The Company announces on December 6th, 2016 that it has sold 100% of its share holdings in Sonoro Energy Iraq B.V. which held the Salah ad Din Asphalt License Agreement which has been in Force Majeure since July 2014. Blue Sky Energy Ltd has acquired this interest for future consideration of $4mm based on reaching certain production milestones. With the Company focus and experience being on Indonesia and SE Asia, the Company felt that pursing Iraq would be a challenge and that the Blue Sky Energy Ltd. offer was fair and with their Middle East experience they could revive the project and future value.
In 2010, Sonoro, through its subsidiary, Sonoro Iraq BV, and its partner, Berkeley, signed the License with the Provincial Government securing the exclusive right to explore for asphalt/bitumen up to 25 API (referred to as “ghir” in Iraq) in the Province. The areas of the License is approximately 24,000 km2 (approximately six million acres) and is situated within the Tigris River Valley, between the Western Desert and the foothills of the Zagros fold and thrust belt.
On March 6, 2012, the Company, through its wholly-owned subsidiary, Sonoro Iraq, closed a Farmout transaction with Geopetrol, whereby Sonoro Iraq assigned to Geopetrol a 30% participating interest in the License, with Sonoro retaining a 40% participating interest and operatorship. Under the Farmout, Sonoro received US$3,000,000 as partial reimbursement for past costs and Geopetrol agreed to fund the first US$9,000,000 of the costs to be incurred in respect of the License. Geopetrol is a part of a privately held group having production from operations in Vietnam, Yemen, France, Tunisia, Canada and India.
The Key terms of the License are the following:
· The exclusive rights to explore, develop and produce asphalt/bitumen within the entire Province and the sell the asphalt/bitumen produced (and/or the by-products after processing) domestically and/or internationally;
· Sonoro Iraq holds a 40% participating interest, and is the operator. Sonoro Iraq BV and Geopetrol will carry Berkeley’s interest for an initial topping facility and through the exploration operations. Sonoro Iraq and Geopetrol have a preferential entitlement to recover their carried costs from the accumulated cost recovery pool expenses before Berkeley receives its share of cost recovery expenditures. Sonoro Iraq, Geopetrol and Berkeley are together referred to as the “Licensee”;
· The Licensee (Sonoro Iraq 40%; Geopetrol 40%; Berkeley 20%) is required to make an investment of US$1,500,000 on exploration activities and construct a topping facility having a minimum 1,000-barrel per day capacity within 18 months from making a commercial discovery. The initial $1,500,000 investment amount has been met;
· An initial exploration period of five years commencing April 14, 2011, followed by a 30 year exploration period with extensions for any carved out exploitation areas to develop asphalt/bitumen. A total of 80% of revenues are available for cost recovery.
· This License was placed in force Majeure in July 2014 due to the ongoing conflicts in Iraq.
From 2012-2014, the Company continued to focus is efforts on obtaining the necessary government approvals to conducts initial exploration and operations under its License, while continuing with its geological study and review of other unconventional resources (asphalt/bitumen) in the Province.
The Company identified and planned/engineered out drilling several wells in the North Salah ad Din prospect which through an Independent Resource Report performed by RPS in 2011 identified most likely contingent Resources of 1.2 billion barrels of oil in place.
The Company continued with its extensive exploration study based on geological and geophysical data covering the license area and other parts of Iraq. Within the shallower Tertiary formations alone, the Company identified 47 individual leads and prospects across the Province.
Unfortunately due to Force Majeure in July 2014 these projects and opportunities have not been pursued further, while the Company waits for the situation to improve in Salah ad Din and Iraq and the Force Majeure to be removed. Following this the Company would still need tore-engage with the provincial government of Salah ad Din and seek federal approval before being able to proceed with the North Salah ad Din Project.