Sonoro Signal E-Newsletter

Issue 7: Equipped, mobilized and motivated: Sonoro’s set for success in West Sulawesi

 

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Spudding ready to begin on LG-1 Up-dip well in Indonesia: Q&A with Sonoro CEO Richard Wadsworth

September 19, 2017

A new drilling contractor. A more powerful coring rig. Praise from the Indonesian government for the technology in play.

The stage has been set—and Sonoro Energy is ready to revisit shallow success in Indonesia.

Spudding on Sonoro’s LG-1 Up-dip well on the Budong Budong Production Sharing Contract (PSC) lease is set to begin the week of Sept. 25, or sooner, depending on weather, road conditions and final SKKMIGAS inspection and approval.

With regional experience, a proven leadership team, a nearby refinery in Balikpapan and Indonesia making steps to boost its attractiveness for oil and gas investment, Sonoro is ready to tap into West Sulawesi’s vast untapped potential.

With spudding set to begin, the Sonoro Signal caught up with Sonoro’s CEO and Director Richard Wadsworth for a Q&A session during a very exciting time for Sonoro.

 

Q: You reviewed PT Advanced Services Indonesia's center of operations in Balikpapan. What impressed you about their operations and equipment enough to offer them the Budong Budong PSC drilling contract?

A: They were very well organized with several drilling coring rigs all certified along with a long list of support equipment. In addition, they have a machining workshop so they could cut various API threads for tubulars and a number of other fittings.

With the drilling rig now mobilized to West Sulawesi and being unloaded and moved to the Budong Budong site, we’re very pleased at the way they’ve met our expectations. Now, we’re on to setting up onsite operations for drilling the well.

Finally, and not to be overlooked, they had a strong safety culture and systems in place.

 

Q: Logistically speaking, how did things go with transportation of all the other associated drilling and support services by boat to the port of Makassar, on the island of West Sulawesi, and by road to the lease site?

A: We wanted to be ready to drill in early August. We met these targets with all the other services, except the drilling rig that was to be provided by the previous contractor.

A large portion of the other services and equipment had mobilized from Java to Makassar, and then trucked from there to our site (about 250 kilometers).

The road conditions varied and the distance was long. Our sea freight services and local trucking and crane services from Sulawesi performed exceptionally, on time, and with no incidents. We are now continuing with some of these same services to get the rig moved from the pier to the site.

 

Q: How are things looking at the lease site, in terms of preparations and establishment? Once drilling activity begins on the Budong Budong PSC lease site, will this be your logistical home base? How many contractors do you expect to be based there?

A: The lease site has been ready since early July. With a significant amount of rain over the past two months, the site has held up well, but has required ongoing maintenance and care—and is now ready to accept the drilling rig.

We have also set up most of the other equipment for the drilling operations on our existing site (LG-1 Up-dip) and logistics staging site (the original lease for the LG-1 well).

Once we are fully mobilized, we expect to have about 20 to 30 people on site at any given time from about half a dozen different contractors, plus our team personnel.

 

Q: Given the events of August, what gives you confidence that you'll achieve shallow success in West Sulawesi?

A: Nothing has changed with our interpretation of the downhole appraisal prospect. On the surface equipment. Only the drilling rig and contractor have changed.

The rig with ASI has more horsepower—it’s a fit-for-purpose, 400-hp hydraulic core rig—and is able to give us more flexibility, including drill depths. With this being a core drilling rig, the footprint is significantly smaller than a convention rotary rig; this allows us to build a smaller lease, resulting in less transportation, smaller crew requirements, and flexibility in mobilization and drilling.

While drilling with coring through the formations, we’re able to do so with a smaller hole—which results in less invasive damage, while allowing us to retrieve valuable core and reservoir for evaluation. The cored hole section will then be reamed and tested. Explosives will not be used in either the coring or testing operations, which reduces the approval timeline, the operating time and the cost.

