WesternZagros sharply boosts contingent oil resources after giant oil field discovery

WesternZagros Resources (CVE:WZR) saw its shares rally Monday after it increased its mean contingent resources in the Oligocene reservoir at its Kurdamir-2 exploration well in Iraq by around 400 percent following the discovery of a giant oil field.
The company’s shares jumped over six percent on the back of the news, to 84 cents per share.
As a result of the find, the company said that its estimate of unrisked contingent resources has increased to 147 million barrels of recoverable oil (corresponding to 464 million barrels of mean estimated gross discovered oil initially in place) for the Oligocene reservoir in the Kurdamir block.
When gas and condensate are included, the company said mean contingent resources equal 384 million barrels of oil equivalent (MMboe).
Its estimate of unrisked prospective resources also increased 300 percent to 1.2 billion barrels of recoverable oil (corresponding to 3.6 billion barrels of mean estimated gross undiscovered oil initially in place), or 1.4 billion barrels of oil equivalent (billion boe) when gas and condensate are included.
These results follow the major oil discovery at the Kurdamir-2 exploration well announced in late March, the Iraq-focused oil and gas explorer said.
The Kurdamir-2 well encountered a 118-metre light oil column with no indications of a water leg at the Kurdamir-2 location, proving that the oil leg in the Oligocene reservoir on the flank of the Kurdamir structure is involved in a much larger trap than was previously interpreted.
"We are delighted with these results as we have found what this company was created to find, and the reason we entered Kurdistan,” said WesternZagros's CEO Simon Hatfield.
"The Kurdamir structure is proving to be one of the top oil discoveries of the decade and this is a company maker for us. The oil reservoir of the Kurdamir structure extends further than the area previously assessed and we have not yet found its limits.
"In addition there is still more news to come on this well as we drill deeper into the Eocene and Cretaceous reservoirs and conduct further testing of the Oligocene oil leg in the coming months."
The updated resource estimates were carried out by Sproule International Limited.
In a conference call Monday, Hatfield said the company is hopeful for production by the end of 2012.
The Kurdamir-2 exploration well was spudded on October 25, 2011 and is operated by Talisman Energy (TSE:TLM) (NYSE:TLM).
The well is located approximately two kilometres northeast of WesternZagros’s Kurdamir-1 discovery well and is targeting the Oligocene, Eocene and Cretaceous reservoirs on the flank of the structure, where the company says the combined potential oil interval is likely at maximum thickness.
WesternZagros and Talisman each have a 40 percent working interest in the Kurdamir block, with the Kurdistan Regional Government holding the remaining 20 percent.
The company said the Kurdamir-2 exploration well is currently drilling through the Eocene reservoir at a depth of roughly 3,114 metres and is encountering numerous oil shows.
Operations, to date, remain on time and budget, and WesternZagros anticipates that the deeper Eocene and Cretaceous reservoirs will be drilled and evaluated by the end of the second quarter this year.
The company also said it is working with its partner to examine additional testing options focused on the full 118 metres of gross oil pay in the Oligocene.
In addition, the co-venturers are planning a 3D seismic program and a further appraisal well to help determine the ultimate size of the Oligocene reservoir.
WesternZagros is an international natural resources company focused on exploring, developing and producing crude oil and natural gas in Iraq.
Through its wholly-owned subsidiaries, the company holds two production sharing contracts with the Kurdistan Regional Government in the Kurdistan region of Iraq.