WesternZagros Resources Ltd. (WZR) (WesternZagros) has completed the first two drill stem tests (DST #1 and DST #2) on the Kurdamir-3 well in the Kurdistan Region of Iraq. Because these tests had unexpected results, WesternZagros is providing this interim update before the testing program is complete.
The first Kurdamir-3 test, DST #1, was conducted in a non-porous zone at a depth below the deepest oil test conducted in the Oligocene at the Kurdamir-2 well. After acidizing, this test flowed oil and spent acid at non-commercial rates. The deepest oil now encountered in the Oligocene is 2,788 metres. DST #2 was then conducted over four low-permeability intervals further up-hole, also at depths below the deepest oil test in Kurdamir-2 and flowed a mix of light crude oil and water at low rates after acidizing. DST #2 gave the first evidence of formation water the Company has seen in the Oligocene reservoir at Kurdamir. While it appears that the well has reached a transition zone or an oil-water contact at approximately the same depth as the previous lowest known oil from the Kurdamir-2 well, the results are difficult to interpret. Two more tests are planned for the upper porous zone of the reservoir - at depths that were oil-bearing in the Kurdamir-2 well. Testing will now extend to late September or October.
Simon Hatfield, Chief Executive Officer, of WesternZagros commented:
"Large oilfields like Kurdamir will often present some anomalies in the early stages of delineation, and this one is proving no exception. We were surprised by the water cut in DST #2 because we had seen evidence during drilling of oil throughout the interval. There are also unusual aspects to the position of the water across the four tested intervals in DST #2, so we are not yet certain whether we have found an oil-water contact that will be consistent across the reservoir, or a restricted compartment, sometimes known as perched water, within the oil reservoir. The next two tests of the shallower porous interval should provide a more indicative view on the oil deliverability of the reservoir. While these first two test results are not the best case scenario, we still have a large oil discovery with more work yet to be done to assess it fully."
Kurdamir-3 Interim Test Results
As operator of the Kurdamir-3 well, Talisman (Block K44) B.V. has conducted two DSTs in the deepest zones of the Oligocene reservoir at Kurdamir-3 and now plans to move up-hole to conduct two additional drill stem tests.
DST #1 and #2 were conducted in the lower part of the Oligocene reservoir which exhibited poorer reservoir characteristics (including fewer fractures) than the main porous zone tested in Kurdamir-2. Both tests were conducted at depths below the base of DST #6 in the Kurdamir-2 well which produced light oil at 3,450 barrels per day and 8.8 mmcf/d of natural gas. DST #3 and #4 will now be conducted in the upper part of the porous zone of the Oligocene which was oil-bearing in Kurdamir-2 and which is more than 87 meters below the depths of the gas-oil contact as seen in Kurdamir-2.
DST #1 was conducted over a perforated interval of 12 metres, between 2,776 and 2,788 metres, across a fracture zone below the base of the reservoir with the objective of proving new lowest known oil. After acidizing the interval, the zone produced a limited amount of oil and spent acid.
DST #2 was conducted over four perforated intervals within a gross interval of 105 metres from 2,614 to 2,719 metres. After acidizing the zones, the well produced 38-degree API oil at low rates with an average water cut of 65 per cent.
The Company is evaluating the test results. Preliminary interpretation indicates that DST #2 may have spanned an oil-water contact or encountered a transition zone. However, due to the oil produced in DST #1, the Company is also evaluating whether this water zone may be restricted in extent due to compartmentalization of the reservoir. Figure 1 is an enlarged portion of a seismic section through the Kurdamir-3 well where it penetrates the Oligocene reservoir. The alternative interpretations of an oil-water contact or restricted water zone ("perched water") are shown. Additional test data and the interpretation of the 3D seismic recently acquired over Kurdamir will assist in this evaluation. Regardless of the foregoing, the interim test results from Kurdamir-3 have increased the risk associated with the undiscovered Prospective Resource assessment that the Company carries for the Kurdamir Oligocene reservoir.
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