Sonoro Signs Asphalt License Agreement in Iraq
Sonoro announced that its wholly owned subsidiary, Sonoro Energy Iraq, and its partner, Berkeley Petroleum Mesopotamia Asphalts Limited (together, the "Licensee"), have signed an Asphalt License Agreement (the "Agreement") with the Al-Salah ad Din Provincial Government in the Republic of Iraq.
The Salah ad Din Province lies just to the North of Baghdad and lies within the trend of mega oilfields including production of roughly 300,000 barrels oil equivalent per day. It is estimated that Iraq may hold the world's fourth largest heavy oil resources behind Canada, Venezuela and Russia. The key terms of the Agreement are the following:
- Sonoro Iraq will have a 70% working interest and will be the operator and Berkeley will have a 30% working interest.
- Licensee has the exclusive rights to explore, develop and produce asphalts and related organics within the entire Al-Salah ad Din
- Province and to sell the asphalts and its related organics produced (and/or the by-products after processing) domestically and/or internationally.
- The Agreement provides for an initial exploration period of 5 years and is followed by a 30 year exploitation period with extensions for any carved out exploitation areas to develop asphalts and related organics.
- Licensee has the right to construct and operate asphalt-heavy oil topping facilities within the Al-Salah ad Din Province, with certain processing capacity commitments.
- Licensee is entitled to 50% of the revenues from the sales of asphalts and related organics (and its by-products after processing), after tax and after cost recovery.
- 80% of the revenues are available for cost recovery. Licensee is committed to a minimum initial investment commitment of US $1.5 million.
The Al-Salah ad Din Provincial Government has obtained the necessary Provincial and Central Government Ministry approvals to grant these rights under the Agreement.
Sonoro Iraq and Berkeley entered into an agreement whereby Sonoro Iraq has a 70% working interest and operatorship, while Berkeley retains a 30% working interest which is carried by Sonoro Iraq for the initial facility and exploration operations.
Sonoro Iraq obtained its interest in the License through Berkeley, and accordingly is paying Berkeley a US$250,000 signing bonus and issuing 23.75 million shares in Sonoro Energy Ltd. at a deemed price of $0.38 per share. Berkeley will also have a carried interest on exploration expenses, while Sonoro Iraq will have a preferential entitlement to recover its expenses before Berkeley can receive income on their equity interests in the project. In addition, Sonoro Iraq obtained further preferential rights from Berkeley and its affiliates to pursue similar asphalt opportunities in the Republic of Iraq as well as preferential rights to participate in at least one other conventional petroleum exploration and or development project Berkeley is currently pursuing within the petroleum sector in Iraq.
Richard Wadsworth commented, "This is a remarkable opportunity for our Company to take its technical experience and process into one of the largest known petroleum areas in the world. We are now aligned with the Province of Al-Salah ad Din to process and develop certain hydrocarbon resources and facilities." Mr. Wadsworth further stated "I would like to thank Berkeley for utilizing its knowledge of Iraq and its extensive relationships to secure these assets and allow Sonoro Iraq to become its operating partner. I would also like to thank our Chairman, Mr. Adam Ranjit Sumel, for his contributions in assisting me in closing this transaction and being in Baghdad for the official signing."