Corporate Fact Sheet

Corporate Fact Sheet
December 2014
WesternZagros is a publicly-traded, Calgary-based, international oil and gas company focused on
exploring, developing and producing crude oil and natural gas in the Kurdistan region of Iraq. As only
the fourth international company to enter Kurdistan, WesternZagros was able to hand-pick its
exploration block in 2005, recognizing the potential for a huge light oil resource base. The Company
holds a 40% working interest in two Production Sharing Contracts (PSCs), both of which are on trend
with, and adjacent to, a number of prolific historic oil and gas discoveries.
WesternZagros has completed the exploration and appraisal phase on the Kurdamir and Garmian
blocks and is commencing the development of its crude oil and gas discoveries. Production of light oil
from the Sarqala-1 well on the Company’s Garmian Block is expected to commence in the first quarter
of 2015. A recent workover on the Sarqala-1 well increased flow rates and tested up to 11,500 barrels
per day of 40 degree API oil.
1 / Corporate Fact Sheet
1 - See October 2, 2014 Material Change Report for Garmian Block Gross and Working Interest 2P reserves.
2 – Block Gross Mean Estimates of Kurdamir and Garmian Blocks
3 - Total Gross Capacity of Facilities, subject to KRG approval
4 - Management estimates based on Block Gross unrisked 2C Contingent Resources for Kurdamir and Block Gross 2P Reserves and unrisked P50 Prospective Resources for Garmian
2 / Corporate Fact Sheet
Large, strategically attractive assets
Kurdamir: Block Gross Mean Contingent Resources of 976 MMboe, 58% oil (38° to 40° API), low sulphur, low H2S
Resource defined by 3D seismic and 3 wells drilling and tested confirming oil
Garmian: Initial Working Interest 2P Reserves of 5 MMbbl, oil (38° to 40° API), low sulphur, no H 2S
Sarqala-1 well produced, in 2012, 1 million barrels under an extended well test confirming reservoir quality
Significant upside from incremental prospective resources:
Kurdamir:
Garmian:
Block Gross Mean Prospective Resources of 1.6 billion BOE for further delineation drilling includes over 1.2 billion BOE
downdip from proven oil in Oligocene.
Block Gross Mean Prospective Oil Resources of 311 MMbbl identified for further delineation drilling.
Highlights
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Successfully completed a rights offering generating gross proceeds of Cdn$200 million. Proceeds will be used to fund
development costs on the Kurdamir and Garmian Blocks and for general and administrative purposes.
Successfully completed the workover of the Sarqala-1well on the Garmian Block to increase the flow capacity of the well. The well
tested at rates of up to 11,500 bbl/d of 40 degree API oil.
Submitted the Garmian development plan in June 2014 and anticipate approval late 2014. The development plan includes three phases
that target oil production of 25,000 to 35,000 bbl/d.
Submitted a Kurdamir development plan for approval; discussions with KRG to redefine the plan are ongoing.
Established Proved plus Probable Reserves for the first time by completing an independent evaluation of the Company’s light oil
discovery on the Garmian Block, This evaluation recognizes an initial 12 million barrels of gross 2P Reserves, representing only a
small portion of the potential of the Sarqala Discovery.
Conducted economic valuations of conceptual development for the Kurdamir Block in excess of $1.5 billion. For the Garmian
Jeribe/Upper Dhiban, 2P Reserves have a value of $75 million and P50 Prospective Resources have a value of $347 million.
Next Steps:
Operations: The Garmian Block’s Hasira-1 exploration well
test results anticipated early 2015.
During 2015, subject to KRG approval, the Company plans
to drill two horizontal or deviated wells (Sarqala-2 and Sarqala-3)
during Phase 2 of the Garmian development plan as well as
install centralized storage and loading facilities and begin the
front end engineering and design work for an incremental
25,000 to 35,000 bbl/d central processing facility for oil.
On the Kurdamir Block, Kurdamir-4, the first horizontal development
well, to be spud dependent on KRG approval, anticipating first production
end 2015.
Production: Subject to KRG approval of the Garmian development plan
anticipated by early 2015. Sarqala-1production capability rates up to 10,000 bbl/d.
Corporate: The Company is executing on phased development plans for its two significant oil and gas field on the Garmian and Kurdamir
Blocks. The overall development philosophy for the PSC lands is based on a phased expansion strategy: maximize production through
increasing processing facilities and production capabilities and drilling.
Corporate Social Responsibility
WesternZagros aspires to be an industry leader with respect to corporate social responsibility. The six key corporate social
responsibility focus areas in the PSC Lands of Kurdistan are local employment, water supply, education, health care, agriculture
and recreation. The Company bases its corporate social responsibility initiatives on the UN Global Compact and the ten principles
in the areas of human rights, labour, environment and anticorruption.
3 / Corporate Fact Sheet
Petroleum Contracts
The Kurdamir and Garmian PSCs each govern separate
contract areas. WesternZagros holds a 40% working interest
in both PSCs. The Kurdamir contract areas operated by
Talisman, with a 40% working interest. The Garmian contract
area is operated by WesternZagros with a 40% working
interest held by Gazprom Neft. The KRG holds the remaining
20% working interest in both PSCs.
Total Oil Produced
100bbls
Royalty Oil
10% of total crude oil
10bbls
Net Available Oil
The schematic illustrates the sharing of production under the
Terms of the Company’s PSCs.
