WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") announced today its operating and financial results for the second quarter ended June 30, 2015. A summary of the activities, the financial statements, and the accompanying Management Discussion and Analysis ("MD&A") are available at www.westernzagros.com and on SEDAR at www.sedar.com. All amounts set out in this news release are in US dollars unless otherwise stated.
Second quarter production from the Sarqala-1 well averaged 5,427 barrels of oil per day ("bbl/d"). The Sarqala-1 well has produced approximately 1.8 million barrels of light oil to date including production from the extended well test conducted in 2011.
Second quarter gross sales were 493,854 barrels of oil ("bbl"), of which WesternZagros's net oil sales were 133,202 bbl.
Second quarter sales revenue to WesternZagros was $5.6 million, with an average realized price of $41.71 per barrel and field netback was $3.9 million. Year-to-date sales revenue is $8.4 million.
Sarqala-1 well production guidance range for the remainder of 2015 is amended to the 5,000 to 5,500 bbl/d range. Based on these revised production rates and domestic oil prices in the range of $42 to $52 per barrel, WesternZagros now estimates 2015 sales revenue of $15 to $22 million and field netback of $10 to $17 million.
Operations are proceeding according to plan to suspend the Hasira-1 well and are expected to be completed in the third quarter. While the Company does not currently have a plan to develop the Mio-Oligocene reservoir, WesternZagros and Gazprom Neft continue to assess its potential.
The Company has recognized in the second quarter a non-cash impairment charge in relation to the exploration and evaluation expenditures for the Garmian block.
The Company is in the final approval stage of the Garmian Field Development Plan ("Garmian FDP") having incorporated concluding comments from the Kurdistan Regional Government ("KRG") into its Plan.
With the completion of the Repsol S.A. acquisition of Talisman Energy Inc. in early May 2015, Repsol has re-entered the negotiations with WesternZagros and the KRG regarding the development of the Kurdamir Block. The parties are actively engaged in advancing the Kurdamir Field Development Plan ("Kurdamir FDP") for oil and gas production although it is anticipated to take until the first quarter of 2016 for the co-venturers to finalize the FDP.
Ended the second quarter with $145 million in cash and cash equivalents and an available undrawn $200 million credit facility.
Operations in the Kurdistan Region of Iraq remain safe and secure.
Commenting on the second quarter results and subsequent events, WesternZagros's Chief Executive Officer Simon Hatfield said:
"The Company is committed to advancing development on the Garmian and Kurdamir Blocks to grow production and cash flow. We are also focused on delivering on our cost controls and capital efficiency. On the Kurdamir Block, we're encouraged by Repsol's engagement as the KRG is keen to progress this oil and gas project. We have established a strong financial position for our Company and are well positioned to weather the adverse global market conditions. 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. We have a solid foundation supported by great assets that provide us with the opportunity to create long-term value for all investors. While these are challenging times for both the Kurdistan Region and international oil companies, we continue to benefit from the relative security in the Kurdistan Region, where we are unaffected by the military operations elsewhere in Iraq."