WesternZagros Resources has issued its results for the periods ended September 30, 2011, key highlights, and activities to date.
In September 2011, WesternZagros received approval from the Ministry of Natural Resources of the Kurdistan Regional Government to start an extended well test at Sarqala. First oil production from Sarqala-1 was achieved on October 18, 2011, after the necessary construction and commissioning activities for the initial facilities were completed. Production started at approximately 2,000 barrels of oil per day (“bopd”) and the Company is planning to achieve production from Sarqala-1 of approximately 5,000 bopd by the end of 2011. In the first half of 2011, the Sarqala-1 well initially tested 40 degrees API crude oil at rates of over 9,000 bopd and at a wellhead pressure of approximately 2,400 pounds per square inch. The well was not stimulated and is expected to improve production rate capability during the extended well test. WesternZagros will utilize the information gathered from the extended well test in determining future appraisal and development activities, including the potential for increasing production beyond 5,000 bopd.
On October 27, 2011, WesternZagros sold its first oil produced from Sarqala-1 into the domestic market. To date, for the sales into the domestic market WesternZagros has executed two sales contracts for total delivery of approximately 66,500 barrels of oil priced in the range of $50 to $60 per barrel, and under the terms of these sales contracts WesternZagros received payments totaling $3.8 million in advance of delivery for these sales. Deliveries under these sales agreements to November 17, 2011 have totaled approximately 47,000 barrels of oil.
On October 25, 2011, WesternZagros closed a strategic investment with the Abu Dhabi National Energy Company PJSC (“TAQA”) whereby TAQA purchased from WesternZagros, through a private placement, 74 million common shares of the Company at a price of Cdn$0.63 per share for gross proceeds of Cdn$46,620,000. TAQA now holds approximately 19.9 percent of the Company’s issued and outstanding common shares. The proceeds from the private placement will be used towards WesternZagros’s 2011/2012 capital and operating program.