Oil Find Declared Commercial, Shares Fall

Simon Hatfield (pictured), WesternZagros's Chief Executive Officer, said:

"The revised assessment, once again, confirms that the Kurdamir Discovery is a giant field containing contingent resources of almost a billion barrels of oil equivalent, a significant oil and gas resource.

"We look forward to submitting a declaration of commerciality on the Kurdamir Block and moving towards development of this exceptional resource."

"On the Garmian block, we're encouraged that the Baram-1 well discovered light oil in the Oligocene. We are evaluating the Baram-1 test results, logs, and core data and integrating with the 3D seismic data to assess the potential of the discovery.

"We are also encouraged that Hasira-1 has confirmed the extension of the Sarqala oil discovery in the Jeribe reservoir. The Hasira-1 well will now drill into the Oligocene and we are looking forward to the results. "

"The development of the Garmian Block is advancing as we have filed the declaration of commerciality, based on the Sarqala Discovery, with the Kurdistan Regional Government. This is the first step in taking WesternZagros from a frontier explorer to a cash flow-generating company.

"As the Kurdistan Region moves towards crude oil exports through the newly constructed pipeline, we foresee our high quality, light oil as a valued component to the Kurdish export blend."

Revised Resources Estimate - Kurdamir Block

WesternZagros has re-evaluated the contingent and prospective resource estimates for the Oligocene reservoir in the Kurdamir structure based on new information obtained from the drilling of the Kurdamir-3 appraisal well and the interpretation of 3D seismic data. The revised resources assessment has been audited by our independent reserves evaluator, Sproule International Limited ("Sproule"), as of February 10, 2014 resulting in no material change.

The revised mean estimate of gross unrisked contingent resources ("Mean Contingent Resources") rose to 750 million barrels of oil equivalent ("MMBOE") as compared to 717 MMBOE in the last resource estimate of February 8, 2013 (the "2013 Assessment"), an increase of 5 percent. On an oil basis, the Mean Contingent Resources are now 386 million barrels of oil ("MMbbl") versus 390 MMbbl in the 2013 Assessment, an adjustment of less than one percent. The combined Mean Contingent Resources estimates for the Oligocene and Eocene reservoirs in the Kurdamir Block are now 976 MMBOE and 541 MMbbl of oil.

The revised mean estimate of gross unrisked prospective resources ("Mean Prospective Resources") for the Oligocene reservoir at Kurdamir is now 1,084 MMbbl of oil, effectively unchanged from the 2013 Assessment of 1,076 MMbbl of oil.