Bill Harris, CFA WesternZagros Resources Ltd. WZR-X HOLD Oct 23, 2014

Has looked at this over the years, but one of the issues has always been the political risk. That is the #1 uncertainty in the stock. This is an area with a lot of volatility, so it will be very hard to access the reserves anytime soon.

At some point they will be sold but does not know to who. He thinks they will get taken out.

The big thing for them is that they have GasPromnet as a partner in the Garmian Block and Talisman (TLM-T) in the Kurdamir Block. Both are very good companies. Made some very nice discoveries. Balance sheet is in good shape. As at Dec/14 they had $.38 in cash, so there is almost no risk. The basic problem is, when can they bring on the production. They are going to try to do it this year in the Kurdistan state, but there has been no agreement. This is a political situation that is going to be very difficult to resolve.

Feels this is up for sale at the right price. The 2015 drill program looks good and the stock should trade flat to slightly up. He thinks oil slowly rises from here, although overvalued at present.

Overall he thinks the company is doing the right things, but obviously we are in a very difficult situation. Small company and geopolitically not the most desirable block. If you are willing to wait fine, but if you have other ideas with more upside, then he would think about selling and moving on.

One of the issues for any energy company is how do you grow in a low growth environment and in a low commodity environment. It doesn’t have a lot of catalysts for a takeover right now. When there is some relative strength, he would suggest selling.

You are dealing in a place with a lot of geopolitical risk. It is arguably worth more but who is going to step up and buy the asset. Hold it if you don’t need the money because there is not much more downside.

Located in Kurdistan. This is probably sitting at its cash value of $0.05-$0.06. Found a lot of oil, but there is a gas cap there, and you have to produce the gas. Not enough revenue coming in to pay the overhead of the government and the salaries of the soldiers. This is a mess. They have a massive reserve, and you are paying nothing for it. As we go along, he thinks the US will want to support Kurdistan, as they are the only ones standing up to take on ISIS. If so, they need revenue and at some point they will bring on these assets again and will grow production over the next few years. For speculative investors, he would say Buy it and Hold it, because the potential is a 10 or 20 bagger.

The stock is very cheap here, but the problem is that they have a net of only 1400 BOEs per day. We need to see a resolution to the ISIS problem and to the natural gas problem so they aren’t flaring the gas. It is only a speculative buy. Management has positioned the company to weather it.

Operates in Kurdistan, on the border of Turkey and Iran, not a very great location. The key is that it is a fabulous oil province. There is a lot of resource, a lot of light and heavy oil. On July 5 there is going to be a shareholder vote to accept a takeover from Kreft (?), the majority shareholder. A lot of money is going to have to be spent in the next year or 2. They were trying to do a deal to bring in additional shareholding to help with expenses. They have 2 massive potential discoveries, but the costs and politics is an issue.