Schacter 12-month Target Price: $2.50Schacter still likes it recommending it in his latest Jan 20 report of that could change depending on how this latest release is interpreted but otoh they still have plenty of cash and more wells to drill.......
WesternZagros (WZR-V)
www.westernzagros.com
Present Price:
.70
12-month Target Price: $2.50
Upside: 257%
Key Purchase Reasons:
1. WZR’s block is on trend with the “Super Giant” Kirkuk oilfield that has 25 billion barrels OOIP with >20 mapped prospects, all with potential gross recoverable reserves of >100MBOE/prospect and some with potential exceeding 500MBOE/structure.
2. The Sarqala -1 well, the first well drilled on the block had to be abandoned until the company can redesign the drilling operation in order to account for the record pressures encountered. Light oil was encountered at shallow depths in the well and is expected to be commercial. If the KRG is able to negotiate exports with the Baghdad government, it is possible that the company could get a work over rig on site and start producing the light oil from the well in a short amount of time.
3. The Shiranish, Kometan and Qamchuqua formations are found in the Cretaceous and are the three major producing reservoirs in the region. Heritage Oil confirmed that these reservoirs on the Miran West structure grossed a 500m thick pay zone. The Shiranish formation Addax encountered in their TT-10 appraisal well was 221m thick, close to 300m and 450m if you include the Kometan and Qamchuqua formations respectively. >80% of Iraqs oil reserves are located in Cretaceous formations.
4. The Kurdamir – 1, WZR’s second well on the block is approaching total depth and results are expected in February. After a significant gas and gas condensate discovery in the Oligocene formation of the Tertiary reservoir, the company has drilled through its second target, the Shiranish. The Shiranish in the Cretaceous reservoir has been found to contain oil in a number of major fields in the area, including Kirkuk, Taq Taq and Kor Mor. Based on seismic interpretation of the size of the Shiranish structure, the formation could contain as much as 220Mb of oil worth >$9/share net to WZR unrisked.
5. If the block holds a multi-billion barrel discovery, and recovery factors are >50%, upside is >$US15/share. WZR has enough cash to carry out its three well exploration program. Cash in the bank is >$US60M, equivalent to ~
.30/ share.
6. The management team has a strong knowledge of the region and benefits from having Talisman as a partner. Historically Talisman has been an acquirer of its partners once the resource has been found and proven, making WZR a potential takeover candidate.
7. Our target $2.50 share price incorporates the value of the Kurdamir-1 natural gas and gas condensate discovery in the up hole zone of the Oligocene plus the value of a ~2 billion barrel discovery risked at a 20% chance of success and 30% recovery. Land was valued at $100/acre.
19 Maiso