October 17, 2011 / 6:08 PM / 6 years ago

TAQA takes stake in WesternZagros before new well

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.

WesternZagros stock was up 8 Canadian cents at 55 Canadian cents on Monday. That is down from $1.74 two years ago.

Weighing on the company’s stock in recent years, full commercial operations in Kurdistan are still not permitted until the semi-autonomous region and Iraq’s central government settle a long-awaited oil and gas law.

Last month, Reuters reported that the Iraqi leadership had changed the latest draft to give the central government more control over the country’s vast reserves. [ID:nL5E7KM3ND]

Hatfield said TAQA, which has invested in a handful of Canadian companies in recent years, will appoint a director to the WesternZagros board, adding welcome expertise in regional business and politics.

“We take that as a huge vote of confidence in us and in the political future of Iraq and Kurdistan,” he said.

In its search for funding, the company was not considering selling out to a third party, Hatfield said.

The Financial Times reported on the weekend that Vallares Plc VLRS.L, set up by former BP (BP.L) CEO Tony Hayward, financier Nat Rothschild and banker Julian Metherell, had been eyeing WesternZagros but had decided against making an advance.

However, Hatfield said he did not have discussions with Vallares, which acquired Genel Energy in September to create a $4 billion company focused on Kurdistan.

“We have not talked to Tony Hayward. We would be happy to talk to him but we’ve never made contact,” he said.

“That completely came out of the blue. We were totally surprised.”

($1=$1.02 Canadian)

Additional reporting by Ankur Banerjee in Bangalore; editing by Peter Galloway

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below