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WesternZagros Resources Spuds Kurdamir-3 With "Transformational" Year Ahead

WesternZagros Resources (CVE:WZR) says it has spudded the latest well of its exploration and appraisal program in the Kurdistan region of Iraq as the company looks ahead to what it calls a "transformational year" for the oil and gas producer.

Drilling on its Kurdamir-3 appraisal well on the Kurdamir Block began last week, with 3D seismic surveys also underway on both the Kurdamir and Garmian blocks.

Preparations are also progressing for the three wells on the Garmian Block planned for this year, the company said.

"2013 promises to be an exciting, transformational year for the company," asserted CEO Simon Hatfield in a statement Monday.

"We are actively delineating our two major discoveries at Sarqala and Kurdamir and also pursuing high-impact step-out exploration on our Baram and Hasira prospects."

Last year, the company saw a number of milestones, including several successful well tests at its giant Kurdamir discovery in Iraq, which led to a substantial resource boost.

The third appraisal well on the block is expected to take around four months to reach the planned total depth of 2,800 metres. The company expects the gross costs of drilling and testing operations to be $50 million.

The well is being drilled on the southwest flank of the Kurdamir structure, around 3 km and 5 km from its Kurdamir-1 and Kurdamir-2 discovery wells, respectively.

The junior oil and gas company said Kurdamir-3 will further appraise the extent of the oil leg in the Oligocene interval, previously found in the Kurdamir 1 and 2 wells.

Meanwhile, the 3D seismic survey on Kurdamir started last month, and is due to wrap up early in the third quarter, encompassing 184 sq kilometres on the block, and extending into the neighbouring Topkhana Block in order to more clearly define the areal extent of the Oligocene, Eocene and Cretaceous reservoirs.

The data from this survey will be used for future appraisal well locations and to refine resource assessments of the existing discovery.

WesternZagros has a 40 per cent working interest in the Kurdamir block, while Talisman Energy (TSE:TLM), the operator of the well, also holds a 40 per cent working interest, with the Kurdistan regional government holding the remainder.

The Canadian junior recently announced that the combined mean prospective resources of the Kurdamir structure in the Oligocene, Eocene, and Cretaceous reservoirs, and the Baram prospect in the Oligocene and Eocene reservoirs, is now 1.7 billion barrels of oil, or over 2 billion barrels of oil equivalent when gas and condensate are included.

The revised estimate at the Baram prospect is thought to show that the prospect has the potential to contain the extension of the Kurdamir oil leg in the Garmian Block.

At the Garmian Block, the Baram-1 well is planned to spud in the third quarter of this year, in order to explore this potential extension of the Kurdamir discovery.

WesternZagros expects the well to take around five months to reach the planned total depth of 3,800 metres, and said it believes the well has the potential to also prove up "significant additional gross contingent oil resources" on the Kurdamir Block.

The Hasira-1 well on the Garmian Block, meanwhile, is planned to spud early in the second quarter to appraise the extent of the oil leg previously seen in the Jeribe reservoir at Sarqala-1 and also to explore the Oligocene reservoir beneath the Jeribe. This well is anticipated to take around seven months to drill its planned total depth of 4,100 metres.

The completion of either Baram-1 or Hasira-1 this year would fulfill the company's obligations under the second exploration sub-period of the Garmian production sharing contract, prior to any extension of such sub-period.

WesternZagros also said Monday that a 2D and 3D seismic survey is over 50% complete at the Garmian Block, with processing and interpretation underway. The data will be used in the appraisal of Sarqala and Mil Qasim, and in identifying exploration targets for 2014.

In addition, the junior company is planning a "low cost" three well drilling program in the southern part of the Garmian Block to explore the potential of the shallow Upper Bakhtiari formation. The first well of this campaign is set to spud in the second quarter.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.