WesternZagros Q1 Results and Updates

Financing

  • During the first quarter of 2013, the Company completed a non-brokered private placement of 51 million common shares with Crest Energy International LLC ("Crest") of Houston, USA, at Cdn$1.25 per common share for gross proceeds of $62.4 million. This represented an approximate 25 percent premium to the March 8, 2013, closing share price. Crest obtained the right under the associated investment agreement to appoint an additional nominee to the WesternZagros Board of Directors and has elected John Howland to that position. Eric Stoerr, an officer of Crest, has been a member of the Company's Board of Directors since August 2012.
  • In conjunction with the private placement, WesternZagros also entered into a loan agreement with Crest and received US$57.5 million, which is secured by 10 percent of the issued share capital of WesternZagros Limited, a wholly-owned subsidiary of the Company that is the contracting party to the Garmian and Kurdamir Production Sharing Contracts (PSCs). The loan accrues interest at a fixed rate of six percent per annum, compounded monthly. The principal and accrued interest is repayable by September 30, 2014, subject to certain prepayment terms.
  • Subsequent to March 31, 2013, the Company completed a further marketed private placement of 11,431,422 common shares with Crest and Jasmine Capital (a wholly-owned subsidiary of Richard Chandler Corporation) at Cdn$1.25 per common share for gross proceeds of $14.1 million. The net proceeds of $13.5 million were then used to repay accrued interest of $0.2 million and repay $13.3 million of the principal amount of the loan from Crest. As a result of these transactions, the remaining principal amount of the Crest loan was reduced to $44.2 million as at April 4, 2013.
  • Upon closing of the further private placement in April 2013, Crest held approximately 19.8 percent and Jasmine Capital held approximately 15.1 percent of the issued and outstanding common shares of the Company.
  • During the first quarter of 2013, the Company executed a two-year drilling contract for two rigs, for which the Company deposited into trust its share of a required deposit in the amount of $20 million. The total deposit in trust is $40 million of which Gazprom Neft has funded their 50 percent share of the total deposit that was due.
  • As at March 31, 2013, WesternZagros had $152.2 million in working capital, excluding the $20 million deposit in trust pertaining to the drilling contract. The Company is fully funded for its planned activities in 2013.
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