TAQA takes stake in WesternZagros before new well

Mon Oct 17, 2011 2:06pm EDT
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Abu Dhabi National Energy Co TAQA.AD will invest C$46.6 million ($46 million) in WesternZagros Resources WZR.V, giving the Canadian-based oil explorer much-needed financial breathing room as drilling draws near for its next big well in Kurdistan in northern Iraq.

Shares in WesternZagros jumped more than 17 percent on the small-cap TSX Venture Exchange on Monday after the Abu Dhabi company, known as TAQA, agreed to take a 19.9 percent stake.

The cash injection allows WesternZagros to fund its share of a follow-up well to its Kurdamir-1 oil, gas and condensate discovery in the northern Iraq territory. It is operated by Talisman Energy Inc TLM.TO.

"We were going to have to go back to the capital markets in the last quarter of this year to increase our capital pool to see us through our commitments through the middle of next year," WesternZagros Chief Executive Simon Hatfield said.

"We were not funded for this well so this basically removes any anxiety we had about having enough capital to meet our needs for the next nine months."

Under the deal, TAQA gets 74 million WesternZagros shares.

"This investment in WesternZagros reflects our focus on developing TAQA's footprint in the Middle East-North Africa region," TAQA General Manager Carl Sheldon said in a statement.

WesternZagros holds 40 percent interests in the Kurdamir and Garmian production-sharing contracts in Kurdistan. Its first revenue is approaching, as it expects to sell crude from an extended well test at its Sarqala-1 find, where output is projected to climb to 5,000 barrels a day by year-end.   Continued...