By John Lee.
Shares in WesternZagros Resources were up 8 percent in early trading on Wednesday following the announcement of its operating and financial results for the first quarter ended March 31, 2014.
Commenting on the first quarter results and subsequent events, WesternZagros's Chief Executive Officer Simon Hatfield (pictured) said:
"There have been several key operational accomplishments and corporate initiatives this year that continue to steadily advance the development of our substantial oil and gas discoveries in Kurdistan.
"The most significant of these is that the interpretation of the integrated 3D seismic data that we acquired last year over the Kurdamir discovery and the Baram structure indicates that it is likely that the oil leg in the Oligocene reservoir at Kurdamir contains significantly more resources than our currently audited contingent resource estimates.
"This is also supported by the successful results of the approximately one and half month extended well test of the lowest perforated interval in our Kurdamir-2 well. This test produced approximately 90,000 barrels of oil, a significant amount of gas and, most significantly, no formation water. This confirms that any oil-water contact ("OWC") is significantly deeper than the tested interval."
"This evidence, together with the new high quality 3D seismic interpretation, provides compelling support that the OWC may be as deep as that encountered at Baram-1. Should this prove to be the case, the oil leg in the Oligocene reservoir at Kurdamir would increase from the 241 metres used for our last contingent resource estimate to an eye-popping 837 metres, a 250% increase.
"The Company has long recognized that Kurdamir has significant undiscovered potential in the Oligocene reservoir down the flank of the structure from the audited contingent resources as we carry over 1 billion barrels of gross prospective oil resources (mean estimate), however, these recent findings increase the chance of success for these resources considerably.
"If proven, this has the potential to convert an estimated 950 million barrels of prospective oil resources to contingent resources. We also anticipate the results of two additional wells that are underway to test the extension of the Kurdamir Oligocene oil leg onto adjacent blocks.
"These are Talisman's Topkhana-2 well and KNOC's Massoyi-1 well, being drilled to the west on Talisman's Topkhana Block and to the north on KNOC's Sengaw South Block. The Company anticipates that the results from these wells are likely to support our assertion that the Kurdamir oil discovery and its extension onto adjacent blocks will prove to be a multi-billion barrel light oil field."
"On our Garmian Block, the KRG has accepted our declaration of commerciality for the Sarqala oilfield and we are near to submitting our first field development plan to the KRG for their approval with a view to commencing production as soon as possible. Preliminary open hole flow tests on the Hasira-1 well have confirmed light oil in both the Oligocene and Jeribe reservoirs although mechanical difficulties have prevented comprehensive testing in the open hole and both sections have now been cased for future testing.
"The light oil that flowed is similar in quality to previous production from our neighboring Sarqala-1 well. A more comprehensive Hasira-1 cased hole production test program is planned once the current drilling rig has moved off the location and the more cost effective workover rig is available, following the workover of Sarqala-1. The current workover of Sarqala-1 is part of the Garmian Development Plan, which contemplates initial Sarqala production of about 10,000 barrels of oil per day this year, increasing up to 25,000 to 35,000 barrels of oil per day during the second phase of development."