SNV:CC - Sonoro Energy Completion of Farm-In Agreement in the Western Canadian Sedimentary Basin
(TheNewswire)
June 1, 2023 – TheNewswire - Calgary, Alberta – Sonoro Energy Ltd. (“Sonoro” or the “Company”)(TSXV:SNV.H) is pleased to report that it has completed the previouslyannounced Western Canadian Sedimentary Basin (“WCSB”) Farm-InAgreement (the “Agreement”), with an arms-length third party,building the first step of the Company’s strategy to build a solidbase of production and cash flow in the WCSB.
Under the terms of the Agreement, Sonoro will be theoperator and earn a 70% working interest in a proven Waseca channelheavy oil resource fairway. In consideration for acquiring the 70%working interest in this 1,840-acre contiguous land block (the“Asset”), Sonoro has committed to fund up to CAD$5 million dollars(on a gross basis) and drill up to 5 wells (the “Carry”) with thefirst well scheduled to spud no later than September 30, 2023. Uponcompletion of the Carry, Sonoro will earn a 70% working interest inthe Asset which contains numerous follow up drilling locations giventhe pervasiveness of the channel sands. After the Carry, furtherdevelopment will be at a 70%/30% working interest split between Sonoroand the counterparty, an Operating Agreement has also been executedbetween the parties which govern the joint operating procedures. Afterthe final release from the security holder, expected by June 15, 2023,of the counterparty and Sonoro proving it can fund an initial minimumof CAD$2 million by Jul 31, 2023, the Farm-In Agreement will be deemedclosed.
This Asset directly offsets an established field whichis currently producing over 1,850 bbl/d; having recovered 11 millionbarrels to date within the same Waseca channel trend. With ourteam’s heavy oil experience and established cold heavy oilproduction systems (“CHOPs”) which are proven in this area, Sonorobelieves it can drill low risk, low-cost wells and bring on productionquickly with area vertical CHOPs type wells IP90 rates of between60-90 bbl/d. A typical newly drilled, completed and equipped heavyoil well is expected to cost less than CAD$750,000 each with payoutsestimated to be less than 1 year under prevailing oil prices and heavyoil differentials. Sonoro has identified the potential for 30 wellsto be drilled on 40 acre spacing. Furthermore, given the average 17meters of net pay within this Waseca channel, there is further upsideto down space to 20 acre spacing. The Asset will produce heavy oilwhich is receiving favorable differentials due to various marketconditions and is expected to remain as such with new egress andrefining options being made available, in combination withlower-than-average operational costs, the Company expects robustnetbacks for the Asset. The Company is also in the process ofcommissioning a third-party resource report for the Asset that wouldbe NI 51-101 compliant.
Pursuant to the Agreement, the counterparty, whichholds green technology patents (carbon sequestration and hydrogengeneration), upon termination of production, may take over thewellbores and associated liabilities for their patented processes. Hence, Sonoro may not incur any abandonment or reclamation costsassociated with the Asset.
The team is also pursuing several other WCSBopportunities, and is optimistic that there will be additional assetsthat the Company will have access to and be able to expand our WCSBbase. With the establishment of the Company resource and operatingbase in the WCSB it will be better positioned to continue to pursuehigh impact transformation opportunities internationally as per thestrategy announced previously.
Further to the warrant extension press release of May25, 2023. Sonoro confirms that the TSXV has approved the extension of7 million warrants at 10 cents until May 30, 2024, however the 5,157,921 warrants priced at 7 and 7.5 centshave not been extended and have expired.
Sonoro also announces that 6,400,000 incentive stockoptions have been granted to management and directors, pursuant to theCompany’s Stock Option Plan, at an exercise price of $0.05 with anexpiry date of May 30, 2028 subject to the approval of the TSX Venture Exchange. Following this grant, theCompany has a total of 10,378,333 stock options outstanding.
Forward-lookingStatements
Certain information in this news release constitutesforward-looking statements under applicable securities laws. Anystatements that are contained in this news release that are notstatements of historical fact may be deemed to be forward-lookingstatements. Forward-looking statements are often identified by termssuch as "may," "should," "anticipate,""expects," "estimates," "seeks" andsimilar expressions. In particular, without limiting the generality ofthe foregoing, this news release contains forward-looking informationregarding the opportunities discussed.
Forward-looking statements necessarily involve knownand unknown risks, including, without limitation, risks associatedwith oil and gas exploration, development, exploitation, production,marketing and transportation, loss of markets, volatility of commodityprices, currency fluctuations, imprecision of reserve estimates,environmental risks, competition from other producers, inability toretain drilling rigs and other services, delays resulting from orinability to obtain required regulatory approvals, changes inlegislation including but not limited to income tax, environmentallaws and regulatory matters, and ability to access sufficient capitalfrom internal and external sources. Readers are cautioned that theforegoing list of factors is not exhaustive.
Readers are cautioned not to place undue reliance onforward-looking statements as there can be no assurance that theplans, intentions or expectations upon which they are placed willoccur. Such information, although considered reasonable by managementat the time of preparation, may prove to be incorrect and actualresults may differ materially from those anticipated. Forward-lookingstatements contained in this news release are expressly qualified bythis cautionary statement.
Additional information on these and other factors thatcould affect Sonoro's operations or financial results are included inSonoro’s reports on file with Canadian securities regulatoryauthorities and may be accessed through the SEDAR website(www.sedar.com) or by contacting Sonoro. The forward-lookingstatements contained in this news release are made as of the date ofthis news release and Sonoro does not undertake any obligation toupdate publicly or to revise any of the included forward-lookingstatements, whether as a result of new information, future events orotherwise, except as expressly required by securities law.
Neither the TSXVenture Exchange nor its Regulation Service Provider (as that term isdefined in the policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of thisrelease .
For further information to participate in futurefinancing, please contact the company at:
For further information to participate in futurefinancing, please contact the company at:
Sonoro Energy Ltd.
or
+1.403.262.3252
This press releaseis not to be disseminated in the United States
Copyright (c) 2023 TheNewswire - All rights reserved.