WesternZagros Resources (CVE:WZR) announced late Wednesday that it generated $25.9 million of gross oil proceeds in the first quarter, more than double what it made in the fourth quarter of 2011.
The company said proceeds were generated from the sales of 450,000 barrels of test oil from the Sarqala-1 well in Iraq.
is 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 (PSC) with the Kurdistan Regional
Government in the Kurdistan region.
The company said it had $30.6 million in working capital at the end of the quarter that finished March 31.
the first quarter, the company announced several operational
achievements, including an increase in the mean estimate of gross
unrisked contingent resources within its PSC lands to 171 million
barrels of oil, compared to 54 million barrels previously.
substantial boost was due to the discovery at the Kurdamir-2 exploration
well of 147 million barrels of mean contingent resources, and a further
1.4 billion barrels of mean estimate gross unrisked prospective
The major oil discovery at the Kurdamir-2 exploration well was announced in late March.
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 was involved in a much larger trap than was previously
Wireline logs indicated a porous zone of 140 metres
thickness within the Oligocene interval, between 2,422 and 2,562 metres,
all of which is hydrocarbon bearing. Within this hydrocarbon zone, well
log data indicated 22 metres of gross gas pay above 118 metres of gross
The company said that according to analysis by an
independent third party engineering expert, the 33 metres of oil pay
tested to date is capable of flowing at rates of 4,000 barrels per day
if stimulated and isolated from the gas pay.
On a mean
prospective resources basis for the entire PSC lands the company holds,
WesternZagros now has 4.7 billion barrels of oil equivalent, compared to
3.7 billion barrels reported previously.
"I am very pleased
with the continued strong operational performance in the first quarter
and delighted with the world-class oil discovery at Kurdamir which
followed it," said CEO Simon Hatfield.
"We have already exceeded
our expectations at the Kurdamir-2 well by discovering a giant field
with over one billion barrels on a Mean Prospective Resources basis, and
we have yet to drill and test the deeper zones.
confident that our appraisal, exploration and production activities
planned for both of our exploration blocks in the coming months will
build on our recent success."
Indeed, there is still more news
to come on the Kurdamir well as the company drills deeper into the
Eocene and Cretaceous reservoirs and conducts further testing of the
Oligocene oil leg in the coming months.
The Kurdamir-2 exploration well was spudded on October 25, 2011 and is operated by Talisman Energy (TSE:TLM) (NYSE:TLM).
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.
company said in late April that 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 at Kurdamir-2.
The co-venturers are also
planning a 3D seismic program over the Kurdamir structure and a further
appraisal well (Kurdamir-3) to assess the ultimate size of the
At its Sarqala-1 well, WesternZagros said
lifting of Sarqala-1 crude oil has not been affected despite the
Kurdistan Regional Government (KRG) halting the exporting of oil from
the Kurdistan region due to a dispute with the federal government in
Sarqala-1 production continues at an average rate of
approximately 5,000 barrels per day, but effective May 1, the regional
government began to receive roughly 36 per cent of the production in
The oil and gas explorer has entered into contracts for
April and May production and received total proceeds of $14.2 million,
after consideration of the KRG volumes that were taken in kind for May.
addition, during the quarter, the company announced an oil discovery in
the Upper Fars Formation at its Mil Qasim-1 exploration well, where
four tests were conducted, resulting in the flow of light, 43 to 44
degree API oil to surface from low permeability, naturally fractured
WesternZagros started additional testing on the test
4 interval at Mil Qasim-1 during the first week of April to further
clean-up the well and get additional information on the long term
deliverability of the Upper Fars reservoir.
The company is still
investigating stimulation and alternate drilling techniques to figure
out how to increase flow rates and unlock what it called "the
considerable potential" of the Upper Fars Formation.