Westernzagros Resources Ltd. Announces Operating Results for the Year Ended December 31, 2014; Provides Operating Guidance for 2015
Mar 18 15
Westernzagros Resources Ltd. announced operating results for the year ended December 31, 2014. The company announced the commencement of light oil production and sales at an average rate of 5,000 barrels of oil per day ("bbl/d") from the Sarqala-1 well on February 11, 2015. Production is being sold in the domestic market under a pre-paid contract and is trucked by local buyers. The company anticipates that this well is capable of production in the range of 8,000 to 10,000 bbl/d. The company has commissioned recent upgrades to the Sarqala processing facility that increases processing capacity from 10,000 to 15,000 bbl/d in order to accommodate additional production from 2015 completions. The company announced that first three phases of the Garmian development plan submitted to the Kurdistan Regional Government ("KRG") are outlined below. Commitment to subsequent phases, including construction of the central processing facility ("CPF") will be dependent on the results of, and the ability to monetize production from, phases 1 and 2. Phase 1 - Establish Production: The Sarqala-1 workover was completed in 2014 with flow rates testing at 11,500 bbl/d. The early processing facility ("EPF") upgrades were also completed increasing the processing capacity from 10,000 bbl/d to 15,000 bbl/d. The EPF has been commissioned and is now in operation supplying crude to the domestic market. The Hasira-1 exploration well test results are anticipated in the second quarter of 2015. Estimated costs in 2015 to complete the Hasira-1 testing operations and final EPF commissioning are $8 to $9 million. The vompany is in discussions to provide associated gas to a proposed KRG gas facility near the block boundary for utilization by the government pursuant to the PSC. This will allow for the utilization of gas to fuel domestic electrical power production and minimize flaring. Phase 2 - Facility Expansion: Expand production facilities to 35,000 bbl/d including centralized storage and loading facilities, tie-in Hasira-1 well upon success and drill the first two horizontal development wells. This phase of development work is anticipated to start in second half of 2015 and into 2016 with estimated net costs of $85 million to $90 million. The planned development drilling program will delineate the Prospective Resources within the Jeribe reservoir. Based on the well results, the production facility capacity could be increased beyond the planned 35,000 bbl/d. With success, the Company believes that the current 2P Reserves and the Gross Prospective Resources (P50 basis) for the Garmian Block could ultimately support a project up to 50,000 bbl/d of oil production. Phase 3 - Increase Well Capacity: Drill up to four additional deviated or horizontal development wells to optimize plant capacity and install water handling and compression equipment, as required. This phase of development work has an estimated net capital cost of up to $155 million. The company's Garmian reserves, as recognized at December 31, 2014 by the independent reserves evaluator was limited solely to the Jeribe reservoir and assumed a maximum well production capability of approximately 6,000 bbls/d for the best producing well. The reserves did not include the results from preliminary testing at Hasira-1 in the Oligocene reservoir and do not include any technical adjustment for the Sarqala workover results due to the limited duration of the test, which tested at over 11,500 bbls/d. It is anticipated that reserves will be updated later in 2015 once results from Hasira-1 are known and the Sarqala-1 well has produced for a longer duration. On the Kurdamir Block, the Company has submitted an alternative development plan to the KRG and is now in active discussions with the KRG on further refinements to advance the development of both the significant gas and oil volumes. Certain activities, including front end engineering of the necessary facilities and planning for additional drilling, will be completed in coordination with the KRG as the development plan is agreed. The Company will provide further guidance and will look to convert the contingent resources to reserves once the development plan has been finalized with the KRG. As the Company advances the execution of its development activities it will continually evaluate both its capital resources and capital structure. The Company in this evaluation will monitor and assess all relevant factors, including the following: The expected timing and scope of development activities based upon an appropriate phasing reflective of the approved development plans, current market conditions, and the political and security situation within Iraq; The ability to export or to sell into the domestic market oil and natural gas in accordance with the economic terms of the PSCs; The level of cash flow generated from production; The continued participation of its co-venturers in development activities; The current conditions of the oil and gas industry given the recent significant decline in world oil prices and the impact on further investment in the industry; The current conditions in the financial markets, including the potential for further market instability; and The ability to access debt, and the costs thereof, for development activities in Kurdistan. With the capital resources and anticipated crude oil sales, the Company is fully funded for currently planned activities in 2015.
The company estimates 2015 production revenues of approximately $20 to $35 million and operating income of $15 to $30 million, after consideration of field operating costs. The company anticipates crude oil sales during 2015 into the domestic market, which is supported by the initial sales in February and March. Crude oil production from the Sarqala-1 well is anticipated to produce between 6,000 and 7,500 barrels per day on an annualized basis (8,000 to 10,000 barrels per day for the remainder following a ramp up in the first quarter of the year). The domestic market price is linked to Brent pricing and payments for the sale of crude oil are received prior to deliver of the volumes. The Company estimates the domestic price will range from $42/bbl to $52/bbl (assuming Brent ranges between $50 to $60 per barrel) which would result in 2015 revenues of $20 to $35 million and operating income of $15 to $30 million after consideration of field operating costs. The company's planned expenditures for 2015 total $125 million, which includes $100 million of capital costs for Phases 1 and 2 of the Garmian development, $10 million of capital costs for development planning and long leads to advance the Kurdamir development plan and $15 million of Corporate, G&A and interest costs. Phase 2 spending for Garmian is dependent on securing KRG approval of the Garmian development plan and the continued ability to monetize crude sales from Sarqala-1.
Westernzagros Resources Ltd. Presents at 43rd Annual Scotia Howard Weil Energy Conference, Mar-24-2015
Mar 2 15
Westernzagros Resources Ltd. Presents at 43rd Annual Scotia Howard Weil Energy Conference, Mar-24-2015 . Venue: Roosevelt New Orleans Hotel, 130 Roosevelt Way, New Orleans, Louisiana, United States. Speakers: Tony Kraljic, Vice President of Business Development.
WesternZagros Resources Ltd. Announces Resignation of John Howland as Board of Directors
Feb 10 15
WesternZagros Resources Ltd. announced that John Howland has resigned from its board of directors due to unforeseen personal circumstances. Mr. Howland joined the Board of WesternZagros in March 2013 as an appointee of Crest Energy International LLC following Crest's second strategic investment pursuant to the terms of an investment agreement between WesternZagros and Crest dated March 10, 2013, as amended.