WesternZagros expects to recommence the EWT at Sarqala upon KRG approval to gain additional information in order to appraise the discovery for future development. Upon receipt of KRG approval, the Company plans to complete a workover of the Sarqala-1 well in the second half of 2013 in order to allow future EWT production capability to increase beyond the current 5,000 barrels per day. Engineering work is also underway for permanent facilities to increase EWT production capability at Sarqala including gas conservation measures. In particular, preliminary engineering design of the Sarqala first phase permanent facilities with 20,000 bbl/d capacity has been completed in readiness to request engineering procurement and construction tenders at the appropriate time. Work is continuing on opportunities to utilize the associated natural gas from any future crude oil production to minimize the flaring of natural gas.
Hasira-1 Exploration and Appraisal Well
The Hasira-1 well is planned to spud in the second quarter of 2013 to appraise the extent of the oil leg previously encountered in the Jeribe reservoir, targeting 25-50 MMBOE of Gross Mean Prospective Resources, at the Sarqala-1 well and also to explore the deeper Oligocene reservoir, targeting a further 25-50 MMBOE of Gross Mean Prospective Resources. Significant oil shows were encountered in the Oligocene interval at Sarqala-1 but the Company was unable to evaluate them at that time due to wellbore conditions. Hasira-1 is expected to take approximately seven months to drill to a planned total depth of 4,100 metres. The drilling rig is currently being prepared in North America for deployment to the Kurdistan Region.
Baram-1 Exploration Well
The Baram-1 well is planned to spud in the third quarter of 2013, in order to explore a potential extension of the oil leg in the Oligocene reservoir of the Kurdamir discovery into the Garmian Block. If successful and the extension is confirmed, this well could add 200-300 MMBOE of Gross Mean Contingent Resources in the Garmian Block and possibly also confirm an additional 500-600 MMBOE of Gross Mean Contingent Resources on the Kurdamir Block. WesternZagros expects the well to take approximately five months to reach the planned total depth of 3,800 metres. An additional drilling rig is also currently being prepared in North America for deployment to the Kurdistan Region.
The completion of either Baram-1 or Hasira-1 in 2013 would fulfill the Company's obligations under the second exploration sub-period of the Garmian PSC, prior to any extension of such sub-period.
Upper Bakhtiari Three-Well Drilling Program
This program is to explore the potential of the shallow (500 to 700 metres depth) Upper Bakhtiari formation in the southern part of the Garmian Block through a low cost, three well drilling program, targeting 29 MMBOE of Gross Mean Prospective Resources. If successful, the wells could be quickly tied into the existing Sarqala facilities for EWT production, subject to KRG approval. The Company plans to spud the first well in the second quarter of 2013 subject to the availability of a drilling rig in Kurdistan.
Garmian Seismic Programs
WesternZagros has commenced a 3D seismic appraisal survey over the Sarqala, Mil Qasim and adjacent Zardi Complex structures. WesternZagros has completed the 2D seismic survey at Chwar which is located 22 kilometres west-northwest of Sarqala to elevate this low risk, Jeribe oil opportunity to drill ready status. The Chwar prospect will be ranked against the other prospects on the Garmian Block. The Company will utilize the 3D information to optimize the number and placement of future appraisal and development well, improve its understanding of fracturing within these structures and further evaluate the Bakhtiari, Upper Fars, Jeribe, Oligocene, Eocene and Cretaceous reservoirs on the southern portion of the Block. The Company also plans to conduct a 3D seismic program in the second half of 2013over the northern portion of the Block targeting the Baram and Qulijan structures. The 3D data over Baram will assist in determining whether Baram is an extension of the existing Kurdamir Oligocene discovery or a separate structure.
Planned expenditures include $30 million for the Hasira-1 well (expected to be spudded in the second quarter of 2013), $28 million for the Baram-1 well (expected to be spudded in the third quarter), $4 million for the Sarqala EWT facilities, $2 million for the first of three wells of the Mil Qasim Upper Bakhtiari program, $7 million for the Garmian South seismic programs and $11 million for G&A and other costs. Contingent projects may also include $4 million for anticipated Sarqala-1 work over and recompletion costs, subject to KRG approval, $8 million for the Garmian North seismic program and $4 million for up to two additional wells at the Mil Qasim Upper Bakhtiari program, subject to successful results.
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