Friday, 29 June 2012

WesternZagros Resources shares up almost 10% on operational update, Kurdamir-2 reaches total depth

WesternZagros Resources (CVE:WZR) shares hiked almost 10 per cent Friday, as the company revealed its Kurdamir-2 well in Iraq continues to show oil at total depth, and said that its Sarqala-1 well should be operational in two weeks.

The company’s shares were trading at 91 cents as at 1:10 pm EDT.

WesternZagros noted that it and the operator at Kurdamir-2, Talisman Energy (TSE:TLM), have informed the Kurdistan Regional Government that the well has reached final total depth of approximately 4,000 metres within the Cretaceous-age Shiranish reservoir.

The companies are currently in discussions regarding extended well testing options following the completion of the Kurdamir-2 initial testing program. In addition, the parties are discussing the timing and location of the next appraisal well, Kurdamir-3.

In an operational update, the company said its Kurdamir-2 well penetrated 510 metres of naturally-fractured marlstones and limestones in the Cretaceous Shiranish reservoir.

Oil shows with associated elevated mud gas readings were recorded over the entire Shiranish section, said the oil and gas company, adding that wireline logging operations have commenced and upon conclusion, the wellbore will be cased with a 7" diameter production liner prior to the commencement of testing.

WesternZagros said it anticipates reporting test results of the Shiranish testing program throughout July and August.
Cased hole testing programs are also being discussed with Talisman for the previously cased Eocene and Oligocene reservoirs.

At the company’s Sarqala-1 well in the Kurdistan region of Iraq, remediation work is continuing.

WesternZagros noted that the cause of the malfunction of the subsurface valve has been diagnosed and the necessary equipment and services have been procured to complete the remediation. The company anticipates that it could take up to two weeks in order to return the well to its former status.

In other news, WesternZagros’s operations achieved 2 million man hours without a lost time incident on June 3.

WesternZagros is an international natural resources company engaged in acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq.

Earlier this month, the company announced it had more than doubled its mean prospective resources in a revised assessment of the Eocene reservoir at the Kurdamir-2 exploration well.

The revised mean prospective resource is now 278 million barrels of oil (MMbbl) as of June 1, 2012, compared to the 124 MMbbl reported previously, said the company.

The Eocene reservoir is the second of the three targeted reservoirs in the Kurdamir-2 well, which is currently being drilled.

In April, WesternZagros increased its mean prospective resources in the Oligocene reservoir at its Kurdamir-2 well by around 400 percent following the discovery of a giant oil field. As a result of the find, the company said that its estimate of unrisked prospective resources 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.

Under the Kurdamir production sharing contract (PSC), the Kurdamir-2 well, which was spudded last October, was required to be drilled by the end of June this year, after which a testing program of indicated pay intervals of the Cretaceous reservoir will follow.

The Kurdamir-2 well is located approximately two kilometres northeast of the Kurdamir-1 discovery well and is targeting the Oligocene, Eocene and Cretaceous reservoirs on the flank of the structure where the combined potential oil interval is likely at maximum thickness.
WesternZagros and Talisman each have a 40 per cent working interest in the Kurdamir Block, with the Kurdistan regional government holding the remaining 20 per cent.

Meanwhile, earlier this month the company also reported that after eight months on extended well test, the Jeribe and Upper Dhiban formations in Sarqala-1 produced roughly one million barrels of light oil.

WesternZagros said it is in discussions with the Ministry of Natural Resources of the Kurdistan regional government with respect to a declaration of commerciality, and the submission of a development plan for Sarqala.
Through its wholly-owned subsidiaries, the company holds two production sharing contracts with the Kurdistan Regional
Government in the Kurdistan region of Iraq.

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