By John Lee.
WesternZagros Resources has announced its operating and financial results for the fourth quarter and year ended December 31, 2014.
WesternZagros achieved several key financial and operational milestones during 2014 and to date, including the commencement of light oil production and sales at an average rate of 5,000 barrels of oil per day ("bbl/d") from the Sarqala-1 well on February 11, 2015.
Production is being sold in the domestic market under a pre-paid contract and is trucked by local buyers. The Company anticipates that this well is capable of production in the range of 8,000 to 10,000 bbl/d.
Simon Hatfield (pictured), Chief Executive Officer, said:
"Bringing the Sarqala-1 light oil well on-stream is a significant development for WesternZagros. This production provides our first cash flow and supports additional development that targets production to 35,000 bbl/d in our Garmian Block over the course of the development period.
"We have built a strong balance sheet and taken steps to ensure capital discipline during this lower crude price environment. We have a solid foundation supported by great assets that provide us with the opportunity to create long-term value for investor."
The Company has commissioned recent upgrades to the Sarqala processing facility that increases processing capacity from 10,000 to 15,000 bbl/d in order to accommodate additional production from 2015 completions.
The Company estimates 2015 production revenues of approximately $20 to $35 million and operating income of $15 to $30 million, after consideration of field operating costs.
"The safe and efficient initiation of production and commissioning of our Sarqala facilities demonstrate the success of our strategy and our operating teams. We'll look to replicate these accomplishments as we grow Sarqala production by drilling more development wells and expanding facilities," Hatfield said.
This new revenue will further help the Company's balance sheet, which was strengthened in 2014 when WesternZagros successfully raised Cdn$200 million in a Rights Offering and arranged a further debt facility of $200 million. WesternZagros ended 2014 with $197.1 million in cash and cash equivalents, sufficient to fund the currently planned appraisal and development activities during 2015.