Tuesday, November 29, 2011

The big home run is what they get at Kudamir - Westernzagros in Kurdistan


Calgary-based junior energy firm WesternZagros testing its Sarqala-1 well, which is now producing 2,000 barrels of oil per day in northern Iraq’s Kurdistan region.

Exxon’s entrance was six weeks after ex-BP PLC chief executive Tony Hayward’s Vallares PLC put up $2.1 billion US to acquire Kurdistan’s largest oil producer, Turkish-based Genel Energy PLC.
The political situation started improving late last year when the Kurds backed an Iraqi national government appointment in December. An oil and gas-sharing pact first drafted in 2007 between Kurdistan and Iraq now anticipated by the end of the year is expected to let oil flow from Kurdistan to other countries, lifting the price per barrel from just over $50 to the global benchmark Brent price — more than $100. The long-standing dispute over how to divide oil revenue meant majors active in Iraq couldn’t drill in the northern region of Kurdistan without penalty, limitations expected to end with the deal closing.
The Exxon development, which raised the ire of the Iraqi government, added a twist. Reuters reported that Baghdad has said any oil deals signed with the Kurdish Regional Government are illegal and has suggested the firm’s contract to develop an oilfield in south Iraq is in jeopardy.
Stevenson predicted mergers and acquisition activity will ramp up as firms look to gain a foothold in Kurdistan, which according to Bloomberg, Kurdistan’s Hawrami said could contain 40 per cent of Iraq’s 115 billion barrels of oil reserves — more than the Gulf of Mexico.
WesternZagros is about a year away from potentially becoming a takeover target, according to Calgary-based analyst Josef Schachter. The company’s highly anticipated Kurdamir-2 (K2) well, being drilled by its operator-partner on one of two Kurdistan blocks for WesternZagros, Calgary’s Talisman Energy Inc., is targeting the Oligocene carbonate reservoir, among the most prolific in Iraq.
“The big home run is what they get at Kurdamir,” Schachter said.
Schachter has a one-year target on the company’s share price of $2.10, far above the closing share price Monday of 72 cents.
WesternZagros, about 20 per cent owned by Abu Dhabi National Energy Co. (TAQA) since a share purchase late last month, reported third quarter financial results Monday, including a net loss of $2 million.
The firm is producing and selling oil in Kurdistan from its Sarqala-1 well, which it expects will produce 5,000 barrels per day before the end of 2011. WesternZagros has more than 3.6 billion barrels of oil equivalent per day of audited prospective reserves, more than half of that crude oil.

Read more: http://www.calgaryherald.com/technology/Political+stability+returning+Kurdistan+industry/5746376/story.html#ixzz1f6rKxqvM

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