Commitments

Under the terms of its Kurdamir and Garmian PSCs, WesternZagros has a 40 percent working interest in each PSC and the KRG has a 20 percent working interest in both PSCs. The remaining 40 percent working interest in the Kurdamir PSC is held by Repsol and the remaining interest in the Garmian PSC is held by Gazprom Neft. The “Contractor Group” is comprised of WesternZagros, the KRG and Repsol for the Kurdamir PSC and WesternZagros, the KRG, and Gazprom Neft for the Garmian PSC.

The Company concluded the second exploration sub-period of the Kurdamir PSC with the Declaration of Commerciality (“DoC”) filed on August 19, 2014. Following submission of the DoC, the Company and its co-venturer submitted a Field Development Plan “FDP” on August 31, 2014, for which the KRG had a 60 day period, on a best efforts basis, to approve the plan. The KRG has subsequently requested changes to the Kurdamir FDP. Until the KRG approves the Kurdamir FDP, the terms of the PSC allow for an extension of the development period based on the number of days required to approve the plan beyond the aforementioned 60 day period.

The Company concluded the second exploration sub-period of the Garmian PSC with the DoC filed on December 23, 2013. The Company and its co-venturers submitted a Garmian FDP to the KRG on June 19, 2014. Per the terms of the Garmian PSC, the KRG had 60 days after submission, on a best efforts basis, to approve the FDP. Until the KRG approves the Garmian FDP, the terms of the PSC allow for an extension of the development period based on the number of days required to approve the plan beyond the aforementioned 60 days.

In accordance with the terms of the PSCs, the Company has certain annual payment commitments. During the respective development periods, the Company’s portion of these annual PSC payments is $1.1 million.