Contingent resources were assigned over a 327 metre gross pay zone from the crest of the structure at 2,142 metres down to 2,469 metres, which is the lowest known hydrocarbon in the Oligocene reservoir of the Kurdamir-1 wellbore as determined by wireline logs and production testing. These contingent resource numbers do not include any of the potential in the as yet undrilled downdip flanks of the Kurdamir structure in the Tertiary Oligocene reservoir deeper than 2,469 metres. This undrilled potential is classified as prospective resource and is addressed below.
The recently completed cased hole production testing of the Tertiary Oligocene reservoir in Kurdamir-1 has confirmed that the gas and condensate discovery announced on November 4, 2009 is in a gas cap, which is associated with a deeper oil column.
Because WesternZagros was unable to test any zones below 2,469 metres in Kurdamir-1, the vertical extent of the oil column encountered is uncertain. If the oil column extends below 2,469 metres, WesternZagros' best estimate of gross unrisked prospective oil resources is 260 MMBBL. Additional information, to be obtained by drilling the Kurdamir-2 well, will be required to confirm the existence of these prospective oil resources. WesternZagros and its co-venturers plan to drill the Kurdamir-2 well in late 2011. The co-venturers are currently conducting the necessary planning and purchases of long lead items to drill this well on the flank of the Oligocene structure to evaluate the extent of the oil column and to extend the well deeper into the Aaliji and Cretaceous formations to test the over 700 metres of hydrocarbon shows encountered in the Kurdamir-1 well.
Additional information obtained from future drilling or additional seismic data may result in a change to this assessment.
Sproule carried out an independent audit of the Kurdamir resources in the Oligocene reservoir in accordance with the current guidelines outlined in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Pursuant to the COGE Handbook, an audit is the process whereby an independent qualified reserves auditor carries out procedures designed to allow the independent qualified reserves auditor to provide reasonable assurance that a reporting issuer's reserves data (or specific parts thereof) have, in all material respects, been determined and presented in accordance with the COGE Handbook and are, therefore, free of material misstatement.
Gas, gas condensate, and oil resources in the Oligocene reservoir in the Kurdamir-1 well in Block 44, as of December 14, 2010, are as follows:
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