WesternZagros Announces First Quarter 2012 Results

Commenting on the first quarter results and subsequent events, WesternZagros's Chief Executive Officer, Simon Hatfield (pictured) said:

"I am very pleased with the continued strong operational performance in the first quarter and delighted with the world-class oil discovery at Kurdamir which followed it. We have already exceeded our expectations at the Kurdamir-2 well by discovering a giant field with over one billion barrels on a Mean Prospective Resources basis, and we have yet to drill and test the deeper zones. We are confident that our appraisal, exploration and production activities planned for both of our exploration blocks in the coming months will build on our recent success."

Operational & Financial Review

On April 23, 2012, WesternZagros reported increases of over 400 percent in Mean Contingent Resources and 300 percent in Mean Prospective Resources in the Oligocene reservoir of the Kurdamir exploration block. The updated estimate of Mean Contingent Resources is 147 MMbbl of oil (corresponding to 464 MMbbl of mean estimated gross discovered oil initially in place) or 384 million BOEs when gas and condensate contingent resources are included. The updated estimate of Mean Prospective Resources is 1.2 Bbbl of oil (corresponding to 3.6 Bbbl of mean estimated gross undiscovered oil initially in place) or 1.4 billion BOE when gas and condensate prospective resources are included.

The significant increase in the estimate of Kurdamir resources is a result of the discovery of a major oil column in the Oligocene reservoir at the Kurdamir-2 exploration well. Wireline logs indicated a porous zone of 140 metres thickness within the Oligocene interval, between 2,422 and 2,562 metres, all of which is hydrocarbon bearing. Within this hydrocarbon zone, well log data indicates 22 metres of gross gas pay above 118 metres of gross oil pay. No evidence of a water leg has been encountered within the Oligocene interval. An open hole drill stem test was conducted from 2,315 metres to 2,477 metres, which included 55 metres of the Oligocene porous zone. This test was conducted across the interpreted gas-oil contact at 2,444 metres. The test achieved a flow rate of 7.3 million cubic feet ("MMcf") per day of gas and a stabilized flow rate of 950 barrels per day ("bbl/d") of 47 degree API mixture of light oil and condensate over the final seven hours of the main flow period. This rate was achieved through a 56/64 inch choke at an average flowing well head pressure of 650 pounds per square inch and without any stimulation. There was no observed decline and no formation water was recovered during testing. According to analysis by an independent third party engineering expert, the 33 metres of oil pay tested to date is capable of flowing at rates of 4,000 barrels per day if stimulated and isolated from the gas pay.