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Press release from Marketwire

WesternZagros's Kurdamir Contingent Resources Jump to Over 1 Billion Barrels of Oil Equivalent

Monday, January 28, 2013

WesternZagros's Kurdamir Contingent Resources Jump to Over 1 Billion Barrels of Oil Equivalent07:30 EST Monday, January 28, 2013CALGARY, ALBERTA--(Marketwire - Jan. 28, 2013) -NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATESWesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") is pleased to announce a fourfold increase in the Company's contingent resource estimates at the giant oil discovery on the Kurdamir Block in the Kurdistan Region of Iraq. The total mean estimate of gross unrisked contingent resources ("Mean Contingent Resources") at Kurdamir has increased to 590 million barrels of oil ("MMbbl") in the Oligocene and Eocene reservoirs. When gas and condensate are included the Mean Contingent Resources exceed 1 billion barrels of oil equivalent as shown in Table A below. These estimates were audited by independent reserves evaluator, Sproule International Limited ("Sproule").Simon Hatfield, WesternZagros's Chief Executive Officer commented,"There's a saying in the oil industry: big fields get better with time, and Kurdamir is proof of that. The Kurdamir structure has the potential to be the largest light oil field discovered in Kurdistan, with the possibility that it extends on to our neighbouring Garmian Block. We're therefore highly motivated to drill the Kurdamir-3 well on the Kurdamir Block and the Baram-1 well on the Garmian Block this year to further delineate this giant discovery."Table A: Mean estimates of the gross unrisked contingent and prospective oil and oil equivalent resources in the Kurdamir Block as of January 23, 2013. The resources presented are the gross volumes estimated for the indicated reservoirs without any adjustments for the Company's working interest or encumbrances.Kurdamir BlockReservoirCategoryOligoceneEoceneCretaceousCategory TotalContingent Resources Oil (MMbbl)435155590Contingent Resources Oil & Gas (MMBOE)7862261012Prospective Resources Oil (MMbbl)9391071301176Prospective Resources Oil & Gas (MMBOE)11391382061483The Mean Contingent Resources in the Oligocene reservoir at Kurdamir have increased to 435 MMbbl of oil from the previously announced 147 MMbbl. When gas and condensate are included the Mean Contingent Resources in the Oligocene equal 786 million barrels of oil equivalent ("MMBOE"). This assessment also recognizes contingent resources in the Eocene reservoir on the Kurdamir Block for the first time. Mean Contingent Resources for the Eocene are 155 MMbbl of oil. When gas and condensate are included, the Mean Contingent Resources equal 226 MMBOE.The corresponding mean estimate of gross discovered petroleum initially-in-place ("Mean Discovered In-Place Resources") increases to 2 billion barrels of oil. When gas and condensate are included, the Mean Discovered In-Place Resources equal 2.8 billion barrels of oil equivalent.The mean estimate of gross unrisked prospective resources ("Mean Prospective Resources") for the Oligocene, Eocene and Cretaceous reservoirs combined is now 1.2 billion barrels of oil on the Kurdamir Block. When gas and condensate are included the Mean Prospective Resources equal 1.5 billion barrels of oil equivalent. As expected, these prospective resources have decreased from those previously announced primarily due to conversion from the prospective to the contingent category.This is the fourth successive independently audited upward revision of contingent resources since the Kurdamir Discovery was announced in November 2009. The Company does not assess contingent resources for the Cretaceous reservoir due to insufficient confidence from test data.Based on reservoir data obtained from the Kurdamir testing program and independent engineering assessments, the Company predicts that sustainable production rates of 7,000 to 11,000 barrels of oil per day are possible for individual wells in the Oligocene reservoir utilizing horizontal drilling and completions technology. These sustainable production rates would follow higher initial flow rates. Horizontal wells will also minimize gas production from the oil leg where it underlies the gas cap.The operator, Talisman (Block K44) B.V. ("Talisman"), is currently preparing to drill the Kurdamir-3 appraisal well in order to continue delineating the field. The anticipated spud date is early February 2013. In addition, the Company is currently preparing to drill the Baram-1 exploration well on the Garmian Block (see Figure 1). The Baram-1 well has the potential to prove the extension of the Kurdamir Discovery