December 22, 2015 - 7:30 AM EST
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WesternZagros Adds Flexibility to Debt Drawdown Timing and Commences Review of Financing Alternatives

CALGARY, ALBERTA--(Marketwired - Dec. 22, 2015) -


WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or the "Company") announces that an agreement has been reached with its major shareholder, Crest Energy International, LLC ("Crest"), to defer the latest first drawdown notice date under the first tranche of its US$200 million unsecured credit facility from the original date of January 1, 2016 to May 1, 2016. The Company felt it was prudent to increase the flexibility of its debt facility in order to reduce commitment fees and interest costs to the Company as it does not expect to need to access any loan funds until the second half of 2016. In addition, the Company is undertaking a review of all financing alternatives available to it to better align with currently anticipated capital needs.

"To ensure the long-term sustainability of our assets, deferring the timing of the first tranche of the credit facility allows us to improve our capital flexibility and significantly reduce financing costs for the development plans on Kurdamir and Garmian. We are also exploring alternative financing alternatives to allow for optimum alignment of capital availability with our development plan needs in order to provide the best available outcome for the Company and all its stakeholders," said Simon Hatfield, WesternZagros's Chief Executive Officer.

"Cost management continues to be an ongoing focus. As part of this exercise the Company has also decided to not award any discretionary cash bonuses for 2015 and to not award any base salary increases for 2016," Hatfield said. 

The Loan Agreement between the Company and Crest dated August 14, 2014 (the "Loan Agreement") consists of two tranches for a total borrowing capacity of USD $200 million, with the first tranche having a loan limit of USD $150 million and the second tranche having a loan limit of USD $50 million. Pursuant to the terms of the Loan Agreement, a drawdown notice in respect of the first tranche was originally required to be given by the Company by January 1, 2016 and a drawdown notice in respect of the second tranche is required to be given by the Company by June 1, 2016, failing which the availability of the applicable tranches will expire. Once an initial draw has been made under any tranche, the drawn amounts on the first and second tranches accrue interest at 12 and 14 percent per annum, respectively, and the undrawn amount under such tranches accrues a commitment fee of 8 percent per annum.

The agreement reached with Crest allows the Company to defer the latest first drawdown notice date under Tranche 1 from January 1, 2016 to May 1, 2016. This would have the effect of reducing the commitment fee and better align the terms of the credit facility with the expected need for capital. All other terms under Tranche 1 and Tranche 2, including the maturity dates, which are October 1, 2017 and June 1, 2018, respectively, will remain unchanged.

The Company has sufficient funds to pay the principal and accrued interest on the outstanding CDN$100 million principal amount of 4 percent convertible notes which are due on December 31, 2015 and would expect to end 2015 with working capital in the range of US$40-45 million after making this payment.

In addition, the Company is undertaking a review of all financing alternatives available to the Company. It is contemplated that the review will include, but is not limited to, the completion of an alternative debt financing or equity financing, or the farm down or sale of some of the assets of the Company. In connection with this review, the Company has retained TD Securities to act as its financial advisor. It is the Company's intention not to disclose developments with respect to the review process until the Board of Directors has approved a specific transaction, action plan or otherwise determines that disclosure is necessary or appropriate.

About WesternZagros Resources Ltd.

WesternZagros is an international natural resources company focused on acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. WesternZagros, through its wholly-owned subsidiaries, holds a 40 percent working interest in two Production Sharing Contracts with the Kurdistan Regional Government in the Kurdistan Region of Iraq. WesternZagros's shares trade in Canada on the TSX Venture Exchange under the symbol "WZR".

This news release contains certain forward-looking statements relating to, but not limited to, expected year end working capital, expected capital and other commitments and the timing thereof, as well as the anticipated results of the review process. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", or similar words suggesting future outcomes. The Company cautions readers and prospective investors in the Company's securities to not place undue reliance on forward-looking information as, by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros.

Forward-looking information is not based on historical facts but rather on management's current expectations as well as assumptions made by, and information currently available to management, concerning, among other things, future capital and other expenditures (including the amount, nature and sources of funding thereof), the ability to identify appropriate financing transactions, the availability of counterparties with whom the Company can conduct a transaction, the continued ability to sell production in the domestic market and the prices to be received in connection therewith, anticipated operating costs, future economic conditions, future currency and exchange rates, continued political stability, continued security in the Kurdistan Region, timing for receipt of any necessary co-venturer, government or regulatory approvals, the successful resolution of disputes, and the participation of the Company's co-venturers in joint activities. In addition, budgets are based upon WesternZagros's current development plans and anticipated costs, both of which are subject to change based on, among other things, the outcome of negotiations with co-venturers and the government, the actual outcomes of well operations and the installation and commissioning of facilities, unexpected delays, availability of future financing and changes in market conditions. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by WesternZagros including, but not limited to, risks associated with the oil and gas industry (e.g. operational risks in development and production; inherent uncertainties in interpreting geological data; changes in plans with respect to capital expenditures; interruptions in operations together with any associated insurance proceedings; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, risks relating to domestic refining capacity and continuing ability to access the domestic market, the uncertainty associated with any dispute resolution proceedings, the uncertainty associated with negotiating with foreign governments and risk associated with international activity, including the lack of federal petroleum legislation and ongoing political disputes and recent terrorist activities in Iraq in particular.

Readers are cautioned that the foregoing list of important factors is not exhaustive and that these factors and risks are difficult to predict. The forward-looking statements contained in this news release are made as of the date of this news release and, except as required by law, WesternZagros does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement. See the "Risk Factors" section of the Company's Annual Information Form dated March 13, 2015 ("AIF") filed on SEDAR at for a further description of these risks and uncertainties facing WesternZagros. Additional information relating to WesternZagros is also available on SEDAR at, including the Company's AIF.


WesternZagros Resources Ltd.
Tony Kraljic
Senior VP, Finance
(403) 693-7011

WesternZagros Resources Ltd.
Lisa Harriman
Manager of Investor Relations
(403) 693-7017
[email protected]

Source: Marketwired (Canada) (December 22, 2015 - 7:30 AM EST)

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