Finally, this approach should bring down our costs, thus improving the economics for a potential future development. We have also seen a very positive interest from the government in the new methodology we are using to drill these shallow oil and gas resources. We believe it can give us a competitive and comparative advantage.


Issue 6: Matra Regent encourages West Sulawesians to ‘fully support this drilling program’

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Regional government, upstream regulator say Sonoro’s Budong Budong appraisal well initiative could bring ‘positive impact’

August 23, 2017

The regional government in Indonesia’s West Sulawesi province and the country’s upstream oil and gas regulator have begun advocating for the potential benefits of Sonoro Energy’s LG-1 Up-dip appraisal well program, according to local media reports.

According to a mid-July article in Metrosulawesi, the newspaper of record in the West Sulawesi capital of Mamuju, the Matra Regent’s office and SKK Migas are encouraging the local government and communities to “fully support this drilling program” with the potential to bring “positive impact.”

“If we have oil here, it will raise standard revenue per capita . . . to the national level,” the newspaper quotes H. Agus Ambo, the vice-regent of Matra, as telling journalists during a news conference in the Mamuju Regent’s office.

Sonoro Energy (TSX-V: SNV) is on track to begin spudding its LG-1 Up-dip well in the Budong Budong Production Sharing Contract (PSC) lease about mid-September.

Sonoro and its wholly owned subsidiary, Stockbridge Oil and Gas, are targeting near-term oil production in the Budong Budong region, where the area’s shallow-surface anticlines show an unrisked prospective recoverable equivalent of 15.9 million barrels of oil as a net-mean-case scenario.

“Our aim through this LG-1 Up-dip program is to bring prosperity to all parties—including local communities, in the form of jobs and economic spinoffs through Indonesia-based contractors,” says Sonoro’s Chief Executive Officer and Director Richard Wadsworth.

Sonoro closed a CAD$3.6-million non-brokered private placement in May 2017 for drilling activities in the Budong Budong PSC lease area.

Civil works are complete at the site, a new drilling contractor, PT Advanced Services Indonesia, has been selected and is preparing to mobilize while the other drilling services have been transported via ship to West Sulawesi and are now on site.

“The Indonesian contractors we’ve worked with have done excellent work, and now we are pleased to have another local contractor in PT Advanced Services to drill the well —as our LG-1 Up-dip well target drilling date rapidly approaches with a drilling rig that is certified and approved to drill,” says Mr. Wadsworth.


Issue 5: A recipe for Indonesian success: Go shallow, go local and repeat

Sonoro’s Budong Budong approach could be a ‘clear advantage’ for future wells

August 3, 2017

Shampoo bottle instructions: Lather. Rinse. Repeat.

Sonoro Energy’s recipe for success: Go shallow. Go local. Repeat.

With Sonoro Energy (TSX-V: SNV) firmly on track to begin spudding its LG-1 Up-dip well in the Budong Budong Production Sharing Contract (PSC) lease around mid-August, the company is looking for repeatable success—within Indonesia, and elsewhere in southeast Asia.

“We’ve taken some time to go over the positive learnings and developments, to date, of the Budong Budong appraisal well program and our collective experiences,” says Sonoro’s Chief Executive Officer and Director Richard Wadsworth.

“We believe we could parlay this process into a clear advantage in pursuing new opportunities in Indonesia.”

Key, repeatable elements of Sonoro’s Budong Budong approach include:

  • Early engagement with the local community in the province of West Sulawesi, which has meant further local involvement and employment;
  • A Jakarta-based team that’s predominantly Indonesian, with members having lived and worked in Sulawesi, which enhances interaction and trust with the local community, leaders and government;
  • Exploration and appraisal in areas where others came, left and bypassed shallower hydrocarbons while gunning for the deeper, more conventional big prize, provided that strong surface geology, geophysics, seismic and regional modelling are available to reduce risk;
  • Using a smaller fit-for-purpose rig, which has reduced mobilization costs, land use, and the complexity of manual hydraulic systems, while also providing significant drilling benefits such as increased drilling control and stability, less invasive drilling mud pressures and improved core recovery;
  • Leveraging Indonesian service providers and companies, which have consistently proven that they can support a successful program at much lower costs.

