SONIC Enters Albanian Heavy Oil Upgrading JV

SONIC Technology Solutions has entered into a joint venture in Albania to build and operate initially a 1,000 bopd PetroSonic heavy oil upgrading facility.

The joint venture is with a private company (PrivateCo) which will provide an existing lease and facility which has been utilized in the past for crude blending operations. The PrivateCo will contribute an initial $1 million in capital required into the joint venture. Sonic, through its wholly-owned subsidiary PetroSonic will provide the license for operating Sonic generators and the process for upgrading of heavy crude oil along with the initial one or two sonic generators to process 1,000 barrels per day of heavy crude oil. The joint venture will be owned 60% by PetroSonic and 40% by PrivateCo. Since much of the infrastructure is already in place at PrivateCo's facility, it is expected that the capital required to commence operations will be approximately $1 million. The joint venture anticipates start-up of the facility this June 2010.

Over the next 30 days the parties intend to finalize a shareholder and license agreement and register a joint venture company in Albania, after which PrivateCo will deposit the initial $1 million capital commitment into the joint venture account. These funds will be utilized to cover costs associated with establishing operations.

Albania provides an excellent region for the application of the PetroSonic process. Albania has the largest onshore heavy oilfield in Europe, with low recoveries to date, and several companies are re-developing the oilfields with production growth expectations. The oil is typically heavy, high in sulphur, and incurs significant pricing discounts relative to conventional oil along with transportation challenges. These factors make Albania an attractive location for PetroSonic's first facility.

Richard Wadsworth, Sonic President and CEO, stated, "I am pleased to be entering into a joint venture with an Albanian partner, bringing a clean upgrading technology to Albania where I believe we can improve the quality and economics of the heavy oil. With our clean de-asphalting and upgrading technology we can improve on the challenges Albania faces with its environmental, transportation, refining and energy needs".

The PetroSonic process consists of a first phase of rapid de-asphalting of oil that is expected to increase the API of typical Albanian heavy oil by approximately 6-10 degrees, reduce sulphur and metals by 40% and lower viscosity by 99%. The second phase of the process utilizes a chemical oxidation process which can upgrade oil by an additional 6-10 API. The Joint venture will initially focus on the first phase de-asphalting process. Once de-asphalting operations are successfully established and cash flow is being generated, the joint venture plans to integrate the second phase.

With respect to the previous Mirex joint venture in Alberta announced in June 2009 by previous management, the Company is in further discussions on its status and funding with Mirex. With current heavy oil differentials in Alberta being tighter than historic averages, the Company has not made this project a priority but continues to believe that in the longer term the economics will improve and a PetroSonic project in Alberta will be initiated.