On August 29, 2011, WesternZagros commenced drilling operations at the Mil Qasim-1 well on the Garmian Block. Mil Qasim-1 is located three kilometres to the south-east of the Company's Sarqala-1 discovery well and is targeting the prospective Upper Fars interval. After successfully setting the 13-5/8 inch casing at 1,615 metres in Mil Qasim-1, the Company has drilled into the Upper Fars interval and has encountered over 88 metres of sands in the Upper Fars and had hydrocarbon shows, both oil and gas, while drilling. WesternZagros has completed logging these initial sands in the Upper Fars, set the 9-5/8 inch casing at 2,128 metres and is preparing to complete drilling to the estimated total depth of Mil Qasim-1 of 2,400 metres. Once total depth is reached, WesternZagros plans to conduct a testing program of the Upper Fars interval.
On October 25, 2011, the Kurdamir-2 exploration well commenced drilling operations, with expected completion by June 2012. The well is being drilled on the flank of the Kurdamir structure approximately two kilometres from the Kurdamir-1 discovery well. Kurdamir-2 is targeting the prospective Oligocene, Eocene and Cretaceous reservoirs. Talisman (Block K44) B.V. ("Talisman") is the operator of the Kurdamir-2 well. To date Kurdamir-2 has been drilled to a depth of approximately 700 metres, where the first intermediate string of casing has been set. WesternZagros anticipates that the drilling and testing of the first reservoir, the Oligocene reservoir, will occur in the first quarter of 2012, with the deeper reservoirs, the Eocene and Cretaceous reservoirs, expected to be drilled and tested by the end of the second quarter of 2012.
During the third quarter of 2011, WesternZagros updated its contingent and prospective resource estimates to reflect the discovery in the Jeribe reservoir at Sarqala-1 and the additional prospects and plays identified on the Garmian Block (Tilako, Zardi, Segrdan, Chwar and Alyan prospects, the Upper Fars Fault Trap Play and the Upper Fars Bawanoor Saddle Play). These updates of contingent and prospective resource estimates were audited by Sproule International Limited. The Company's mean estimate of gross contingent resources for the discovery at Sarqala-1 is 24 million barrels (MMbbl) of oil, or 31 million barrels of oil equivalent (MMBOE), as of September 7, 2011. This contingent resource number does not include the significant prospective resource potential on the flanks of the Sarqala structure deeper than the lowest known oil at 3,485 metres, nor the potential of an extension of this reservoir interval on the southwest flank of the structure. WesternZagros's combined mean estimate of gross unrisked prospective oil resources for these intervals increased to 198 MMbbl, or 250 MMBOE, as of September 7, 2011. Previously the mean estimate of gross unrisked prospective resources for the Jeribe reservoir of Sarqala-1 was 101 MMbbl, or 137 MMBOE. As at January 14, 2011 Western Zagros's mean estimate of gross unrisked prospective oil resources is 705 MMbbl in the Upper Fars Fault Trap Play, 120 MMbbl in the Bawanoor Saddle Play, 127 MMbbl in the Zardi prospect, 93 MMbbl in the Segrdan prospect, 25 MMbbl in the Chwar prospect, 17 MMbbl in the Alyan prospect, and 13 MMbbl in the Tilako prospect as of July 19, 2011. With the completion of these assessments the combined mean estimate of prospective resources on the Company's two contract areas in Kurdistan is 2.3 billion barrels of oil, or 3.7 billion barrels of oil equivalent. Further details on these resource assessments can be found in the material change reports of the Company dated September 14, 2011 and July 19, 2011.
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