All of these practices have been accomplished without sacrificing health, safety or the environment—and all of them meeting or exceeding industry standards.

“Collectively, these practices have allowed us to execute quickly and reduce our costs significantly,” says Mr. Wadsworth. “And with lower finding and development costs, we could potentially develop a larger program in a shallow oil and gas field that normally would have been overlooked, possibly leading to the further opening of a new basin of production.

“With Indonesia now importing more than a million barrels of oil a day, and limited new exploration and developments occurring,” he notes, “this would be an economic benefit to all Indonesians.”

Sonoro’s approach has also earned the respect of officials within Indonesia’s upstream oil and gas regulator, adds Mr. Wadsworth.

“Government officials have commended our company on many of these practices,” he says, “and encouraged us to seek further opportunities in the Budong Budong PSC—and elsewhere in Indonesia.”

 

(DISCLAIMER: Readers are cautioned that certain statements in this article may constitute “forward-looking statements”—which, by their by their nature, are based on current expectations regarding future events that involve a number of assumptions, known and unknown risks, and uncertainties. Actual results, performance or achievements of the Company, or the industry, may vary materially from what is expressed or implied by such forward-looking statements. Therefore, readers should not place undue reliance on forward-looking statements.)

Issue 4: Taking aim at Budong Budong and beyond

Sonoro actively seeks existing assets in southeast Asia with a future upside

July 26, 2017

There are plenty of fish in the sea.

And for Sonoro Energy, they may be just across the Java Sea . . . or the Flores Sea . . . or the Banda Sea.

Sonoro Energy (TSX-V: SNV) is fully committed to developing its Budong Budong Production Sharing Contract (PSC) in West Sulawesi, Indonesia, where spudding on the LG-1 Up-dip site is expected to begin in early August.

At the same time, Sonoro is also actively seeking other opportunities to acquire onshore oil and gas assets in Indonesia and elsewhere in southeast Asia—from discoveries to appraisals to developments, with near-term production potential and a future upside.

“Our Sonoro Energy team has significant brownfield experience, with the ability to implement new technology,” says Sonoro Chief Executive Officer and Director Richard Wadsworth. “So we are constantly on the lookout for existing onshore oil and gas production, with upside opportunities, in Indonesia and the surrounding area.

“Essentially, we are looking to connect assets with near-term production and cash flow,” he adds, “with the appropriate capital markets to bring prosperity to all parties.”

Sonoro recently closed a CAD$3.6-million non-brokered private placement for drilling activities in the Budong Budong PSC lease area.

Sonoro is also actively looking for new onshore opportunities in the region that meet key company criteria, such as:

  • Shallower (typically less than 1,000 metres), low-risk opportunities, where Sonoro can apply its development approach andtechnology upside;
  • Oil and gas contracts that have not been developed due to previous weak commodity markets, and insufficient capital or access to capital;
  • Contracts that offer the ability to establish early production, credibility and jobs in the local community, leading to early cash flow and further production growth;
  • Contracts with further development and exploration upside; and
  • Contracts whose geographic locations offer the ability to create a core production area.

“Our team at Sonoro, and our wholly owned subsidiary, Stockbridge Oil and Gas Ltd., collectively has decades’ worth of exploration and production experience in southeast Asia,” says Mr. Wadsworth.

“That’s pivotal to our overall goal of developing a diversified portfolio of productive onshore assets in Indonesia and southeast Asia.”

