CALGARY, ALBERTA--(Marketwire - May 25, 2010) -
NOT FOR DISTRIBUTION TOU.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
WesternZagros Resources Ltd. (TSX VENTURE:WZR)("WesternZagros" or "the Company") is continuing concerted efforts tobring the Kurdamir-1 well safely under control. The operational statusof the well is unchanged; it remains shut-in, and there has been norelease of hydrocarbons or hydrogen sulphide (H2S) at thesurface. There have been no injuries. Specialists from Boots & CootsInternational Well Control Inc. are now on site and assessing thesituation. The necessary equipment is being mobilized and has started toarrive, and drilling mud is being prepared to begin efforts to controlthe well. The equipment includes a snubbing unit, which is a hydraulicworkover rig that enables well intervention to be performed while thewell is under pressure.
The Emergency Response Teams in Calgary and in the KurdistanRegion of Iraq remain active, managing both the operational activitiesand the outreach required to assist approximately 100 local residents,who remain evacuated as a precaution. Those local residents live withinthe Emergency Planning Zone, and WesternZagros is working directly withthem to ensure their needs are met during this period of dislocation.Human safety remains the top priority of the response efforts.
WesternZagros expects the well control activities to take atleast 30 days. If these efforts are successful, it may be possible toresume drilling and testing the well as planned. As of May 24, 2010, thetotal cost of the Kurdamir-1 well, with the sidetracking operations,had reached approximately $81 million gross, or $49 million net to theCompany. WesternZagros anticipates that the additional well controlactivities currently underway could add approximately $7 to $9 milliongross to that cost (or $4 million to $5 million net to the Company),although that estimate is preliminary and may change.
The Company is currently pursuing a claim under its wellcontrol insurance coverage for the costs of the ongoing sidetrackingefforts, and plans to submit additional claims for the current wellcontrol activities. The policy has a total claim limit of $75 milliongross. As of May 24, 2010, WesternZagros and its partners had incurredin excess of $25 million gross for well control and sidetrackingactivity.
"We are grateful for the assistance we have received as wework through this difficult situation, and for the professionalism andcommitment demonstrated by our employees and contractors," said SimonHatfield, Chief Executive Officer of WesternZagros. "We are workingclosely with our partners, the Kurdistan Regional Government andTalisman, who have given us their full support. The petroleum operatorand service community in Kurdistan has also been very cooperative. Anumber of companies have helped us by providing equipment or suppliesfor our operations."
Kurdamir-1 is a wildcat exploration well, located on theKalar Bawanoor Block, in the Kurdistan Region of Iraq. WesternZagros isdrilling the well with its co-venturers, the Kurdistan RegionalGovernment (KRG) and Talisman (Block K44) B.V. Further operationalupdates will be provided as well control and drilling activitiesprogress.
About WesternZagros Resources Ltd.
WesternZagros is an international natural resources companyengaged in acquiring properties and exploring for, developing andproducing crude oil and natural gas in Iraq. WesternZagros, through itswholly-owned subsidiaries, holds a Production Sharing Contract with theKurdistan Regional Government in the Kurdistan Region of Iraq.WesternZagros' shares trade in Canada on the TSX Venture Exchange underthe symbol "WZR".
This news release may contain forward-looking informationbased on assumptions that are subject to a wide range of businessrisks. WesternZagros' operations are subject to all risks normallyincident to the exploration, development and operation of crude oil andnatural gas properties and the drilling of crude oil and natural gaswells, including geological risk, encountering unexpected formations orpressures, premature declines of reservoirs, potential environmentdamage, blow-outs, fires and spills, all of which could result inpersonal injuries, loss of life and damage to property of WesternZagrosand others; environment risks; delay or changes in plans with respect toexploration or development projects or capital expenditures; its jointventure partner's continued participation in the exploration activitiesunder the PSC, the ability to attract key personnel; the risk ofcommodity price and foreign exchange rate fluctuations.
All of WesternZagros' assets are located in the KurdistanRegion of Iraq. As such, WesternZagros is subject to political,economic, and other uncertainties of that region as well as risks ofloss due to civil strife, acts of war, guerrilla activities andinsurrections. WesternZagros' operations may be materially adverselyaffected by changes in government policies and legislation or socialinstability and other factors which are not within its control. Risksalso include the uncertainty involved in the estimation of undiscoveredresources. For further information on WesternZagros and the risksassociated with its business, please see WesternZagros' AnnualInformation Form dated March 26, 2009 which is filed at www.sedar.com and on the Company's website.
Forward-looking information typically contains statementswith words such as "anticipate", "estimate", "expect", "potential","could", or similar words suggesting future outcomes. We caution readersand prospective investors of the Company's securities not to placeundue reliance on forward-looking information as by its nature, it isbased on current expectations regarding future events that involve anumber of assumptions, inherent risks and uncertainties, which couldcause actual results to differ materially from those anticipated byWesternZagros.
THE TSX VENTURE EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FORTHE ADEQUACY OR ACCURACY OF THIS RELEASE.