WesternZagros to Target Over 1 Billion BOEs during 2011/2012 Exploration Program

Notes to Tables 1 and 2:

1. The contingent resources are the gross volumes estimated for the Tertiary Oligocene carbonate reservoirs at Kurdamir-1, without any adjustments for working interest or encumbrances.
2. The contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent resources have an associated chance of development (economic, regulatory, market and facility, corporate commitment or political risks). These estimates have not been risked for the chance of development. There is no certainty that the contingent resources will be developed and, if they are developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the contingent resources.
3. The prospective resources are the gross volumes estimated for the indicated reservoirs, without any adjustments for working interest or encumbrances. Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market and facility, corporate commitment or political risks). The chance of commerciality is the product of these two risk components. These estimates have not been risked for the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources. In this case, prospective resources are undiscovered resources that indicate development potential in the event the discovery is commercial and should not be construed as reserves or contingent resources.
4. The prospective resources for the Tertiary Oligocene carbonate reservoirs at the Kurdamir-1 well are as at December 14, 2010 as previously disclosed in the Corporation's Material Change Report dated December 16, 2010, which is available at www.sedar.com. Prospective resources are provided for oil if the oil column extends deeper in the structure. Additional information, likely through the drilling of an appraisal well, will be required to confirm the existence and extent of a deeper oil column downdip on the flanks of the structure.
5. The gross unrisked contingent resources for gas reflect reductions for condensate recovery, surface losses, and fuel gas
6. Low Estimate is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.
7. Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
8. High Estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.
9. Mean Estimate is the average from the probabilistic assessment
10. The prospective resource estimates for the Kurdamir Tertiary Eocene, Kurdamir Cretaceous, Sarqala Jeribe and Mil Qasim prospects are based upon interpretation of WesternZagros' extensive recent vintage 2D seismic database within Block K44 (1483 kilometres, 42 lines), well data from WesternZagros' Sarqala-1 and Kurdamir-1 exploration wells (wireline logs, test information, core, mud log information, etc.), together with available information from a number of offset wells.
11. The Kurdamir Tertiary Eocene prospective resource assessment is based primarily on a potential 275 metres' thick gross hydrocarbon column interpreted over the interval 2569 metres and 2844 metres. The anticlinal structure of the potential Tertiary Eocene reservoir at Kurdamir is very similar to that of the overlying Tertiary Oligocene reservoir, which tested gas, condensate and oil, and for which contingent resources have previously been reported. Gas wetness data indicates a potential gas / oil contact within the Tertiary Eocene reservoir at approximately 2672 metres in the Kurdamir-1 well.
12. The Kurdamir Cretaceous prospective resource assessment is based on an interpreted approximately 750 metres thick gross hydrocarbon column in the Cretaceous formations encountered over the interval 3309 to 4061 metres in the Kurdamir-1 well. Gas wetness data over this interval indicates a gas column overlying an oil leg with the gas / oil interface likely being between 3507 metres and 3580 metres. Oil was liberated into the drilling fluid from 3687 metres and 3785 metres.
13. The Mil Qasim prospective resource assessment is based on an anticlinal structure defined by six good quality recent vintage 2D seismic lines, together with oil shows (35 degree API gravity oil) from Upper Fars sandstones encountered in the offsetting Sarqala-1 well.
14. The Sarqala Jeribe prospective resource assessment is based on probable pay encountered in the Sarqala-1 well. The anticlinal trap (with fault assisted closure upside) is defined by 10 recent vintage, good quality 2D seismic lines. The Qumar-1 well, 25 kilometres south of Sarqala, is considered by the Corporation as a good analog. Qumar-1 tested 2,200 barrels of oil per day (bopd) on a ¼" choke from the Jeribe reservoir.
15. The gross contingent resource estimates for the Tertiary Oligocene reservoir at Kurdamir-1 are based on 115 kilometres of 2D seismic lines (10 lines), wireline logs, and the hydrocarbons recovered from two drill stem tests and two cased hole production tests. No formation water was recovered during any of the testing. Logging results indicated a gross hydrocarbon pay of 327 metres, penetrated from the top of the Tertiary Oligocene carbonate reservoir at 2142 metres to the lowest known oil at 2469 metres and composed of 270 metres of gas and gas condensate column overlying 57 metres of oil column on a best estimate (P50) basis.The significance of the oil produced from the deepest cased hole production test is that it was from a depth which is deeper than the previous depth of maximum closure of the structure at the Oligocene level as mapped from seismic data. As such, the Company has revised the depth of maximum closure to 2776 metres (-2150 metres sub sea depth) at the Oligocene level. This change increases the area under closure on Block 44 significantly and results in a consequential and corresponding increase in prospective oil resources.
16. Barrels of oil equivalent (BOEs) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl has been used and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

There are several contingencies that prevent the classification of the contingent resources at Kurdamir-1 as reserves. WesternZagros has no current plans to develop the gas and/or condensate and/or oil resources at this time. There is limited local infrastructure and markets for natural gas and condensate in the area at this time, and export infrastructure for natural gas to gain access to international markets has not yet been developed. Additional information, likely to be obtained through the drilling of a well on the flank of the structure, will be required to determine the economic viability of development. WesternZagros will work with its co-venturers, the Kurdistan Regional Government and Talisman Block K44 B.V., on the evaluation of the commercial potential and technical feasibility of developing the gas, condensate and oil discovered at Kurdamir-1. Beyond this contingency, no federal Iraq legislation has been agreed to or enacted to address the future organization of Iraq's petroleum industry or the sharing of petroleum and other revenues within Iraq. Failure to enact legislation (or the enactment of federal legislation contradictory to Kurdistan Region legislation) could materially adversely impact WesternZagros' interest in the Kurdistan Region and the Production Sharing Contract (PSC).

This resource disclosure coincides with the filing on SEDAR at www.sedar.com of a material change report, which includes the following additional information: a further description of the information used in the assessment of prospective resources, the risks and level of uncertainty associated with the discovery and recovery of the resources, the risks and uncertainties relating to the development of any discovered resources, and the significant positive and negative factors relevant to the estimates.