 

(DISCLAIMER: Readers are cautioned that certain statements in this article may constitute “forward-looking statements”—which, by their by their nature, are based on current expectations regarding future events that involve a number of assumptions, known and unknown risks, and uncertainties. Actual results, performance or achievements of the Company, or the industry, may vary materially from what is expressed or implied by such forward-looking statements. Therefore, readers should not place undue reliance on forward-looking statements.)

Issue 3: Sonoro target named to 2017 Wells to Watch list

LG-1 Up-dip well in Indonesia earns a spot on DrillingInfo’s worldwide index of ‘regionally significant prospects’

July 20, 2017

Sonoro Energy is seeking shallow, repeatable success. Its target just got some deep respect.

Sonoro’s Budong Budong LG-1 Up-dip well, in the Indonesian province of West Sulawesi, was recently named to DrillingInfo’s 2017 Wells to Watch list.

The Budong Budong PSC region in West Sulawesi is estimated to have 16 million barrels of prospective recoverable resources.

“This is very gratifying for Sonoro Energy,” says Sonoro’s Chief Executive Officer and Director Richard Wadsworth. “We’ve targeted the Budong Budong lease because the LG-1 Up-dip site is a simple, low-risk appraisal well with shallow drilling targets, great potential and a history of success.”

The worldwide 2017 Wells to Watch list of “regionally significant prospects” was released in late June by DrilingInfo, an industry intelligence service.

“In this report, DrillingInfo experts from around the globe pinpoint 53 of the top wells and exploration drilling programmes to watch through the remainder of 2017,” reads the 2017 Wells to Watch report.

Sonoro (TSX-V: SNV) expects spudding of the the LG-1 Up-dip well to begin in early August, which comes after much planning and work at:

  • obtaining the necessary local engagement and government approvals;
  • securing PT Pontil, a subsidiary of Major Drilling Group International, as its drilling contractor;
  • obtaining its environmental permit to drill up to seven wells in the Budong Budong PSC area; and
  • organizing the transportation of the drilling rig, and all associated equipment and services, to the Budong Budong lease site in late July.

Additionally, Sonoro has identified several other large seismic structures within the Lariang Basin as next-step activities following the drilling of the LG-1 Up-dip well.

“Our aim is to leverage previous success/discoveries, our team’s track record, experience and technology,” says Mr. Wadsworth, “to build a significant and balanced portfolio, starting with near term production, of high-quality oil and gas assets in onshore Indonesia and southeast Asia.”
 

(DISCLAIMER: Readers are cautioned that certain statements in this article may constitute “forward-looking statements”—which, by their by their nature, are based on current expectations regarding future events that involve a number of assumptions, known and unknown risks, and uncertainties. Actual results, performance or achievements of the Company, or the industry, may vary materially from what is expressed or implied by such forward-looking statements. Therefore, readers should not place undue reliance on forward-looking statements.)

Issue 2: Indonesia's Budong Budong block: Drilling into a promising exploration history

Sonoro focused on previous success where others came, looked and left

June 22, 2017

Others have taken a Veni, Vidi, Verti philosophy . . . which, translated loosely from Latin, means “I came, I saw, I turned around.”

And because of it, their losses could become Sonoro Energy’s gains.

Sonoro (TSX-V: SNV) is fully committed to revisiting the shallow success of oil exploration in Indonesia’s onshore West Sulawesi province, which dates back more than a century.

With an appraisal well drilling program now in motion for its Budong Budong block, following the recent raise of CAD$3.6 million through a non-brokered private placement, Sonoro is focused on successful production in an area where others came, looked . . . and left.

“The Budong Budong region has an intriguing history in terms of oil exploration, dating back to the Doda Oil Company’s arrival back in the 1890s,” says Sonoro Energy’s chief executive officer Richard Wadsworth.

“Frankly, it’s remarkable that regular shallow-well oil production has not taken place in the region to date—and that’s why we’re focusing our efforts on fast-tracking this process.”

