1.WZR’s block is on trend with the “Super Giant” Kirkuk oilfield that has25 billion barrels OOIP with >20
mapped prospects,all with potential gross recoverable reserves of >100MBOE/prospectand some with
potential exceeding 500MBOE/structure.
2. The Sarqala -1 well, the first well drilled on theblock had to be abandoned until the company can redesign
the drilling operation in order to account for the recordpressures encountered. Light oil was encountered at
shallowdepths in the well and is expected to be commercial. If the KRG is ableto negotiate exports with the
Baghdad government, itis possible that the company could get a work over rig on site andstart producing
the light oil from the well in ashort amount of time.
3. The Shiranish, Kometan andQamchuqua formations are found in the Cretaceous and are the three major
producing reservoirs in the region. Heritage Oil confirmedthat these reservoirs on the Miran West structure
grosseda 500m thick pay zone. The Shiranish formation Addax encountered intheir TT-10 appraisal well
was 221m thick, close to300m and 450m if you include the Kometan and Qamchuqua formations
respectively. >80% of Iraqs oil reserves are located inCretaceous formations.
4. The Kurdamir – 1, WZR’ssecond well on the block has been drilled to a total depth of 4,077meters and has
penetrated the Shiranish reservoirtarget. A high pressure zone was encountered above the deeper
Qamchuqa formation but will not be drilled any furthersince the pressures encountered are beyond the
safetylimits of the well. As a result, WZR will conduct a cased hole testingprogram in order to test the
Shiranish for oil. Thecompany has indicated that there have been numerous oil and gas showswhile drilling
through the Shiranish and areoptimistic about the chances of testing oil from this formation. Resultsare
expected in early March. Based on seismicinterpretation of the size of the Shiranish structure, the formation
could contain as much as 220Mb of oil worth >$9/sharenet to WZR unrisked.5.In addition to the Shiranish potential, WZR has had an independentengineering firm evaluate the uphole
discovery in theOligocene reservoir. The prognosis is that the condensate discovery islikely from an oil
prone source associated with anoil column deeper in the Kurdamir structure. The company is considering
drilling a follow-up well in the flank to be decided oncethe results from the ongoing testing program in the
deeperzone are known.
6. If the block holds amulti-billion barrel discovery, and recovery factors are >50%, upsideis >$US15/share.
WZR has enough cash to carry outits three well exploration program. Cash in the bank is >$US60M,
equivalent to ~
.30/ share.
7. Themanagement team has a strong knowledge of the region and benefits fromhaving Talisman as a
partner. Historically Talismanhas been an acquirer of its partners once the resource has been foundand
proven, making WZR a potential takeovercandidate.
8. Our target $2.50 share priceincorporates the value of the Kurdamir-1 natural gas and gas condensate
discovery in the up hole zone of the Oligocene plus thevalue of a ~2 billion barrel discovery risked at a 20%
chance ofsuccess and 30% recovery. Land was valued at $100/acre.