Sonoran Energy Acquires East Texas Oil Production

Sonoran Energy has signed a purchase and sales agreement to acquire three producing oil properties in East Texas. The properties, which subject to complete due diligence are being purchased from the Rippy Oil Company, are located in three separate oil fields known as the JRC, Lisa Layne and Ann McKnight (Paluxy) Fields. Currently production from the properties is approximately 210 barrels of oil per day (bopd) with the opportunity to increase production relatively quickly to 300 bopd through installation of electrical submersible pumps on some of the wells. Net reserves of up to 300 thousand barrels of proven oil have been identified for these assets, which are being acquired in an all cash transaction. Potential also exists to add additional reserves through the drilling of new infill wells on the properties.

"These high-quality, long-life oil fields give Sonoran Energy its first production from Texas and augment our growing suite of assets in North America," said Peter Ostenfeld-Rosenthal, Sonoran Energy's President and CEO. "Sonoran's holdings in Texas and Louisiana now exceed 18,000 gross acres, establishing a domestic base with strong potential."

The JRC and Lisa Layne oil fields located adjacent to each other in Wood County, Texas, consist of productive oil zones in the Paluxy sands at about 7,300 feet and the Subclarksville sands at 5,150 feet. These two oil fields are producing 170 barrels of oil a day (bopd) from six wells in the Paluxy formation and two wells in the Subclarksville zone. Substantial work has been performed on the properties over the past 15 months to upgrade surface and subsurface equipment and operations. Upside potential exists with continued improvement of production from currently installed electric submersible pumps (ESP), and replacement of existing rod pumps with new ESP pumps. Further upside potential to add additional reserves exists in re-drilling of one of the existing wells and possible additional infill and horizontal wells.

The Ann McKnight Unit is located in the Ann McNight (Paluxy) Field in Smith County and is currently producing 40 barrels of oil per day. Improved production can be achieved by installation of ESP's in two existing wells. Additional reserves have been identified through drilling a well on the crest of the structure and through possible tertiary recovery.