Operations

In early 2014, WesternZagros transitioned from an exploration and production company to a development and production company.

WesternZagros holds two Production Sharing Contracts (“PSCs”) in the Kurdistan Region of Iraq, which provides for the exploration and development of crude oil and natural gas.

The Garmian contract area is operated by WesternZagros, holding a 40% working interest. Gazprom Neft Middle East B.V. also holds a 40% working interest. The Kurdamir contract area is operated by a subsidiary of Repsol S.A., Talisman (Block K44) B.V. (“Repsol”). WesternZagros also has a 40% working interest. The Kurdistan Regional Government holds a 20% working interest in both PSCs.

The Company is executing on phased development plans for its two significant oil and gas fields on the Garmian Block and the Kurdamir Block. The Company, its co-venturers and the Kurdistan Regional Government are continuing discussions with respect to advancing development plans to maximize production and cash flow, and balance capital expenditures. The Company’s overall development philosophy for the Production Sharing Contract lands is based on a phased expansion strategy: maximize production through increasing processing facilities, production capabilities and drilling. Management believes that this phased development will increase production and cash flow, and manage the Company’s capital investment.

WesternZagros will maintain focus on fiscal control, safety and environmental stewardship, and risk management. In addition, the Company will manage capital spending to profitably grow production and funds flow through operational execution and by maintaining prudent and conservative financial discipline.