Mil Qasim-1 Discovery Well (Garmian Block)
Lower Bakhtiari and Upper Fars Formations
Mil Qasim-1 was drilled to a total depth of 2,425 metres in December 2011 ahead of time and on budget. The well encountered a gross hydrocarbon bearing interval of approximately 800 metres containing numerous sandstones (each in the range of 2-13 metres thick) in the Lower Bakhtiari and Upper Fars Formations. Hydrocarbon shows and wireline logs indicate the presence of oil in the Upper Fars Formation and this was the focus of the testing program. Hydrocarbon shows and wireline logs also indicate the potential for additional oil in the Lower Bakhtiari Formation, but testing of this interval has been deferred to a later date.
The testing program has resulted in the flow of light, 43 to 44 degree API oil to surface from low permeability sandstone reservoirs and natural fractures in the Upper Fars Formation. No H2S and no formation water were identified during testing. Four tests were conducted in the Mil Qasim-1 well. Test 1 was an open hole test, Tests 2 to 4 were cased hole tests.
Test 1 was conducted over the open hole section between the depths of 2,129 metres and 2,168 metres. Test 1 resulted in a flow of 44 degree API gravity oil with no formation water, at an average rate of 108 barrels of oil per day ("bopd") over a two day period using an 8/64" choke with a flowing well head pressure of 1,606 psi. Initial reservoir pressure was calculated to be 6,405 psi.
Test 2 was conducted over a gross perforated interval of 49 metres between the depths of 2,054 metres and 2,103 metres. Although Test 2 successfully flowed limited amounts of oil to surface, the test failed to evaluate the potential of the reservoir interval due to ineffective perforations.
Test 3 was conducted over a gross perforated interval of 167 metres between 1,799 metres and 1,966 metres. Test 3 resulted in a flow of 44 degree API oil with no formation water, at an average rate of 488 bopd over a one day period using a 48/64" choke with a flowing well head pressure of 113 psi. Initial reservoir pressure was calculated to be 5,338 psi. Test 3 analysis conducted by an independent third party engineering expert indicates that this interval has the potential to produce at over 1,000 bopd if formation damage can be mitigated by stimulation or use of alternative drilling techniques. The Company is considering additional measures to enhance future flow from this interval.
Test 4 was conducted over a gross perforated interval of 107 metres between the depths of 1,636 metres and 1,743 metres. Test 4 resulted in a flow of 43 degree API oil and an emulsion at an estimated rate of 250 barrels per day ("bpd") over a one day period. Test 4 was conducted using a 32/64" choke with a flowing well head pressure of 90 psi.
These drill-stem testing operations were concluded on February 14, 2012. However, upon approval from the Kurdistan Regional Government, WesternZagros plans to immediately conduct an extended well test over the Test 4 interval to further clean-up the well and gain additional information on its long term deliverability. The Company will conduct additional analysis to determine how to increase flow rates and unlock the considerable potential of the low permeability, naturally fractured sandstones of the Upper Fars Formation.
Upper Bakhtiari Formation
The Mil Qasim-1 well also encountered hydrocarbon shows in a high porosity conglomerate and sandstone interval of approximately 25 metres thickness in the Upper Bakhtiari Formation at a depth of approximately 500 metres. The Company is actively researching lower cost drilling solutions to evaluate this shallow zone later this year as it is encouraged by the existence of numerous highly productive water wells drilled in the Upper Bakhtiari Formation in the southern Garmian area that have typical flow rates of 6,000 bpd.
Commenting on the test results, WesternZagros Chief Executive Officer Simon Hatfield said, "The data gained while testing Mil Qasim-1 significantly contributes to our improving knowledge of the Upper Fars Formation. We're encouraged that we have flowed oil from multiple zones in the Upper Fars with no identified formation water and we are optimistic that these reservoirs can achieve economic flow rates in the future. The next two wells that WesternZagros plans to drill in the area, Sarqala-2 and Hasira-1, although being drilled for deeper targets, will also provide additional information on the Upper Fars reservoirs and the extent of the Mil Qasim discovery. The light oil discovered in Mil Qasim underscores the importance of our Blocks as a source of high quality light oil from the Kurdistan Region of Iraq."
Kurdamir-2 Exploration Well (Kurdamir Block)
The 13 5/8" intermediate casing in the Kurdamir-2 exploration well has been set and cemented at 2,315 metres in the Lower Fars top seal above the Oligocene reservoir. The well is on track to drill and test the Oligocene reservoir as expected by the end of the first quarter of 2012.
Sarqala-1 Extended Well Test ("EWT") (Garmian Block)
Following the installation of additional tank storage capacity, production continues at an average rate of 5,000 bopd. Sarqala crude is being processed in local refineries under the auspices of the Ministry of Natural Resources.
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