WesternZagros Resources Ltd. Annual General and Special ... · Khala_S Hasan_Albian Alyan_Albian...
Transcript of WesternZagros Resources Ltd. Annual General and Special ... · Khala_S Hasan_Albian Alyan_Albian...
WesternZagros Resources Ltd.
Annual General and Special Meeting
June 1, 2010
Caution to the Reader
This presentation contains forward-looking statements with respect to WesternZagros, including but not limited to operational information, future exploration anddevelopment plans and anticipated future production and resources. Forward-looking information typically contains statements with words such as “anticipate”, “estimate”,“potential”, “could”, or similar words suggesting future outcomes. WesternZagros cautions readers and prospective investors in the Company’s securities to not place unduereliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks anduncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros. Readers are also cautioned that disclosed test rates andpotential production rates may not be indicative of ultimate production levels.
Forward looking information is based on management's current expectations and assumptions regarding, among other things, plans for and results of drilling activity, futurecapital and other expenditures (including the amount, nature and sources of funding thereof), future economic conditions, future currency and exchange rates, continuedpolitical stability and the Company's continued ability to obtain qualified staff and equipment in a timely and cost efficient manner. In addition, budgets are based uponWesternZagros' current exploration plans and anticipated costs both of which are subject to change based on, among other things, the actual results of drilling activity,unexpected delays and changes in market conditions. Although the Company believes the expectations and assumptions reflected in such forward-looking information arereasonable, they may prove to be incorrect.
WesternZagros’ operations are subject to all the risks normally incident to the exploration, development and operation of crude oil and natural gas properties and the drillingof crude oil and natural gas wells, including encountering unexpected formations or pressures, premature declines of reservoirs, potential environmental damage, blow-outs,fires and spills, all of which could result in personal injuries, loss of life and damage to property of WesternZagros and others, environmental risks; delays or changes in planswith respect to exploration or development projects or capital expenditures; the ability to attract and retain key personnel; the risk of commodity price and foreign exchangerate fluctuations.
All of WesternZagros’ assets are located in Kurdistan. As such, WesternZagros is subject to political, economic, and other uncertainties, including, but not limited to, theuncertainty of negotiating with foreign governments, expropriation of property without fair compensation, adverse determinations or rulings by governmental authorities,changes in energy policies or the personnel administering them, nationalization, currency fluctuations and devaluations, disputes between various levels of authorities,arbitrating and enforcing claims against entities that may claim sovereignty, authorities claiming jurisdiction, potential implementation of exchange controls, royalty andgovernment take increases and other risks arising out of foreign governmental sovereignty over the areas in which WesternZagros’ operations are conducted, as well as risksof loss due to civil strife, acts of war, guerrilla activities and insurrections. WesternZagros’ operations may be adversely affected by changes in government policies andlegislation or social instability and other factors which are not within the control of WesternZagros including, among other things, adverse legislation in Iraq and/or theKurdistan Region, a change in crude oil or natural gas pricing policy, the risks of war, terrorism, abduction, expropriation, nationalization, renegotiation or nullification ofexisting concessions and contracts, taxation policies, economic sanctions, the imposition of specific drilling obligations and the development and abandonment of fields.
The ability of WesternZagros to successfully carry out its business plan beyond exploration is primarily dependent on the continued support of its shareholders, the discoveryof economically recoverable reserves, its joint venture partner’s continued participation in the exploration activities under the PSC, and the ability of the Corporation toobtain financing to develop reserves. WesternZagros’ cash balance may not be sufficient to fund its ongoing activities at all times and carry the KRG’s 20 per cent interestunder the PSC. From time to time, WesternZagros may require additional financing in order to carry out its oil and gas acquisition, exploration and development activities.Failure to obtain such financing on a timely basis could cause WesternZagros to forfeit its interest in certain properties, miss certain acquisition opportunities and reduce orterminate its operations. It is possible that future global economic events and conditions may result in further volatility in the financial markets which, in turn, couldnegatively impact WesternZagros’ ability to access equity or debt markets in the future.
Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors should not place undue reliance on these forward-lookingstatements. For a full discussion of the risk factors, please refer to the Annual Information Form on the Company’s web site.
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Our Objective
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To be recognized, through consistently superior business performance and operations excellence, as one of the leading junior oil and gas companies active in Iraq.
4 Sarqala-1
Qulijan-1
Understanding the Region’s Oil & Gas Fields
B’A A’ B
Composite Seismic Section (SW to NE)
Kurdamir-1 and Qulijan-1 Location
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Razyana
Zhala
Tilako
Shana
Qabri
Qula
Smaqa_S
Khala_S
Hasan_Albian
Alyan_Albian
Zardi
Baran
Alyan
Yarmand
Smaqa_N
Tukin
Wurela
Qula_W
Namiq
Hasan
Chwar
Khala_N
0 6 123 Kilometers
Legend
4-way
3-way
2-way
Sarqala Deep
Mansur
Sarhad
Confidential
Kurdamir-1Current Driller
(Tertiary gas/condensate)
A
A’B’
B
• Structural style
similar to existing
giant fields in Iraq
and Iran
Horizon Legend
Ground Elevation
Upper Fars
Lower Fars Evaporite
Base Fars Detachment
Lower Fars Transition Beds
Oligocene
Aaliji
Shiranish
Kurdamir: The Potential Reward
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Block K44
Block K39
?
Block K38
Kurdamir-1
30 km2
155 km2
Kurdamir-1 Well Control Operations
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Kurdamir-1 Well Control Operations
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Kurdamir-1 Well Control Operations
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Kurdamir-1 Well Control Operations
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Kurdamir-1 Well Control Operations
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Kurdamir-1 Well Control Operations
Photo of Kurdamir-1 Rig Condition
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Kurdamir-1 Village
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Financial Impact
As of May 28, 2010 Gross Net
Estimated Kurdamir-1 Costs
Total expenditure $88 to $90 M $53 to $54 M
Well control and sidetrack expenses only $33 to $35 M $20 to $21 M
Insurance Policy and Estimated Claim
Insurance policy limit $75 M $45 M
Insurance claim (net of $1 million deductible)
$32 to $34 M $19 to $20 M
The total gross expenditures for Kurdamir-1 excludes further costs for both sidetracking beyond 3,214 metres or cased hole testing. Any further sidetracking expenditures will increase both the total expenditure and the amount claimed under the insurance policy.
The lead insurer has now approved the insurance claim.
Financial Position (As at March 31, 2010, US$ millions)
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The anticipated costs of Kurdamir-1 include well control operations, but exclude any costs for continuing to sidetrack beyond 3,214m and future cased-hole testing activities.
Due to the nature of oil and gas exploration, budgets are regularly reviewed and are subject to change. Upon successful completion of well control activities at Kurdamir-1, WesternZagros will update the 2010 budget to include future activities at Kurdamir-1 and at the third exploration commitment well.
Working Capital PositionWithout Insurance
With Insurance
Cash $55.1 $55.1
Non-Cash Working Capital (1.9) (1.9)
Insurance Claim - 10.0
Working Capital $53.2 $63.2
Remaining 2010 Capital and Operating Budget
Without Insurance
With Insurance
Kurdamir-1 $11 $ -
Advance Planning of Third Well 6 6
Geoscience and Field Office 4 4
G&A and Business Development 4 4
Total $25 $14
Operational priorities
Complete well control activities
Prepare to drill third exploration commitment well – Qulijan-1 (formerly Sarhad)
Resume drilling at Kurdamir-1
Evaluate Kurdamir-1 gas and condensate discoveries
Evaluate exploring the flanks of the Kurdamirstructure
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WesternZagros: Positioned for Success
Large exploration area in an active region
Multiple prospects with multiple reservoir targets
Hydrocarbons already discovered
Strong technical team with extensive experience
Experienced international industry partner
Financed to meet key commitments
Excellent opportunity to create substantial shareholder value
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Block K39
Block K38
Kurdamir-1
www.westernzagros.com
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