Sonoro, through its wholly-owned subsidiary, Sonoro Energy Iraq, has entered into a Farmout Agreement with Geopetrol International and its subsidiary, Geopetrol Iraq Corp. (collectively, Geopetrol).
The Agreement provides for the assignment by Sonoro to Geopetrol of a thirty percent (30 percent) participating interest in the Asphalt License Agreement (the License) among Sonoro Iraq, the Al-Salah ad Din Provincial Government (the Government) and Berkeley Petroleum Mesopotamia Asphalts Limited, with Sonoro retaining a forty percent (40 percent) participating interest in the License and operatorship. The Agreement is subject to certain conditions being completed, including the approval of the Government and the TSX Venture Exchange.
Pursuant to the Agreement, Geopetrol will pay to Sonoro an initial cash payment of US $3,000,000 as partial reimbursement of past costs and fund the first US $9,000,000 of the costs to be incurred by Sonoro and Geopetrol in respect of the License. The Company and Geopetrol intend to use the US $9,000,000 to conduct drilling operations on the North Salah ad Din prospect.
Under the Agreement, Geopetrol will also participate in a private placement (the Private Placement) for 46,000,000 common shares in the capital of Sonoro at a price of CDN $0.09 per share for aggregate gross proceeds of CDN $4,140,000. Following the Private Placement, Geopetrol will own approximately 17.5 percent of Sonoro's outstanding common shares. In conjunction with the closing of the Agreement, Sonoro will also pay to an arm's length third party a finder's fee equal to three percent (3 percent) of the total amounts payable by Geopetrol under the Agreement, with two percent (2 percent) of such finder's fee payable in cash and the remaining one percent (1 percent) payable in common shares of Sonoro at a price per share equal to the closing market price of the common shares immediately prior to the announcement of the Agreement.
Richard Wadsworth, Sonoro President & CEO said, "Geopetrol brings a wealth of international experience in both the oil and gas upstream and services businesses as well as bringing significant financial strength to our partnership. With Geopetrol we will be looking to accelerate the drilling of the North Salah ad Din prospect as well as other identified prospects in the Salah ad Din Province."
Gaston Rebilly, Geopetrol International's President, commented, "We are pleased to have the opportunity to farm-in on what we believe is a potential world class resource in the Salah ad Din Province of Iraq. Sonoro has developed a range of excellent drilling prospects and we look forward to working with Sonoro to jointly explore and develop these prospects."
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