C$1.10 at the close in Toronto. It was the largest drop since May 17, 2010.
Tests of the Kurdamir-3 well in Iraq’s Kurdistan region resulted in non-commercial flow rates, WesternZagros said in a statement yesterday. The company is unlikely to meet its pre-drill objective at Kudamir-3 of increasing contingent resources by 200 million barrels, said Tudor Pickering analyst Gerry Donnelly.
“Despite the fact the lowest zone was always expected to be of lower quality than upper zones that await testing, we believe the market’s expectation remains on delivering nothing short of a defining test rate that establishes field commerciality,” Donnelly said in a note to clients today.
WesternZagros, based in Calgary, has been examining the potential for oil and gas production in Kurdistan since 2003 and began trading on the Toronto exchange in 2007.