In recent days, those fast-tracking efforts include:

In spite of abundant seismic and well data that shows great promise—an unrisked prospective recoverable equivalent of 15.9 million barrels, as a net-mean-case scenario—Sonoro and its wholly owned subsidiary, Stockbridge Oil and Gas, are the first industry players to seriously consider drilling the area’s shallow-surface anticlines.

Among the highlights of the area’s drilling history:

  • Between 1898 and 1905, Holland’s Doda Exploration Company drilled four shallow wells in an area commonly known for its active oil seeps
  • All four of these wells yielded significant oil and gas shows, with several blowouts
  • Notes from these drilling operations remarked: “Sand pump, small drill collar and seven pipes were thrown from the drilling platform” and “For 4 hours, rocks and mud with many oil traces flew out of the borehole, with great force”
  • Through much of the 1930s, BPM (Shell) performed extensive field mapping and identified multiple surface anticlines, two of them with oil seeps (Bula Bae and Madjene)
  • With the Second World War looming, and the Japanese preparing to invade, these areas were never drilled
  • Between 1970 and 1974, Gulf drilled a pair of stratigraphic holes; one of these experienced a gas blowout near the old Doda wells, and was abandoned at a shallow depth
  • BP conducted seismic 2D information in 1974, and drilled one well, with impressive shows throughout, but soon turned its attention to South Sulawesi
  • Tately and Harvest attempted and failed in 2011 to test deeper targets—but its LG-1 well, drilled in the “Doda area,” yielded strong oil and gas shows through the top 750 metres, blew out at one point, and required 22 pounds of mud before the casing could be set

“Given the abundant available data, and the empirical evidence over several decades, we see our Budong Budong appraisal well program as a low-risk, high-return proposition,” says Wadsworth.

“We also believe that success in this region would open up new basins and new opportunities—and finally fulfil the potential that’s been apparent for more than 100 years.”


Issue 1: Going deep for shallow success in Indonesia

With Budong Budong license extended, Sonoro is gearing up for appraisal well program

February 27, 2017

The treasure has been locked away for nearly a century.

The team has decades’ worth of experience in southeast Asia.

The expectation? Revisiting success in Indonesia’s West Sulawesi province—and doing it for the long term.

In mid-January, the Indonesian government gave Stockbridge Oil and Gas, Sonoro Energy’s wholly owned subsidiary, a one-year extension on its Budong Budong drilling license through Jan. 15, 2018.

And with an unrisked prospective recoverable equivalent of 15.9 million barrels, as a net-mean-case scenario, Sonoro is excited about unlocking near-term production in the Budong Budong region—with a one- to two-well appraisal program scheduled for 2017.

“History tells us that Holland’s Doda Oil Company had incredible success in this area back in the early 1900s, after discovering a giant oil seep using primitive technology. Oil and gas continues to leak from wellheads today,” notes Sonoro Energy’s chief executive officer Richard Wadsworth.

“The seismic and LG-1 well data we’ve seen from the area is very promising,” he adds. “We’re focused on, and entirely committed to, repeating that shallow-well success of West Sulawesi through our LG-1 updip well—and fast-tracking the process to regular production.”

Sonoro Energy and Stockbridge Oil and Gas Ltd.’s management team has a wealth of exploration and production experience in southeast Asia, with companies like Shell, ARCO, P.T. Petcon, Pertamina and Total. Multiple members of the team were involved in the exploration of the Palangkaraya block, which was ultimately sold to Conoco-Phillips.

“We believe that the Budong Budong region has potential reserves, and we’re confident that this is a low-risk exploration initiative at shallow drilling targets—with potential for an untested new reservoir,” says Mr. Wadsworth.

Balikpapan’s Pertamina Refinery lies just across the Makassar Strait from Budong Budong, a 280-kilometer trip that takes less than 48 hours.

“With success on the LG-1 updip well, we believe this will open up numerous other prospects in the Budong Budong License and the basin that are well worth pursuing,” says Mr. Wadsworth.