90bbls
Under the PSC terms, the contractor’s portion of “Profit Oil”
is based on a sliding scale from 35% to 16% depending on
the R-Factor. The R-Factor is established by reference to the
ratio of cumulative revenues over cumulative costs. When the
ratio is below one, the contractor is entitled to 35% of the Profit
Oil. The contractor’s percentage is then reduced on a linear
sliding scale to a minimum of 16% when the ratio equals two
or greater.
Cost Recovery Oil
Total Profit Oil
up to 45% of net available oil
sharing based on R-Factor slide
range of 35%/65% 16%/84%
40bbls
1
50bbls 2
*
Contractor Group
**
KRG
18 bbls
WesternZagros (2)
40%
32bbls
Talisman/Gazprom
Neft 40%
KRG
20%
7bbls
4bbls
3
7bbls
20 - 24% = 27 - 31%
1. WesternZagros entitled to 60% on Kurdamir and 50% on Garmian based on funding required under both PSCs
2. R factor is the ratio of cumulative revenues over cumulative costs
3. KRG is entitled to a 3% capacity building bonus of WesternZagros profit oil for a net effective share of 38.8%.
Reserves, Contingent Resources and Prospective Resources
Table 1: See October
2, 2014 Material
Change Report for
Working Interest
Reserves, Contingent
Resources and
Prospective
Resources and further
details in respect of
the economic analysis
completed, including
the initial development
phases submitted to
the KRG, the full field
development scenario
and pricing and other
assumptions.
Reserves(1)
License
Reservoir (Classification)
1P (6)
Garmian
Jeribe/Upper
Dhiban
2P
(6)
3P
(6)
Contingent Resources (2)
License
(3)
Garmian (4)
(MMbbl)
(MMboe)
NPV10
(7)
US$ million
3
1
1
33
12
5
5
75
23
9
Reservoir
(MMbbl)
Tertiary Oligocene
366
Tertiary Eocene
138
Prospective Resources
License
(MMbbl)
Block Gross
Kurdamir
Kurdamir
Working Interest (Gross) (5)
Block Gross
Block Gross
9
216
P50 (Best Estimate)
Working Interest (Gross)
NPV10
(MMbbl)
(MMboe)
US$ million (7)
146
288
(7)
1,555
82
P50 (Best Estimate)
Working Interest (Gross)
NPV10
(MMbbl)
(MMboe)
US$ million (7)
55
Reservoir
(MMbbl)
Tertiary Oligocene
1004
402
470
(8)
Tertiary Eocene
91
36
47
(8)
Cretaceous
108
43
69
(8)
Jeribe/Upper Dhiban
(below lowest known oil)
61
24
24
347
Jeribe/Upper Dhiban
(potential extension southwest flank)
87
35
35
(8)
Upper Fars
63
25
25
(8)
Mio-Oligocene
41
16
16
(8)
Eocene
33
13
13
(8)
Cretaceous
5
2
2
(8)
See the October 2, 2014 Material Change Report for Garmian Block Gross and Working Interest 2P reserves. In addition, see the Company’s Annual Information Form dated March 13, 2014 (“AIF”)
and its MD&A for its most recently completed fiscal quarter for a further description of these reserves, Contingent Resources and Prospective Resources. Additional information relating to
WesternZagros is also available on SEDAR at www.sedar.com, including the AIF and such MD&A .
4 / Corporate Fact Sheet
Sarqala-1 Development Plan Phase 1 facility upgrades increasing capacity up to 15,000 bbl/d by early 2015
Executive Management Team
Simon Hatfield
Greg Stevenson
Mike Tinkler
Lance Berg
Tony Kraljic
Bill Jack
Mary Benassi
Chief Executive Officer
Chief Financial Officer
VP Exploration and Reservoir Development
VP Engineering and Operations
VP Business Development
VP and General Manager Kurdistan
VP Human Resources
Board of Directors
David Boone
Fred Dyment
John Frangos
Simon Hatfield
James Houck
John Howland
Randall Oliphant
William Wallace
Independent Businessman
Chairman, WesternZagros Resources Ltd.
Independent Businessman
CEO, WesternZagros Resources Ltd.
Independent Businessman
Crest Investment Company
Executive Chairman and Director, New Gold Inc.
Independent Businessman
Analysts
FirstEnergy
GMP
HSBC Bank plc
RBC Capital Markets
Schachter Asset Management
Scotia Capital
Standard Bank Group
TD Securities
Holt & Co.
Wood & Company
Gerry Donnelly
Ryan Savage
Peter Hitchens
Al Stanton
Josef Schachter
Gavin Wylie
Lionel Therond
Shahin Amini
Shola Labinjo
Yuriy Kukhtanych
5 / Corporate Fact Sheet
Head Office:
600, 440 – 2nd Avenue SW
Calgary, Alberta T2P 5E9
T. +1 403 693 7001 F. +1 403 233 0174
Investor Inquiries:
T. +1 403 693 7017
[email protected]
Contact
44 207 448 0251/214 / [email protected]
403 543 3584
/ [email protected]
44 207 991 6787
/ [email protected]
44 131 222 3638
/ [email protected]
403 264 4413
/ [email protected]
403 213 7333
/ [email protected]
44 203 145 6645
/ [email protected]
44 20 7 282 8217
/ [email protected] Pickering
44 203 008 6437
/ [email protected]
420 222 096 452
/ [email protected]
6 / Corporate Fact Sheet