Sonoro Update on Iraqi Progress
Sonoro Energy recently announced the following operational and corporate updates.
As previously announced on June 12, 2012, Sonoro and its partners entered into an agreement to establish a joint venture company (“JV Co”) and purchase a 750 HP drilling rig, subject to certain conditions including a final satisfactory rig inspection.
JV Co has now been established and an independent third party has completed the rig inspection on behalf of JV Co with no significant deficiencies noted. In addition, JV Co has completed a number of rig modifications and is now packing the drilling rig and its components for transportation in contemplation of closing the rig purchase.
Upon completion of the rig purchase and obtaining the necessary import and transportation approvals, JV Co will transport the rig to the drilling location in Salah ad Din. The three well drilling program is expected to last 45-60 days. Prior to drilling, civil works will prepare the leases and access roads.
As a result of ongoing geological and technical evaluation, the Company has identified an additional structure to be drilled as part of the three well drilling program. The Company now plans to drill two wells into the North Salah ad Din (“NSD”) structure, with final locations having been moved from the initial prognosis. The new locations are closer to the main highway and are expected to require less civil construction work.
The new Sherqat structure, on which the Company plans to drill the third well, lies approximately 8 kilometres to the east of the NSD targets. The Sherqat structure has not been included in the Company’s reported contingent resources report. The Sherqat structure is more subtle than the NSD structure, and appears to have good closure and seals at approximately the same depths as the NSD structure.
With the NSD well locations shifted, the Company has reapplied for the land lease permits. Most of the necessary approvals have been obtained for the land lease, with those remaining expected soon.
The Company has applied for drilling permits within the NSD and Sherqat areas from the Ministry of Mines and Industry.
The Company has also received confirmation from the Salah ad Din Provincial Government that the Ministry of Oil has confirmed to the Provincial Government, in response to their request for clarification, that asphalt does not fall under the regulations of the Ministry of Oil.
During the second quarter of 2012, the Company entered into a Farmout Agreement (the “Farmout Agreement”) with Berkeley Mesopotamia Petroleum Limited and Geopetrol Iraq Corp. by which it agreed to acquire a 40% interest in oil and gas rights in Iraq. Sonoro’s rights and obligations under the Farmout Agreement are subject to satisfaction of certain conditions by July 31, 2012.
The Company has determined that the closing conditions will not be met prior to the July 31st deadline and, as a result, the Company’s interest under the Farmout Agreement will expire. The Company will continue to focus on its Asphalt License and the upcoming NSD and Sherqat programs.