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WesternZagros announces first quarter 2015 operational and financial results

Production from the Sarqala-1 well in the Garmian Block commenced on February 11, 2015, and for the remainder of the quarter averaged 5,221 barrels of oil per day

WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") announced today its operating and financial results for the first quarter ended March 31, 2015. 

WesternZagros achieved several key financial and operational milestones during the first quarter of 2015 and to date, including:

  • Production from the Sarqala-1 well in the Garmian Block commenced on February 11, 2015, and for the remainder of the quarter averaged 5,221 barrels of oil per day ("bbl/d").
  • Gross sales were 255,807 barrels of oil ("bbl"), of which WesternZagros's net oil sales were 68,997 bbl. Sales revenue to WesternZagros was $2.9 million, reflecting an average realized price of $41.71 per barrel. Field netback was $1.9 million.
  • Gross production from Sarqala-1 is anticipated in the range of 5,700 to 6,700 bbl/d for the remainder of 2015.
  • Prepared well site and secured long lead equipment for the next development well on the Sarqala oilfield. This well is anticipated to spud pending approval of the Garmian Development Plan by the KRG in accordance with the PSC terms.
  • Commissioned the Sarqala production facility upgrades that increased processing capacity from 10,000 to 15,000 bbl/d with the capability to tie in future Sarqala development wells.
  • In the process of suspending the Hasira-1 well after conducting an unsuccessful cased-hole testing program in the high pressure Mio-Oligocene oil reservoir.
  • Maintained a strong balance sheet with $158.6 million in cash and cash equivalents as at March 31, 2015 and an available $200 million undrawn credit facility. Focusing on capital efficiency and prioritized strict cost reduction efforts including optimizing capital investment, reducing staff, renegotiating contracts with service companies and cutting discretionary expenditures. 

Commenting on the first quarter results and subsequent events, WesternZagros's Chief Executive Officer Simon Hatfield said:

"The first quarter of 2015 was a significant transition point for WesternZagros as we initiated light oil production, commenced sales into the domestic market and generated cash flow from our Sarqala-1 well. As the well and surface facilities are optimized, we expect Sarqala-1 to produce up to 6,700 bbl/d on a sustained basis. We also plan to grow this production with our next development well at Sarqala pending approval of the Garmian Development Plan. Should the current oil sales arrangement continue, cash flow generated from production will help support our development program as we progress towards a planned production rate of 35,000 bbl/d for the field."

"Our strategy through 2015 is to utilize our capital flexibility and balance sheet strength to maintain optionality throughout this time of lower oil prices and regional geo-political uncertainty. We will continue to strengthen our internal operations management, exercise strict cost control, and enhance efficiency to proactively respond to low oil prices through the prudent advancement of various production and operational plans. We are continuing negotiations with our co-venturer and the KRG on the Kurdamir Development Plan - approval of both the Sarqala and Kurdamir field development plans are key value driving events to our Company."

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