Operational & Financial Review
On August 7, 2012 the Company announced that it had signed a strategic investment agreement (the "Agreement") with Crest Energy International LLC ("Crest"). Under the Agreement, Crest purchased, through a non-brokered, private placement, 40,714,286 Common Shares in the Company at $1.40 per share for $57 million. Crest owns 9.88 percent of the Company's issued and outstanding Common Shares upon closing of the private placement. This price represented an approximate 10 percent premium to the August 4, 2012 closing share price. Under the terms of the agreement, Eric Stoerr, a representative from Crest has been appointed to the WesternZagros board of directors.
On August 1, 2012, the Company announced that the Kurdistan Regional Government ("KRG") assigned Gazprom Neft Middle East B.V. ("Gazprom Neft") as the Third Party Participant ("TPP") with a 40 percent interest in the Garmian Production Sharing Contract ("Garmian PSC"). WesternZagros received a net amount of $56 million in connection with the TPP assignment. Operatorship remains with WesternZagros, which maintains its 40 percent interest, until the commencement of the development period under the PSC. WesternZagros and Gazprom Neft will each fund 50 percent of costs on the Garmian Block effective from June 1, 2012.
At the Kurdamir-2 well, the operator, Talisman (Block K44) B.V. ("Talisman"), and WesternZagros are in the final stages of preparation to test three intervals in the Cretaceous Shiranish reservoir which has a potential gross hydrocarbon pay interval of over 500 metres. Testing has not yet started but is anticipated to be within the next two weeks. The Company is also working with Talisman to prepare for testing of the additional 275 metres and 118 metres of gross oil pay in the Eocene and Oligocene reservoirs respectively. The co-venturers are also planning a 3D seismic program and a further appraisal well (Kurdamir-3) to assess the ultimate size of this giant discovery.
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