ASP Transatlantic Mining Corporation

Zargon Oil & Gas Ltd. (TSX:ZAR)(TSX:ZAR.DB) ("Zargon") reports that the
revisions to the Enhanced Oil Recovery ("EOR") royalty program announced last
week by Alberta Energy will have a positive impact on the economics of Zargon's
Alkaline Surfactant Polymer ("ASP") enhanced oil recovery project at Little Bow
in Southern Alberta. 


Zargon is currently reviewing the details of Alberta's modified EOR Crown
royalty program (see announcement at
www.qp.alberta.ca/documents/orders/orders_in_council/2014/714/2014_335.html for
further details), which effectively bring the Alberta conventional oil EOR
royalties more in line with existing Alberta oil sands (in-situ) and
Saskatchewan conventional oil EOR royalty programs. 


Zargon's initial estimates indicate the terms of the revised EOR program could
increase Zargon's full cycle rate of return of the first two phases of the
Little Bow ASP project by up to 5 percent (to 22 percent) and increase the
discounted cash flow (PVBT 10 percent) of phases 1 and 2 of the Little Bow
project by up to $30 million. In Zargon's most recent year end 2013 reserve
report, Zargon's independent reserves evaluator McDaniel & Associates
Consultants Ltd., assigned 4.48 million barrels of proved and probable oil and
liquids reserves and an incremental discounted cash flow (PVBT 10 percent) of
$66.3 million to phases 1 and 2 of the Little Bow project. Subsequent to the
effective date of the McDaniel report, Zargon has spent more than $12 million of
McDaniel future development capital for project construction, commissioning and
more than three months of injection. 


Since initial ASP injection commenced in late March, Zargon has injected
approximately 1 million barrels of ASP solution into the phase 1 area of the
Little Bow Mannville I Pool, at an average injection rate of 102 percent of
design capacity. Encouragingly, pattern injection rates are balanced and are
meeting or exceeding reservoir models, and we have observed no evidence of
premature breakthrough. 


ASP injection to date constitutes nearly 4 percent of the reservoir hydrocarbon
pore volume ("HCPV"). We are targeting an ASP injection volume of 30 percent of
the HCPV followed by a polymer only injection volume of 40 percent of the HCPV.
Our analysis predicts a 12 percent ASP incremental oil recovery factor and peak
incremental oil rates of 1,700 barrels of oil per day in 2017 for the Little Bow
phases 1 and 2 project area. Phase 2 ASP injection is scheduled to begin in the
summer of 2016.


The early project data pertaining to injection rates, voidage replacement and
the lack of breakthrough (and related early oil production volumes) imply
encouraging reservoir conformance and support our estimates of incremental oil
recovery and peak production rates. However, with no sign of early breakthrough,
the timing of first oil volumes is delayed. We are now predicting negligible
Little Bow phase 1 volumes in 2014 with a year end 2014 rate of 150 barrels of
oil per day (previously 350 barrels of oil per day). Incremental production is
expected to average 700 barrels of oil per day in 2015 (previously 900 barrels
of oil per day) and then increase to an unchanged 1,550 barrels of oil per day
in 2016, once phase 2 production begins. Follow up phases 3 and 4 will commence
after phase 1 and 2 injections are completed. Without further plant
debottlenecking or expansions, Zargon's combined Little Bow project (phases 1
though 4) total production is expected to stabilize at more than 2,200 barrels
of oil per day in the 2021 through 2023 period. The long-life stable production
profile of the ASP project is well suited for Zargon's dividend-paying business
model. For further information regarding the Little Bow ASP project, please
refer to the company's corporate presentation, which is available at the
www.zargon.ca. 


Based in Calgary, Alberta, Zargon's securities trade on the Toronto Stock
Exchange and there are currently 30.134 million common shares outstanding. 


FORWARD-LOOKING STATEMENTS 

This press release offers our assessment of Zargon's future plans and operations
as at July 28, 2014, and contains forward-looking statements. All statements
other than statements of historical fact may be forward-looking statements. Such
statements are generally identified by the use of words such as "anticipate",
"continue", "estimate", "expect", "forecast", "may", "will", "project",
"should", "plan", "intend", "believe" and similar expressions (including the
negatives thereof). In particular, this press release contains forward-looking
statements pertaining to the following:




--  our interpretation of the revised Alberta EOR royalty scheme; 
    
--  our estimates of economics, reserves, production and timing thereof, and
    costs for the Little Bow ASP project; 
    
--  our plans for our Little Bow ASP project and the results therefrom; and 
    
--  our business plans and strategy. 



By their nature, forward-looking statements are subject to numerous risks and
uncertainties, some of which are beyond our control, including such as those
relating to results of operations and financial condition, general economic
conditions, industry conditions, changes in regulatory and taxation regimes,
volatility of commodity prices, escalation of operating and capital costs,
currency fluctuations, the availability of services, imprecision of reserve
estimates, geological, technical, drilling and processing problems,
environmental risks, weather, the lack of availability of qualified personnel or
management, stock market volatility, the ability to access sufficient capital
from internal and external sources and competition from other industry
participants for, among other things, capital, services, acquisitions of
reserves, undeveloped lands and skilled personnel. Risks are described in more
detail in our Annual Information Form, which is available on our website and at
www.sedar.com. 


Forward-looking statements are provided to allow investors to have a greater
understanding of our business. You are cautioned that the assumptions, including
among other things, future oil and natural gas prices; future capital
expenditure levels; future production levels; future exchange rates; the cost of
developing and expanding our assets; our ability to obtain equipment in a timely
manner to carry out development activities; our ability to market our oil and
natural gas successfully to current and new customers; the impact of increasing
competition, our ability to obtain financing on acceptable terms; and our
ability to add production and reserves through our development and acquisition
activities used in the preparation of such information, although considered
reasonable at the time of preparation, may prove to be imprecise and, as such,
undue reliance should not be placed on forward-looking statements. Our actual
results, performance, or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements. We can give no
assurance that any of the events anticipated will transpire or occur, or if any
of them do, what benefits we will derive from them. The forward-looking
information contained in this document is expressly qualified by this cautionary
statement. Our policy for updating forward-looking statements is that Zargon
disclaims, except as required by law, any intention or obligation to update or
revise any forward looking statements, whether as a result of new information,
future events or otherwise. 


FURTHER INFORMATION 

Zargon Oil & Gas Ltd. is a Calgary based oil and natural gas company working in
the Western Canadian and Williston sedimentary basins that has delivered a long
history of returns and dividends (distributions). Zargon's business is focused
on oil exploitation projects that profitably increase oil production and
recovery factors from existing oil reservoirs. 


In order to learn more about Zargon, we encourage you to visit Zargon's website
at www.zargon.ca where you will find a current shareholder presentation,
financial reports and historical news releases. 


FOR FURTHER INFORMATION PLEASE CONTACT: 
Zargon Oil & Gas Ltd.
C.H. Hansen
President and Chief Executive Officer
403-264-9992
zargon@zargon.ca
www.zargon.ca

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