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Press release from Marketwire

WesternZagros Revises Resource Estimates for Baram and Kurdamir; Results Highlight Major Potential to be Tested this Year

Monday, February 11, 2013

WesternZagros Revises Resource Estimates for Baram and Kurdamir; Results Highlight Major Potential to be Tested this Year07:30 EST Monday, February 11, 2013CALGARY, ALBERTA--(Marketwire - Feb. 11, 2013) -NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATESWesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") has conducted further analysis of the results from the Kurdamir-2 well and provides a revision of its resource estimates for the Oligocene reservoir in the Kurdamir Block, as well as an update for the adjacent Oligocene reservoir in the Baram prospect on the Garmian Block. On the Baram prospect, the total mean estimate of gross unrisked prospective resources ("Mean Prospective Resources") increased by over 300 percent to 423 million barrels of oil ("MMbbl"). When gas and condensate are included the Mean Prospective Resources increased by 90 percent to 496 million barrels of oil equivalent ("MMBOE"). The Company's revised estimates are related to its interpretation that the Baram prospect has the potential to contain the extension of the Kurdamir oil leg in the Garmian Block (see Figure 1). The combined Mean Prospective Resources of the Kurdamir structure in the Oligocene, Eocene, and Cretaceous reservoirs and the Baram prospect in the Oligocene and Eocene reservoirs is now 1.7 billion barrels of oil, or over 2 billion barrels of oil equivalent when gas and condensate are included, as summarized in the table below. All of the revised estimates were audited by independent reserves evaluator, Sproule International Limited ("Sproule"), on February 8, 2013.Simon Hatfield, WesternZagros's Chief Executive Officer, commented,"As we understand the giant Kurdamir Discovery better, we are intrigued by the potential that the Baram prospect is an extension of Kurdamir. As such, we expect Baram-1 to be a high impact well and one of the most attractive opportunities on the Garmian Block. One of the rigs we have secured is currently being prepared in North America for deployment to Baram-1 and we anticipate spudding the well in the third quarter of this year."To view Figure 1: Top Oligocene Depth Structure Map showing proximity of Kurdamir & Baram, please visit the following link: http://media3.marketwire.com/docs/211wzr_fig1.pdfThe Company's interpretation that the Baram prospect is an extension of the Kurdamir structure will be confirmed by drilling and testing the Baram-1 exploration well in 2013. The table below illustrates the combined mean estimate of gross unrisked contingent and prospective resources for both the Kurdamir discovery and the Baram prospect based on the most recent Sproule assessment audit.Mean Gross Resource Estimates (Unrisked)CategoryOligoceneEoceneCretaceousCategory TotalsKurdamirBaramKurdamirBaramKurdamirBaramKurdamirBaramCombined TOTALContingent Resources Oil (MMbbl)390155545545Contingent Resources Oil, Gas & Condensate (MMBOE)717226943943Discovered in Place (MMbbl)126561418791879Discovered in Place (MMBOE)179582826232623Prospective Resources Oil (MMbbl)10764231071113013134341747Prospective Resources Oil, Gas &Condensate (MMBOE)12634961383120616075272134Undiscovered in Place (MMbbl)34861365417819574447721846661Undiscovered in Place (MMBOE)40931603539964819545125678018The individual assessments for each of the categories provided in the table above are outlined in more detail as follows: Baram Prospect - Oligocene Table 1(a), below, provides estimates of the gross unrisked recoverable prospective resources for the Oligocene reservoir of the Baram prospect as audited by Sproule as of February 8, 2013.Table 1(b), below, provides estimates of the gross unrisked undiscovered petroleum initially-in-place, included in this latest Sproule audit for the Oligocene reservoir of the Baram prospect. Low Estimate(7)Best Estimate(8)High Estimate(9)Mean Estimate(10)Table 1(a)ProspectReservoirHydrocarbonP90P50P10MeanGross UnriskedTypeMMbbl/BcfMMbbl/BcfMMbbl/BcfMMbbl/BcfProspective Resources(1), (3)BaramTertiary OligoceneOil72320906423Garmian Block Oil, GasSolution Gas70330955440and CondensateMMBOE(11)843751065496As of Feb 8, 2013Baram Total Mean MMbbl Oil Only - Gross Unrisked Prospective Resources423Baram Total Mean MMBOE - Gross Unrisked Prospective Resources496Low Estimate(7)Best Estimate(8)High Estimate(9)Mean Estimate(10)Table 1(b)ProspectReservoirHydrocarbonP90P50P10MeanGross UndiscoveredTypeMMbbl/BcfMMbbl/BcfMMbbl/BcfMMbbl/BcfPetroleum (Oil and Gas)BaramTertiary OligoceneOil Initially-In-Place285114327681365Initially in Place (Unrisked) (1),(5)Solution Gas Initially-In-Place290117529151425Garmian BlockMMBOE(11)333133932541603As of Feb 8, 2013Baram Total Mean MMbbl Oil Only - Gross Unrisked Undiscovered Petroleum Initially-In-Place1365Baram Total Mean MMBOE - Gross