onto the Garmian Block. A 3D seismic program on the Kurdamir Block is also underway. WesternZagros and Talisman each have a 40 percent working interest in the Kurdamir Block with the Kurdistan Regional Government ("KRG") holding the remaining 20 percent.To view Figure 1: Kurdamir Discovery: Top Oligocene Depth Structure Map, please visit the following link: http://media3.marketwire.com/docs/849402_map.pdf. WesternZagros will host a webcast on Tuesday, January 29, 2013, to discuss the Sproule audited resource estimates. The investment community is invited to participate in the webcast, which will begin at 9:00 A.M. Mountain Standard Time. Access to the webcast is available at http://www.gowebcasting.com/4147. A replay of the webcast will be available on the Company website, www.westernzagros.com, following the presentation. Sproule carried out its independent audit in accordance with the current guidelines outlined in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Pursuant to the COGE Handbook, an audit is the process whereby an independent qualified reserves auditor carries out procedures designed to allow the auditor to provide reasonable assurance that a reporting issuer's reserves data (or specific parts thereof) have, in all material respects, been determined and presented in accordance with the COGE Handbook and are, therefore, free of material misstatement.Tables 1(a) and 1(c), below, provide estimates of the gross unrisked recoverable contingent and prospective oil, and oil equivalent resources for the Oligocene, Eocene and Cretaceous reservoirs included in this latest Sproule audit.Tables 1(b) and 1(d), below, provide estimates of the gross unrisked discovered (oil and gas) and undiscovered (oil) initially-in-place, included in this latest Sproule audit of the Oligocene, Eocene and Cretaceous reservoirs of the Kurdamir structure. Table 1(a)Gross Unrisked Contingent Resources(1),(2) Kurdamir Block Oil, Gas and Condensate As of Jan 23, 2013Low Esti- mate(7)Best Esti- mate(8)High Esti- mate(9)Mean Esti- mate(10)ProspectReservoirHydrocarbonP90 (1C)P50 (2C)P10 (3C)MeanTypeMMbbl/ BcfMMbbl/ BcfMMbbl/ BcfMMbbl/ BcfKurdamirTertiary OligoceneOil240410667435Solution Gas310525835555Associated Gas(6)860122016901250Condensate30497250MMBOE(11)4657501160786KurdamirTertiary EoceneOil69138263155Solution Gas115245480280Associated Gas90130180130Condensate2353MMBOE105204378226Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Contingent Resources590Kurdamir Total Mean MMBOE - Gross Unrisked Contingent Resources1012Table 1(b)Gross Discovered Petroleum (Oil and Gas) Initially in Place (Unrisked) (1),(4) Kurdamir Block As of Jan 23, 2013 Low Esti- mate(7)Best Esti- mate(8)High Esti- mate(9)Mean Esti- mate(10)ProspectReservoirHydrocarbon P90P50P10MeanTypeMMbbl/ BcfMMbbl/ BcfMMbbl/ BcfMMbbl/ BcfKurdamirTertiary OligoceneOil Initially-In-Place969138118721406Solution Gas Initially-In-Place1260177023551795Gas Initially-In-Place1305182024501855MMBOE(11)1397197926732014KurdamirTertiary EoceneOil Initially-In-Place344572928614Solution Gas Initially-In-Place565104017301100Gas Initially-In-Place130185255185MMBOE4607761259828Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Discovered Petroleum Initially-In-Place2020Kurdamir Total Mean MMBOE - Gross Unrisked Discovered Petroleum Initially-In-Place2843Table 1(c)Gross Unrisked Prospective Resources (1),(3) Kurdamir Block Oil, Gas and Condensate As of Jan 23, 2013 Low Esti- mate(7)Best Esti- mate(8)High Esti- mate(9)Mean Esti- mate(10)ProspectReservoirHydrocarbon P90P50P10MeanTypeMMbblMMbblMMbblMMbblKurdamirTertiary OligoceneOil2688841649939Solution Gas345113520851200MMBOE(11)326107319971139KurdamirTertiary EoceneOil3191202107Solution Gas50160350185MMBOE39118260138KurdamirCreta- ceousOil38108243130Solution Gas75225525275Associated Gas(6)65140260155Condensate2484MMBOE63173382206Kurdamir Sub Total Mean MMbbl Oil Only - Gross Unrisked Prospective Resources1176Kurdamir Sub Total Mean MMBOE - Gross Unrisked Prospective Resources 1483Table 1(d)Gross Undiscovered Petroleum (Oil and Gas) Initially in Place (Unrisked) (1),(5) Kurdamir Block As of Jan 23, 2013Low Esti- mate(7)Best Esti- mate(8)High Esti- mate(9)Mean Esti- mate(10)ProspectReservoirHydrocarbon P90P50P10MeanTypeMMbbl/ BcfMMbbl/ BcfMMbbl/ BcfMMbbl/ BcfKurdamirTertiary OligoceneOil Initially-In-Place986312648733051Solution Gas Initially-In-Place1280406061253895MMBOE(11)1199380358943700KurdamirTertiary EoceneOil Initially-In-Place153388708417Solution Gas Initially-In-Place2506801275730MMBOE195501921539KurdamirCreta- ceousOil Initially-In-Place2235121014574Solution Gas Initially-In-Place430109521651215Associated Gas Initially-In-Place115235425255MMBOE3147341446819Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Undiscovered Petroleum Initially-In-Place4042Kurdamir Total Mean MMBOE - Gross Unrisked Undiscovered Petroleum Initially-In-Place5058Notes to Tables 1(a), 1(b), 1(c) and 1(d): The resources presented are the gross volumes estimated for the indicated reservoirs without any adjustments for the Company's working interest or encumbrances. For a description of the production sharing terms under the PSCs, see the Company's Annual Information Form dated March 26, 2012 available at www.sedar.com. 