- WesternZagros began drilling the Sarqala-1 well in May 2008 and reached a total depth of 4,357 metres before suspending operations in early 2009. While numerous oil and gas shows were encountered, the Company was not able to test the well or penetrate all the reservoir targets. WesternZagros has since completed a promising study of the Miocene Jeribe Formation encountered at Sarqala-1 and is planning to re-enter the well in order to drill a short sidetrack and test this zone late in the fourth quarter of 2010.
About Mil Qasim
- Mil Qasim is an anticline defined from seismic data, the crest of which lies approximately three kilometres from the Sarqala-1 well. Target reservoirs are sandstones of the Upper Fars Formation, which are anticipated to be oil bearing. Testing this prospect will require a well drilled to a proposed total depth of approximately 2,400 metres, penetrating known and much simpler geology than that found at either Sarqala or Kurdamir.
- Qulijan is an attractive drill-ready prospect within 12 kilometres of the Kurdamir-1 discovery well. It is an anticlinal structure with upside potential dependent on fault seal against the fault that separates it from Kurdamir. The main reservoir is Oligocene, where the Company proved hydrocarbons at the Kurdamir-1 well. It will require a well targeted to a depth of approximately 3,800 metres.
Management's Discussion and Analysis
The following management's discussion and analysis ("MD&A") reviews WesternZagros Resources Ltd.'s ("WesternZagros" or the "Company") financial condition, activities and results of operations for the period ended September 30, 2010. It should be read in conjunction with the unaudited interim consolidated financial statements for the period ended September 30, 2010, the audited consolidated financial statements for the year ended December 31, 2009 and the related notes. The effective date of this MD&A is November 18, 2010.
This discussion offers management's analysis of the financial and operating results of WesternZagros and contains certain forward-looking statements relating, but not limited, to operational information, future drilling plans and testing programs and the timing associated therewith, estimated Production Sharing Contract ("PSC") commitments, anticipated capital and operating budgets, anticipated insurance recoveries, anticipated working capital and estimated costs. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", or similar words suggesting future outcomes. The Company cautions readers and prospective investors in the Company's securities to not place undue reliance on forward-looking information as, by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros. Readers are also cautioned that disclosed test rates may not be indicative of ultimate production levels.
Forward looking information is based on management's current expectations and assumptions regarding, among other things, outcomes of future well operations, plans for and results of drilling activity, future capital and other expenditures (including the amount, nature and sources of funding thereof), insurance recoveries, future economic conditions, future currency and exchange rates, continued political stability, timely receipt of any necessary government or regulatory approvals, the Company's continued ability to employ qualified staff and to obtain equipment in a timely and cost efficient manner, the continued participation of the Company's co-venture partners in exploration activities and the timely receipt of insurance proceeds. In addition, budgets are based upon WesternZagros' current plans and anticipated costs, both of which are subject to change based on, among other things, the actual outcomes of well operations and the results of drilling activity, unexpected delays, availability of future financing and changes in market conditions. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by WesternZagros including, but not limited to, risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; interruptions in operations together with any associated insurance proceedings; denial of any portion of the insurance claims; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity.
Readers are cautioned that the forgoing list of important factors is not exhaustive. The forward-looking statements contained in this MD&A are made as of the date of this MD&A and, except as required by law, WesternZagros does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. See the Risk Factors section of this MD&A for a further description of these risks and uncertainties facing WesternZagros. Additional information relating to WesternZagros is also available on SEDAR at www.sedar.com, including the Company's material change report dated November 25, 2009, which includes the risks and level of uncertainty associated with the Company's ability to recover resources from the PSC lands.