WesternZagros Resources : Announces First Quarter 2017 Operational and Financial Results

NEWS RELEASE

Commenting on the first quarter results and subsequent events, WesternZagros's Chief Executive Officer Simon

Hatfield said:

"The leading news this quarter is of course our agreement with Crest to take WesternZagros private. Given the current market conditions, the Crest offer represents a significant premium to the share price at the time of the offer. The Company encourages shareholders to take advantage of this offer."

WesternZagros achieved several key financial and operational milestones during the first quarter 2017 and to date, including:

• Corporate - On May 12, 2017, the Company entered into a definitive agreement ("Arrangement Agreement") with its largest shareholder, Crest Energy International LLC ("Crest") to take the Company private. Pursuant to the Arrangement Agreement, an affiliate of Crest will provide the Company with funds necessary to acquire all of the Company's outstanding common and preferred shares for CAD$0.28 per share, other than one common share held by Crest which will be acquired by such Crest affiliate. The transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta). The shareholder meeting to approve the transaction is scheduled for July 5, 2017 and following a positive outcome at the meeting, is expected to close in early July 2017.
• Financial - The Company ended the quarter with $22.5 million in cash and cash equivalents.

  Concurrent with the Arrangement Agreement, WesternZagros entered into a bridge loan agreement with the same Crest affiliate pursuant to which the Company has received funding of $30 million (the "Bridge Loan') to address its immediate financing requirements. In connection with entering into the Arrangement Agreement and the funding of the Bridge Loan, WesternZagros and Crest entered into an agreement to terminate the prior undrawn

  $200 million credit facility dated August 14, 2014.

• Production - First quarter gross oil sales from the Sarqala field averaged 4,942 barrels of light oil per day ("bbl/d"), of which WesternZagros's net oil sales were 1,333 bbl/d. Following the completion of a planned acid stimulation completed at the end of March, the Sarqala-1 well is currently producing at approximately 6,900 bbl/d.
• Revenue - Revenue recognized by WesternZagros during the first quarter was $5.1 million with an average realized price of $42.83/bbl. Subsequent to March 31, 2017, the Company received payment for all remaining first quarter revenues, with no remaining outstanding receivables for first quarter revenue.
• Garmian Development- The first Garmian development well has been approved by the co-venturers and is expected to spud in July 2017 with a budgeted net cost to WesternZagros of $18 to 22 million. This is the Company's first Garmian well located with the benefit of 3D seismic data and is designed as a producing well for

  the Jeribe reservoir. The co-venturers have also approved a facilities work program for 2017 in order to debottleneck and expand the Sarqala production facility to an initial estimated capacity of 10,000 bbl/d and then to further increase to an estimated 15,000 bbl/d capacity by the end of the year.

• Kurdamir Development - WesternZagros and Repsol continue to advance discussions with the KRG on finalizing the approval of the Kurdamir Development Plan. The major outstanding matter is the finalization of the gas sales agreement for phase 1 gas volumes applicable to the Kurdamir project and the adjacent Topkhana project. The two projects are to be developed concurrently with the sharing of top side facilities to optimize capital costs.
• Impairment of E&E Expenditures- The Arrangement Agreement entered into with Crest subsequent to the reporting date, providing for the acquisition of all of the outstanding shares of the Company, presented evidence that an indicator of impairment existed for exploration and evaluation expenditures as at March 31, 2017. Based on the total acquisition price, the estimated recoverable amount associated with the Kurdamir Block was determined to be $20.8 million which resulted in the recognition of a non-cash impairment loss of $254.1 million for the first quarter of 2017. Refer to the section entitled "Impairment of E&E Expenditures" in the Company's MD&A dated May 25, 2017 for further description.

WesternZagros has posted its operating and financial results for the first quarter ended March 31, 2017 on its website. The financial statements, the Management Discussion and Analysis, and the Annual Information Form are available at www.westernzagros.com and on SEDAR at www.sedar.com.

WesternZagros continues to focus on advancing development in accordance with the approved Garmian FDP and securing KRG approval of the phased development plan for the Kurdamir Block in line with market conditions and dependent upon the sustainability of regular payments for production.

Following the successful acidization workover, the Company anticipates the average daily productive capacity of Sarqala-1 will range from 6,850 to 10,000 bbl/d for the remainder of 2017. Assuming continuous production and payments for the year, and an average Brent price of $50 to $55 per barrel, WesternZagros estimates 2017 revenues of $24 to $33 million.

The Company has $22.5 million in cash and cash equivalents as at March 31, 2017, plus the Bridge Loan proceeds of

$30 million received subsequent to March 31, 2017, to advance the field development plans with its co-venturers. The Company continues its focus on strict cost management and estimates spending of approximately $48 million for the remainder of 2017 to operate the Sarqala production operations, advance the currently approved work programs of the Garmian and Kurdamir blocks with its co-venturers and fund WesternZagros head office costs. The first Garmian development well has been approved by the co-venturers and is expected to spud in July 2017 with a budgeted net cost to WesternZagros of $18 to 22 million. This is the Company's first Garmian well located with the benefit of 3D seismic data and is designed as a producing well for the Jeribe reservoir. The co-venturers have also approved a facilities work program for 2017 in order to debottleneck and expand the Sarqala production facility to an initial estimated capacity of 10,000 bbl/d and then to further increase to an estimated 15,000 bbl/d capacity by the end of the year and with an estimated cost net to the Company of $6 million.

