WesternZagros Resources (CVE:WZR) has unveiled its operational and financial results for 2012, calling it a "breakthrough year" led by the giant oil discovery at its Kurdamir-2 well in Iraq.
"We anticipate building on this success through our fully funded, aggressive exploration and appraisal program of 2013," said the junior oil and gas company's CEO, Simon Hatfield, in a statement Friday.
"Our objectives for 2013 include drilling and testing Kurdamir-3 and further exploration and appraisal on the Garmian Block with the Hasira-1 well, Baram-1 well and the Mil Qasim Upper Bakhtiari shallow well program."
Earlier this week, WesternZagros received $123 million through a debt and equity financing by existing shareholder Crest Energy International, which now holds almost 20 per cent of the Canadian junior's shares. The funds will be used for the company's 2013 capital and operating program, together with the $79.6 million of working capital in place at the end of 2012.
Drilling on its Kurdamir-3 appraisal well on the Kurdamir Block began in February, with 3D seismic surveys also underway on both the company's Kurdamir and Garmian blocks.
Last year, the company saw a number of milestones, including several successful well tests at its giant Kurdamir discovery in Iraq, which led to a substantial resource boost.
The total combined mean estimate of gross unrisked contingent resources at Kurdamir increased to 545 million barrels of oil in the Oligocene and Eocene reservoirs.
On the Kurdamir and Garmian blocks, the total combined mean estimate of gross unrisked contingent resources is now 974 million barrels of oil equivalent, and the total mean estimate of gross unrisked prospective resources is now 4.7 billion barrels of oil equivalent.
During the fourth quarter of last year, three intervals were tested within the 168 metre gross hyrdocarbon column in the Oligocene reservoir.
Based on the reservoir data from the Kurdamir testing program, the company said it predicts that sustainable production rates of 7,000 to 11,000 barrels of oil per day are possible for individual wells in the Oligocene.
Kurdamir-3, an Oligocene appraisal well, is targeting between 150 to 250 million barrels of prospective oil resources. The company is currently drilling the well at a depth of 1,926 metres, with a planned total depth of 2,800 metres.
The well is being drilled on the southwest flank of the Kurdamir structure, around 3 km and 5 km from its Kurdamir-1 and Kurdamir-2 discovery wells, respectively.
WesternZagros has a 40 per cent working interest in the Kurdamir block, while Talisman Energy (TSE:TLM), the operator of the well, also holds a 40 per cent working interest, with the Kurdistan regional government holding the remainder.
At the company's Garmian Block, the Baram-1 well is planned to spud in the third quarter of this year, in order to explore the potential extension of the Kurdamir discovery.
This well, the company said Friday, has the possibility of being the "highest impact well" this year, with the potential to add gross mean contingent oil equivalent resources of 200 to 300 million barrels in the Garmian block, and 500 to 600 million barrels at Kurdamir.
The Canadian company believes that the Baram prospect has the potential to contain the extension of the Kurdamir Oligocene oil leg into the Garmian block.
Also on Garmian, WesternZagros began a 3D seismic survey last year over the Sarqala and Mil Qasim oil discoveries, which is now more than 75 per cent completed.
The Hasira-1 well on the block is planned to spud in the second quarter of this year, to appraise the extent of the oil leg previously found in the Jeribe reservoir, and also to explore the deeper Oligocene reservoir.
In terms of financials, the company said in its statement that its 2012 results are "consistent" with an early-stage exploration company, posting a net loss of $10.3 million last year, and a "solid financial position". Indeed, it is fully funded for planned activities in 2013.
It spent $31.2 million in capital expenditures in the fourth quarter.
Looking ahead, the company, which says it is pursuing a dual listing in London to provide an additional market for future financings, will be continually focused on the appraisal drilling at the Kurdamir block, as well as exploration drilling at Garmian.
Under the terms of WesternZagros' production sharing contracts, the exploration periods for Kurdamir and Garmian end on September 1, 2014 and December 31, 2014, respectively, after which the development periods begin.
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