Unrisked Undiscovered Petroleum Initially-In-Place1603 Kurdamir Discovery - Oligocene Based on a recalculation of Oligocene contingent and prospective resources, the contingent and prospective resources for the Kurdamir Oligocene reservoir that were disclosed in the Company's Material Change Report dated January 28, 2013, have been revised by the Company and audited by Sproule. This recalculation stems from changes in two reservoir parameters including new data obtained from the analysis of oil samples from DST 6 in the Kurdamir-2 well. The revision results in a minor reduction in the contingent resources and an increase in the prospective resources categories for the Kurdamir Block, as outlined below.Kurdamir BlockMean Gross Resource Estimates (Unrisked)CategoryOligoceneEoceneCretaceousCategory TotalContingent Resources Oil (MMbbl)390155545Contingent Resources Oil & Gas (MMBOE)717226943Prospective Resources Oil (MMbbl)10761071301313Prospective Resources Oil & Gas (MMBOE)12431382061607Tables 2(a) and 2(c), below, provide revised estimates of the gross unrisked recoverable contingent and prospective resources for the Oligocene reservoir of the Kurdamir structure as audited by Sproule as of February 8, 2013.Tables 2(b) and 2(d), below, provide revised estimates of the gross unrisked discovered petroleum initially-in-place, included in this latest Sproule audit of the Oligocene reservoir of the Kurdamir structure. The tables also include the unchanged resource estimates for the Eocene and Cretaceous reservoirs.Low Estimate(7)Best Estimate(8)High Estimate(9)Mean Estimate(10)ProspectReservoirHydrocarbonP90 (1C)P50 (2C)P10 (3C)MeanTypeMMbbl/BcfMMbbl/BcfMMbbl/BcfMMbbl/BcfKurdamirTertiary OligoceneOil210365599390Solution Gas205380650410Table 2(a)Gross UnriskedAssociated Gas(6)855122016851250ContingentCondensate30497150Resources (1),(2)MMBOE(11)4176811059717Kurdamir Block Oil, Gas and CondensateKurdamirTertiary EoceneOil69138263155As of Feb 8, 2013Solution Gas115245480280Associated Gas90130180130Condensate2353MMBOE105204378226Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Contingent Resources545Kurdamir Total Mean MMBOE - Gross Unrisked Contingent Resources943Low Estimate(7)Best Estimate(8)High Estimate(9)Mean Estimate(10)ProspectReservoirHydrocarbonP90P50P10MeanTypeMMbbl/BcfMMbbl/BcfMMbbl/BcfMMbbl/BcfKurdamirTertiary OligoceneOil Initially-In-Place874124216781265Table 2(b)Gross Discovered PetroleumSolution Gas Initially-In-Place853129818351325(Oil and Gas) Initially in Place (Unrisked) (1),(4)Gas Initially-In-Place1301182424511856Kurdamir BlockMMBOE(11)1233176223931795As of Feb 8, 2013KurdamirTertiary EoceneOil Initially-In-Place344572928614Solution Gas Initially-In-Place565104017301100Gas Initially-In-Place130185255185MMBOE4607761259828Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Discovered Petroleum Initially-In-Place1879Kurdamir Total Mean MMBOE - Gross Unrisked Discovered Petroleum Initially-In-Place2623Low Estimate(7)Best Estimate(8)High Estimate(9)Mean Estimate(10)ProspectReservoirHydrocarbonP90P50P10MeanTypeMMbbl/BcfMMbbl/BcfMMbbl/BcfMMbbl/BcfKurdamirTertiary OligoceneOil309101818611076Solution Gas310105020301125Table 2(c)MMBOE(11)361119321991263Gross Unrisked ProspectiveKurdamirTertiary EoceneOil3191202107Resources(1), (3)Solution Gas50160350185Kurdamir Block Oil,MMBOE39118260138Gas and CondensateKurdamirCretaceousOil38108243130As of Feb 8, 2013Solution Gas75225525275Associated Gas(6)65140260155Condensate2484MMBOE63173382206Kurdamir Sub Total Mean MMbbl Oil Only - Gross Unrisked Prospective Resources1313Kurdamir Sub Total Mean MMBOE - Gross Unrisked Prospective Resources1607Low Estimate(7)Best Estimate(8)High Estimate(9)Mean Estimate(10)ProspectReservoirHydrocarbonP90P50P10MeanTypeMMbbl/BcfMMbbl/BcfMMbbl/BcfMMbbl/BcfKurdamirTertiary OligoceneOil Initially-In-Place1161362054633486Table 2(d)Gross Undiscovered Petroleum (Oil andSolution Gas Initially-In-Place1166369459593642Gas) Initially in PlaceMMBOE(11)1355423664564093(Unrisked) (1),(5) KurdamirTertiary EoceneOil Initially-In-Place153388708417Kurdamir Block As of Feb 8, 2013Solution Gas Initially-In-Place2506801275730MMBOE195501921539KurdamirCretaceousOil Initially-In-Place2235121014574Solution Gas Initially-In-Place430109521651215Associated Gas Initially-In-Place115235425255MMBOE3147341446819Kurdamir Total Mean MMbbl Oil Only - Gross Unrisked Undiscovered Petroleum Initially-In-Place4477Kurdamir Total Mean MMBOE - Gross Unrisked Undiscovered Petroleum Initially-In-Place5451Sproule 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.Notes to Tables 1(a), 1(b), 2(a), 2(b), 2(c) and 2(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 2(b); 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 2(d)). 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. 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 GroupJohn Kiely+44 (0) 20 7360 4900jkiely@smithfieldgroup.comSmithfield GroupJames McFarlane+44 (0) 20 7360 4900jmcfarlane@smithfieldgroup.com