CALGARY, Canada (June 1, 2023)—Sonoro Energy Ltd. (“Sonoro” or the “Company”) (TSXV: SNV.H) is pleased to report that it has completed the previously announced Western Canadian Sedimentary Basin (“WCSB”) Farm-In Agreement (the “Agreement”), with an arms-length third party, building the first step of the Company’s strategy to build a solid base of production and cash flow in the WCSB.
Under the terms of the Agreement, Sonoro will be the operator and earn a 70% working interest in a proven Waseca channel heavy 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 the first well scheduled to spud no later than September 30, 2023.
Upon completion of the Carry, Sonoro will earn a 70% working interest in the Asset which contains numerous follow up drilling locations given the pervasiveness of the channel sands. After the Carry, further development will be at a 70%/30% working interest split between Sonoro and the counterparty, an Operating Agreement has also been executed between the parties which govern the joint operating procedures.
After the final release from the security holder, expected by June 15, 2023, of the counterparty and Sonoro proving it can fund an initial minimum of CAD$2 million by Jul 31, 2023, the Farm-In Agreement will be deemed closed.
This Asset directly offsets an established field which is currently producing over 1,850 bbl/d; having recovered 11 million barrels to date within the same Waseca channel trend. With our team’s heavy oil experience and established cold heavy oil production systems (“CHOPs”) which are proven in this area, Sonoro believes it can drill low risk, low-cost wells and bring on production quickly with area vertical CHOPs type wells IP90 rates of between 60-90 bbl/d.
A typical newly drilled, completed and equipped heavy oil well is expected to cost less than CAD$750,000 each with payouts estimated to be less than 1 year under prevailing oil prices and heavy oil differentials. Sonoro has identified the potential for 30 wells to be drilled on 40 acre spacing.
Furthermore, given the average 17 meters of net pay within this Waseca channel, there is further upside to down space to 20 acre spacing. The Asset will produce heavy oil which is receiving favorable differentials due to various market conditions and is expected to remain as such with new egress and refining options being made available, in combination with lower-than-average operational costs, the Company expects robust netbacks for the Asset.
The Company is also in the process of commissioning a third-party resource report for the Asset that would be NI 51-101 compliant.