Tuesday, 19 March 2013

WesternZagros wraps up $123 mln financing with Crest Energy International

WesternZagros Resources (CVE:WZR) says it has closed the $123 million debt and equity financing it announced last week with existing shareholder Crest Energy International, with the proceeds to 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. 
Through a non-brokered private placement, Crest Energy bought 51 million shares of WesternZagros at C$1.25 each - generating total proceeds of $63.75 million. 
The $1.25 price was roughly 25 percent higher than the junior oil and gas company's closing price of $1.00 as of March 8 - the last trading day prior to the announcement of the financing. 
Crest already held a near 10 percent stake in WesternZagros, and after the placement, it now holds an approximate 19.8 percent interest. 
Along with the private placement, Crest has advanced WesternZagros a US$57.5 million loan, which will accrue interest at 6 percent per year, and will be secured by 10 percent of the Canadian junior's operating subsidiary. 
The loan, together with the accrued interest, will be repaid in full on September 30, 2014, the company said. 
As part of the deal, Crest's John Howland, who has worked as the chairman and CEO of "one of the larger grain companies in the U.S.", has been appointed to the board of WesternZagros. Crest's Eric Stoerr has also sat on WesternZagros' board since last August and will continue to serve. 
Crest will also have rights to participate for its pro-rata share in future equity issuances by the company. 
"We are extremely pleased by Crest's support and confidence in WesternZagros as evidenced by this financing," said chairman of WesternZagros, Fred Dyment, in a statement on Tuesday. "The entire Board looks forward to working with John in the future. He will be a great addition to our board, as Eric has proven to be." 
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.

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