WesternZagros amends Kurdistan contract, extends exploration period for Garmian block

WesternZagros Resources (CVE:WZR) announced Tuesday it has finalized an amendment to the production sharing contract (PSC) with the Kurdistan government and Talisman Energy (NYSE:TLM, TSE:TLM) to govern its activities in the Kalar-Bawanoor Block in Kurdistan.
The new agreement divides the original contract area into two regions: the northern portion is named Garmian, and the southern segment is called Kurdamir. WesternZagros will operate the 1,780 square kilometre northern block, Garmian, while Talisman will operate the 340 square kilometre Kurdamir block.
The Garmian area contains the Sarqala-1 oil discovery, where WesternZagros more than doubled its mean estimate for gross unrisked prospective resources to 2,192 million barrels (MMbbls) of oil, compared to its original estimate of 1,092 MMbbls.
The block also contains the Mil Qasim-1 prospect, among other potential oil discoveries.
Only the company's work obligations and timeline for the first exploration period have been affected by the changed agreement.
The new exploration sub-period now expires December 31, 2011, changed from the same date last year, and the remaining exploration obligation is now the Mil-Qasim-1 exploration well.
The economic terms, operator and working interest are unchanged from the original PSC.
"We are pleased that we have reached a win-win solution that meets the objectives of the government and each of the contractor parties," said CEO Simon Hatfield.
"These amended PSCs give us the additional time needed to drill our next wells and to enable us to incorporate the information gained from our recent discoveries in order to maximize our potential for future exploration success."
WesternZagros said it plans to conduct tests in the Jeribe Formation at the Sarqala-1 light oil discovery at the same time as the drilling of the Mil Qasim-1 well, planned for early August.
The Calgary, Alberta-based company also said it has identified several other prospects on the Garmian block, including Baran, Qulijan, Bawanoor, the Upper Fars Fault Trap Play and the Zardi Complex, all of which, it says, offer considerable exploration potential.