WesternZagros Resources has received approval to begin producing its first oil through an extended well test at its Sarqala-1 oil discovery. Drilling at Mil Qasim-1, the Company's third exploration well, is proceeding ahead of schedule.
"We are delighted to commence our extended well test at Sarqala-1 sooner than anticipated. The acceleration of the next phase of testing will determine the maximum sustainable production of the Jeribe Discovery, and will enable us to deliver our first light crude oil to market by truck, providing initial cash flow to the Company. This is a milestone event for us; one which will position WesternZagros for the first time as a producing company in one of the world's most prospective exploration areas," said Simon Hatfield, Chief Executive Officer (pictured).
Sarqala-1 Discovery Well Update
WesternZagros has received approval from the Ministry of Natural Resources of the KRG to start the extended well test at Sarqala. Current plans are to commence production from the Sarqala-1 well in October at approximately 2,000 barrels of oil per day ("BOPD") and increase production up to approximately 5,000 BOPD by the end of 2011. The crude oil will be trucked during this extended test and likely sold on the domestic market.
The Sarqala-1 well initially tested 40 degree API crude oil at rates of over 9,000 BOPD at a wellhead pressure of approximately 2,400 pounds per square inch. The well was not stimulated and is expected to continue to clean up and increase production capability during the test.
A recent report by Fekete Associates, an independent petroleum reservoir engineering company, calculates the Sarqala-1 well maximum theoretical absolute open flow (the "AOF") for the Jeribe reservoir through the existing tubing to be 11,070 BOPD. The well capability is currently limited by tubing size, and production could be increased to a maximum theoretical AOF of 13,640 BOPD by increasing the tubing size. WesternZagros will utilize the information gathered from this extended well test in determining future appraisal and development activities, including the potential for increasing production beyond 5,000 BOPD. Future appraisal and development well designs will allow for higher capacity tubing and potentially horizontal completions to take advantage of the demonstrated high deliverability from the Jeribe reservoir.
Mil Qasim-1 Exploration Well Update
Mil Qasim-1 is the Company's third exploration well. WesternZagros spudded the well on August 29, 2011. Drilling is currently ahead of schedule and 20" casing has been successfully run at approximately 750 metres. Currently, the Company is drilling ahead at approximately 1,200 metres and anticipates setting the next casing string at approximately 1,600 metres prior to drilling into the targeted Upper Fars Reservoir. In keeping with other wells drilled by WesternZagros, oil shows have already been encountered in the shallow section of the well drilled to date. Further updates will be provided as operations progress.