WesternZagros Resources closed the day up 9% on Wednesday following its report of an increase of over 100 per cent in the combined mean estimate of gross unrisked prospective resources on the Company's Kalar-Bawanoor exploration block ("Block K44") to 2,192 million barrels of oil, or 3,570 million barrels of oil equivalent when oil, gas and condensate prospective resources are included (previously these estimates were 1,092 million barrels of oil, or 1771 million barrels of oil equivalent).
This latest independent audit by Sproule International Limited ("Sproule") addressed the multiple reservoirs in additional prospective areas of the Company's block, which are all located on the Garmian contract area to be covered by the amendments negotiated by WesternZagros, the Ministry of Natural Resources of the Kurdistan Regional Government ("KRG")and a wholly-owned subsidiary of Talisman Energy Inc. These amendments are awaiting approval by Oil and Gas Council of the KRG. The audit included prospects identified with Jeribe, Mio-Oligocene, Shiranish and Eocene reservoirs and two Upper Fars plays. These prospects and plays are potential follow on exploration locations for future drilling consideration. The Company continues to assess the potential of other additional prospects and plays and will continue to release audited results as they become available.
"After this fourth in the series of independently audited assessments, we're encouraged by the continuing rise in resource estimates. The recent oil discovery in the Jeribe Formation at the Sarqala-1 well and the potential in the Upper Fars reservoir at the Mil Qasim-1 well supports the prospectivity of these additional prospects and plays," said Simon Hatfield, WesternZagros' Chief Executive Officer.
Work is continuing on the Sarqala Jeribe contingent resource assessment and remaining prospective resource assessment and will be finalized upon receipt of final test fluid, engineering studies and detailed petrophysical analysis. Preparations are currently underway to secure and install the necessary equipment to undertake an extended test of the Sarqala-1 well. This includes establishing a crude storage and loading facility to permit the transfer and sale of produced oil.
WesternZagros has moved the 2,000 horsepower Viking I-10 rig to the Mil Qasim-1 site and is currently completing the necessary rig up and preparations for drilling operations to evaluate the Upper Fars reservoir. The anticipated spud date for Mil Qasim-1 is now early August, with test results expected in the fourth quarter of 2011. Success at the Mil Qasim-1 Upper Fars reservoir, combined with the results of the extended well testing planned for the Sarqala-1 Jeribe reservoir, will assist to determine the optimum location and timing for future exploration and appraisal activities required to unlock the potential of these most recently audited prospects and plays.
Sproule carried out its independent audit 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 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.
Table 1, below, provides summary estimates of the oil, and oil equivalent resources in all of the reservoirs included in this latest Sproule audit. A detailed table providing estimates of the gross unrisked prospective oil, associated gas, gas condensate and solution gas resources in all of the reservoirs included in this latest Sproule audit is disclosed in the Company's Material Change Report dated July 19, 2011 which is available at www.sedar.com.
Table 2 provides the cumulative total mean estimate of gross unrisked prospective resources for Block K44 to date, including estimates as previously disclosed in the Company's Material Change Reports dated December 16, 2010, January 17 and February 22, 2011, which are available at www.sedar.com.