Western Oil Sands Provides Update on WesternZagros


    CALGARY, Aug. 14 /CNW/ - Western Oil Sands Inc. (TSX: WTO) ("Western")
today provided an update and further details on the structure of WesternZagros
as it relates to the Plan of Arrangement (the "Plan") with Marathon Oil
Corporation ("Marathon") (NYSE:   MRO).
    As previously announced, as part of the proposed sale of Western to
Marathon, Western will also be distributing common shares and warrants of
WesternZagros to its shareholders under the Plan. In addition to the
consideration paid by Marathon for the Athabasca oil sands assets, for every
share of Western held, a shareholder will receive one common share of
WesternZagros and one tenth of a warrant to purchase common shares of
WesternZagros. Each whole warrant will be exercisable into one WesternZagros
common share at an exercise price of $2.50 per share. The warrants will expire
three months following the effective date of the Plan. WesternZagros will
apply to a Canadian stock exchange to list its common shares and warrants
coincident with the effective date of the Plan.
    Following closing of the transaction, WesternZagros will be capitalized
with approximately $134 million which includes $82.5 million of cash from
Western, proceeds of $10 million from a private placement of shares of
WesternZagros to management, directors and employees of WesternZagros and
approximately $41 million from the exercise of the warrants as described
above, a portion of which are pre-committed to be exercised. These funds will
be used to finance on-going exploration activities including the completion of
a seismic program and drilling three initial exploratory wells.
    WesternZagros has an extensive geological and geophysical database
covering its Exploration and Production Sharing Agreement ("EPSA") area,
including over 700 kilometers of 2D seismic data which it is using to confirm
the subsurface configuration of, and identify optimum drilling locations on,
five seismically identified prospects. Drilling of the first exploratory test
well is expected to commence in the first quarter of 2008. Based on the
seismic analysis to-date, WesternZagros estimates 1.6 billion barrels of oil
as the un-risked prospective resources from these five prospects and gross
risked prospective resources of 980 million barrels. The estimates of
prospective resources were internally generated as of the first quarter of
2007. Prospective resources are those quantities of oil and gas estimated on a
given date to be potentially recoverable from undiscovered accumulations. If
discovered, they would be technically and economically viable to recover.
    WesternZagros maintains a 100 per cent interest in the contractor's share
of cost and profit oil subject to a 25 per cent participation option by the
Kurdistan Regional Government. The exploratory wells mentioned above are
estimated to cost approximately $20 million per well with an estimated total
target depth of 4,500 metres. WesternZagros is targeting oil in Tertiary and
Cretaceous zones with the possibility of gas condensate. These zones have
yielded production in other nearby fields. Should drilling results prove
successful, commercial quantities of production may be transported via truck
to market delivery points. In the long-term, WesternZagros is examining
various transportation options between its contract area and existing export
    WesternZagros' leadership team includes members from Western's existing
Board and management. David Boone, Fred Dyment and Randall Oliphant, currently
Directors on Western's Board, as well as John Frangos, a founder and former
Chief Operating Officer of Western, have agreed to serve on the Board of
WesternZagros. Jim Houck and David Dyck are also Directors of WesternZagros
and will act in a management capacity as interim President and Chief Executive
Officer and interim Chief Financial Officer, respectively. The leadership team
also includes Simon Hatfield, as Senior Vice President, Exploration and
Corporate Development, and Rob Theriault, as Senior Vice President,
Engineering and Operations.
    An investor presentation about the transaction and the WesternZagros
opportunity is available on Western's website at www.westernoilsands.com. The
presentation can be found on the home page and also in the Investors section.

    About Western Oil Sands

    Western Oil Sands Inc. is a Canadian corporation listed on the Toronto
Stock Exchange under the symbol WTO. Our vision is to create shareholder value
through the opportunity capture and development of large, world-class
hydrocarbon resources. Our primary asset is our 20 per cent undivided interest
in the Athabasca Oil Sands Project. Western is also pursuing initiatives
related to in-situ and technology development as well as downstream
opportunities. WesternZagros, a wholly-owned subsidiary of Western, is
pursuing conventional oil and gas exploration opportunities in the Federal
Region of Kurdistan in Northern Iraq. For additional information on Western
Oil Sands visit www.westernoilsands.com.

    This news release may contain forward-looking information based on
assumptions that are subject to a wide range of business risks, including
consummation of the Plan of Arrangement and listing of WesternZagros being
dependent on the satisfaction of customary closing conditions, the approval of
Western's shareholders and the approval of governmental authorities.
WesternZagros' operations are subject to all risks normally incident to oil
and gas exploration and production activities. All of WesternZagros' assets
are located in Kurdistan. As such, WesternZagros is subject to political,
economic, and other uncertainties of that region as well as risks of loss due
to civil strife, acts of war, guerrilla activities and insurrections.
WesternZagros' operations may be adversely affected by changes in government
policies and legislation or social instability and other factors which are not
within its control. Risks also include the uncertainty involved in the
estimation of prospective resources. There is no certainty that any portion of
the internal prospective resource estimates contained herein will be
    Forward-looking information typically contains statements with words such
as "anticipate", "estimate", "expect", "potential", "could", or similar words
suggesting future outcomes. We caution readers and prospective investors of
the Company's securities not to 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 Western.

For further information:

For further information: David Dyck, Senior Vice President and Chief
Financial Officer, (403) 233-1700; Dorreen Miller, Manager, Investor Relations
and Communications, (403) 233-1757

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