WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") is committed to providing timely and accurate information about its business strategy and objectives, financial and operating results, and development plan advancements. In addition to regulatory and materially-driven news releases, the Company invites investors and stakeholders to stay informed of its activity in the Kurdistan Region of Iraq through this newly-initiated status update. This periodic update comes in advance of the Company's standard second quarter results which are scheduled for release on August 13, 2015.
Second quarter production from the Sarqala-1 well averaged 5,427 barrels of oil per day ("bbl/d). WesternZagros continues, in accordance with the KRG, to supply this production to the domestic market under pre-paid contracts. The Company currently has two domestic customers for its oil production.
The Company is incorporating final comments from the Kurdistan Regional Government ("KRG") into its Sarqala Field Development Plan ("FDP"). Approval of the FDP is expected once the KRG has completed its contractual negotiations to build a natural gas plant to utilize the associated natural gas from the Sarqala field.
Operations to suspend the Hasira-1 well are proceeding according to plan and are anticipated to be completed in the third quarter. Although the FDP will delineate and develop the resources within the Jeribe reservoir, the Company and its partner, Gazprom Neft, are actively discussing the most effective next steps and the timing to assess the potential of Hasira-1's Mio-Oligocene oil discovery.
The Company has prepared the Sarqala-2 well site and is ready to spud the well, which is expected to occur in the fourth quarter, once the Hasira-1 suspension operations are completed and the Sarqala FDP is approved by the KRG.
Following the Repsol S.A. ("Repsol") acquisition of Talisman Energy Inc. in early May 2015, the Company is now actively engaged with Repsol on advancing the Kurdamir Development Plan. The KRG is keen to progress this oil and gas project although it is anticipated to take until the first quarter of 2016 for the co-venturers to finalize the development plan.
Corporate & Financial
Pursuant to the terms of the Investment Agreement between the Company and Crest dated March 10, 2013 as amended, Crest is in active discussions with the Company to appoint two directors to the WesternZagros Board. The Company welcomes these future appointments as the Company executes on its strategic and financial priorities.
In light of the ongoing oil price environment, the Company continues to implement strict cost reduction efforts that have meaningful impact to the bottom line, including optimizing capital investment, renegotiating contracts with service companies and cutting discretionary expenditures. The Company's priorities are to manage capital spending to profitably grow production and funds flow through operational execution and maintaining prudent and conservative financial discipline.