As at March 31, 2017, WesternZagros had $22.5 million in cash and cash equivalents. Subsequent to March 31, 2017, the Company received $30 million in proceeds under the Bridge Loan concurrent with entering into the Arrangement Agreement with Crest.

The Company's remaining 2017 capital budget is estimated to be approximately $48 million, including the Sarqala-2 well which has now been approved by the Garmian Block co-venturers. However, the development plan for the Kurdamir Block has not yet been approved by the KRG and the Company will continue to evaluate, monitor and assess relevant factors which may impact anticipated future capital requirements and spending, including the following:

• The results of the shareholder vote and other conditions to closing under the Arrangement Agreement;

• The ability to access other sources of funding for development activities in the Kurdistan Region, if required;

• The expected timing and scope of development activities based upon an appropriate phasing reflective of the approved development plans, current market conditions, and the political and security situation within Iraq;

• The ability to export or to sell oil and natural gas in accordance with the economic terms of the PSCs;

• The level of cash flow generated from sales of crude oil and stability of payments;

• The continued participation of its co-venturers in development activities;

• The current conditions of the oil and gas industry given the continued volatility in world oil prices and its impact on further investment in the industry and the Kurdistan Region;

• The timing for repayment of the Bridge Loan; and

• The current conditions in the financial markets, including the potential for further market instability;

With the existing capital resources on hand, including the proceeds from the Bridge Loan and expected revenue, the Company anticipates that it is fully funded for currently planned activities for the next twelve months. However, additional funding may be required by the Company in the future. The quantum of, and timing for, such funding will be dependent upon the factors identified above, and particularly the outcome of the negotiations and final approvals of the Kurdamir FDP. The Company may delay certain phases of its development plans if the ability to export or sell into the domestic market oil and natural gas, and receive timely payment therefor, in accordance with the economic terms of the PSCs is restricted, unavailable or uncertain, or if the political and security situation within Iraq is not suitable. If the Arrangement Agreement entered into with Crest is not completed for any reason, the sources for any required additional funding may include potentially accessing the debt and/or equity markets or seeking additional partnerships, farmouts or other strategic arrangements.

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".

For further information please contact:

Senior VP Finance Manager of Corporate Communications and Administration (403) 693-7011 (403) 693-7017

Email: investorrelations@westernzagros.com WesternZagros Website: www.westernzagros.com

This news release certain forward-looking statements relating to, but not limited to, anticipated capital and other commitments and the timing thereof, expectations regarding the necessity for further funding and the timing and potential sources thereof, operational information, development plans, anticipated capacity of facilities, expected production rates, revenues and petroleum costs (as defined in each PSC), statements regarding the plan of arrangement under the Arrangement Agreement (the "Arrangement") and the anticipated timing for holding the

required shareholder meeting and completing the Arrangement. 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, development plans, future capital and other expenditures (including the timing, amount, nature and sources of funding thereof), the outcomes of future well operations, drilling activity and testing, the installation and commissioning of facilities, the ability to access financing as required, the continued ability to sell production in the domestic or export markets and the quantum and timing of payments 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, timely receipt of any necessary co-venturer, government or regulatory approvals, the successful resolution of any disputes, the Company's continued ability to employ qualified staff and the continued 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, drilling activity and testing 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 timing, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, risks relating to the ability to access the export or domestic markets and to receive payments in accordance with the PSC terms on a timely basis, risks relating to the ability to access financing as and when needed, the uncertainty associated with any dispute resolution proceedings, the uncertainty associated with negotiating with foreign governments and the risk associated with international activity, including the lack of federal petroleum legislation, ongoing political disputes and recent terrorist activities in Iraq in particular.

In respect of the forward-looking statements and information concerning the completion of the Arrangement and the anticipated timing for completion of the Arrangement, WesternZagros has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the time required to prepare and mail meeting materials, the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court, shareholder, TSX Venture Exchange and other third party approvals and the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials; inability to secure necessary shareholder, regulatory, court or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. Risks and uncertainties that may cause such differences include but are not limited to: the risk that the Arrangement may not be completed on a timely basis, if at all; the conditions to the consummation of the Arrangement may not be satisfied; the risk that the Arrangement may involve unexpected costs, liabilities or delays; the possibility that legal proceedings may be instituted against WesternZagros and/or others relating to the Arrangement and the outcome of such proceedings; the possible occurrence of an event, change or other circumstance that could result in termination of the Arrangement; risks relating to the failure to obtain necessary shareholder and court approval; other risks inherent in the oil and gas industry. Failure to obtain the requisite approvals, or the failure of the parties to otherwise satisfy the conditions to or complete the Arrangement, may result in the Arrangement not being completed on the proposed terms, or at all. In addition, if the Arrangement is not completed, the announcement of the Arrangement and the dedication of substantial resources of WesternZagros to the completion of the Arrangement could have a material adverse impact