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Monday, 11 March 2013
WesternZagros Resources gets $123 mln of support from Crest Energy International for 2013 plans
WesternZagros Resources (CVE:WZR) says it has secured a whopping $123 million in debt and equity financing from existing shareholder Crest Energy International, which will be used for the company's capital and operating plans this year.
Specifically, the company will be focused on the continued appraisal of its Kurdamir Oligocene disovery in Iraq, as well as on exploration activities on the Garmian Block, and the continued appraisal of its existing Sarqala find.
Under the terms of the agreement, Crest Energy will buy, through a non-brokered private placement, 51 million shares of WesternZagros at $1.25 each - generating total proceeds of $63.75 million.
The $1.25 price is roughly 25 percent higher than the junior oil and gas company's closing price of $1.00 on Friday. Crest already holds a near 10 percent stake in WesternZagros, and after the placement announced today, it will hold an approximate 19.8 percent interest.
Along with the private placement, the two parties have also entered into a senior secured loan agreeement, under which Crest will loan WesternZagros US$57.5 million. The loan will accrue interest at 6 percent per year, and will be secured by 10 percent of the Canadian junior's operating subsidiary.
The loan will be repaid in full after 18 months, the company said. WesternZagros expects to close the transaction before March 18.
Crest will also have rights to participate for its pro-rata share in future equity issuances by the company, and once the private placement is closed, it will be able to appoint an additional nominee to the oil and gas explorer's board of directors. Crest's Eric Stoerr has sat on WesternZagros' board since last August.
Last month, WesternZagros said it spudded the latest well of its exploration and appraisal program in the Kurdistan region of Iraq as it looks ahead to what it calls a "transformational year" for the oil and gas producer.
Drilling on its Kurdamir-3 appraisal well on the Kurdamir Block began in February, with 3D seismic surveys also underway on both the 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 third appraisal well on the block is expected to take around four months to reach the 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.
The junior oil and gas company said Kurdamir-3 will further appraise the extent of the oil leg in the Oligocene interval, previously found in the Kurdamir 1 and 2 wells.
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 this potential extension of the Kurdamir discovery. WesternZagros expects the well to take around five months to reach the planned total depth of 3,800 metres, and said it believes the well has the potential to also prove up "significant additional gross contingent oil resources" on the Kurdamir Block.