WesternZagros says Abu Dhabi energy firm takes near 20% stake worth $46.6 million

WesternZagros Resources (CVE:WZR) reported Monday that it has signed a deal for Abu Dhabi National Energy to acquire almost 20 percent of the Calgary-based oil and gas company for $46.6 million.

Shares of WesternZagros reached a high of 20 percent, gaining 9 cents to trade at 56 cents on the junior Toronto Stock Exchange.

The company, which has oil and natural gas projects in Iraq, said that through a private placement Abu Dhabi Energy, known as Taqa, will pay $46.6 million, or 63 cents for 74 million shares of WesternZagros.

The securities issued under the agreement have a hold period until June 30, 2012. After the private financing, Taqa will have about 19.9 percent of WesternZagros' issued and outstanding common shares.    

WesternZagros chief executive Simon Hatfield said: "This landmark agreement represents a significant leap forward for us. Taqa is an excellent strategic investor for WesternZagros given their proven track record, their support for our direction and their deep knowledge of our operating region."

Under the agreements terms, a Taqa representative will join the company’s board of directors. Further, WesternZagros has granted some rights to Taqa to take part in pro-rata share in future equity issuances by the company. 

Taqa operates on four continents. It is mainly involved in upstream oil and gas as well as power generation and water desalination.

In a statement, Taqa’s general manager, Carl Sheldon, said: "This investment in WesternZagros reflects our focus on developing Taqa’s footprint in the Middle East and North Africa region.

"We believe that the fit between these complementary strengths will yield the potential for significant added value through future developments."

Profits from the private placement will be used towards WesternZagros’s capital and operating income for 2011 and 2012.

The agreement is subject to closing conditions and regulatory approvals, and should close by the end of the month.

WesternZagros Resources is an international natural energy company engaged in the exploration, development and production of crude oil and natural gas in Iraq. It holds two production sharing contracts with the Kurdistan Regional Government, in Iraq.