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WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") has started drilling operations at the Mil Qasim-1 well on the Garmian Block in the Kurdistan Region of Iraq.
Mil Qasim-1 is located three kilometers to the south-east of the Company's Sarqala-1 discovery well. Mil Qasim-1 is targeting the prospective Upper Fars interval that exhibited numerous oil shows, including oil to surface in the drilling mud, while drilling the same interval in the Sarqala-1 well. The planned total depth is approximately 2,400 metres.
"This is the first well to be drilled on the Mil Qasim structure, which we believe could potentially be developed jointly with Sarqala," commented Simon Hatfield, the Company's Chief Executive Officer. "With an independently audited mean estimate of 106 million barrels of prospective oil resources at Mil Qasim, we're excited to explore this structure, which is also the second of the three wells that make up our objective of discovering 800 million barrels of oil by mid-2012."
Drilling Mil Qasim-1 fulfills WesternZagros' work obligation under the first exploration sub period of the Garmian PSC. As Operator of the Garmian Block, WesternZagros is currently funding 100 percent of drilling operations until such time as a third party participant is assigned a 40 percent working interest in the Block by the Kurdistan Regional Government. The Company expects the gross costs associated with drilling and testing operations to be in the range of US$30 - 35 million. The delay in spudding this well was to ensure the drilling contractor met the Company's operational requirements.
About WesternZagros Resources Ltd.
WesternZagros is an international natural resources company engaged in acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. WesternZagros, through its wholly-owned subsidiaries, holds a Production Sharing Contract with the Kurdistan Regional Government in the Kurdistan Region of Iraq. WesternZagros' shares trade in Canada on the TSX Venture Exchange under the symbol "WZR".
This news release contains certain forward-looking information relating, but not limited, to operational information, future drilling and development plans and the timing associated therewith. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", or similar words suggesting future outcomes. The Company cautions readers not to place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros. In addition, the forward-looking information is made as of the date hereof, and the Company assumes no obligation to update or revise such to reflect new events or circumstances, except as required by law.
Forward-looking information is not based on historical facts but rather on management's current expectations and assumptions regarding, among other things, plans for and results of drilling activity and testing programs, future capital and other expenditures (including the amount, nature and sources of funding thereof), continued political stability, and timely receipt of any necessary government or regulatory approvals. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by WesternZagros including, but not limited to, risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; interruptions in operations together with any associated insurance proceedings; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity. For further information on WesternZagros and the risks associated with its business, please see the Company's Annual Information Form dated April 11, 2011, which is available on SEDAR at www.sedar.com.
In addition, statements relating to "prospective oil resources" contained herein are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources described can be economically produced in the future. Terms related to resource classifications referred to herein are based on the definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook. "Prospective resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market, facility, corporate commitment or political risks). The chance of commerciality is the product of these two risk components. The estimates referred to herein have not been risked for either the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources. All resource estimates presented are gross volumes for the indicated reservoirs, without any adjustment for working interest or encumbrances. The Company's material change report filed on SEDAR at www.sedar.com and dated January 14, 2011, contains additional detail on the information used in the resource assessment for Mil-Qasim and includes the risks and level of uncertainty associated with the recovery and development of the resources and the significant positive and negative factors relevant to the estimates.
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