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). These estimates have not been risked for the chance of development. There is no certainty that the contingent resources will be developed and, if they are developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the contingent resources. The Company's material change report dated January 25, 2013, which is available at www.sedar.com, contains additional detail on the specific contingencies which prevent the classification of these contingent resources as reserves. Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market and facility, corporate commitment or political risks). The chance of commerciality is the product of these two risk components. These estimates have not been risked for the chance of discovery or for the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources. Discovered Petroleum Initially-In-Place (equivalent to discovered resources) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations on Company lands prior to production. The petroleum type for this property is crude oil and natural gas. The recoverable portion of discovered petroleum initially-in-place includes production, reserves, and contingent resources; the remainder is unrecoverable (see Table 1(a); there are no reserves or production for this reservoir). Undiscovered Petroleum Initially-In-Place (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, as of a given date, to be contained in accumulations yet to be discovered on Company lands. The petroleum type for this property is crude oil and natural gas. The recoverable portion of undiscovered petroleum initially-in-place is referred to as prospective resources; the remainder is unrecoverable (see Table 1(c)). These are the gross undiscovered initially-in-place volumes estimated for the reservoirs in the Kurdamir structure below the lowest known oil. The undiscovered petroleum initially-in-place has not been risked for chance of discovery. The gross unrisked contingent resources for gas reflect reductions for condensate recovery, surface losses, and fuel gas. Low Estimate is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate. Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater of less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate. High Estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate. Mean Estimate is the average from the probabilistic assessment. Barrels of oil equivalent (BOEs) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl has been used and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This resource disclosure coincides with the filing on SEDAR at www.sedar.com of a material change report (the "Material Change Report"), which includes the following additional information: the specific contingencies which prevent the classification of contingent resources for the Kurdamir block as reserves, the risks and level of uncertainty associated with the discovery and recovery of the resources, the risks and uncertainties relating to the development of any discovered resources, and the significant factors relevant to the estimates.About WesternZagros Resources Ltd. WesternZagros is an international natural resources company engaged in 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, as well as predicted production rates. 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, 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 26, 2012 (the "AIF"), which is available on SEDAR at www.sedar.com.WESTERNZAGROS RESOURCES WAS RECOGNIZED AS A TSX VENTURE 50® COMPANY IN 2012. TSX VENTURE 50 IS A TRADE-MARK OF TSX INC. AND IS USED UNDER LICENSE.FOR FURTHER INFORMATION PLEASE CONTACT: 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 Contact Information: WesternZagros Resources Ltd.Greg StevensonChief Financial Officer(403) 693-7007WesternZagros Resources Ltd.Tony KraljicVP Business Development(403) 693-7011WesternZagros Resources Ltd.Lisa HarrimanManager of Investor Relations(403) 693-7017investorrelations@westernzagros.comwww.westernzagros.comSmithfield GroupScott FultonDirector+44 (0) 20 7903 0641sfulton@smithfieldgroup.com