Sonoro Energy Ltd (SNV)

[MHT]

You are going to have to be more specific when you state Iraq, because Sonoro Energy's interests in Iraq are two-fold - they have 2 different projects going on simultaneously:

1) Topping Facility
2) Exploration & Production


Topping Facility

The topping facility in this case will be a diesel/kerosene refinery. The objective is to secure a supply of crude oil for a diesel/kerosene refinery that they would like to construct & operate. Please go here for the requirements to construct/operate a refinery in Iraq:

http://www.oil.gov.iq/Law-of-Private%20Investment-in-Crude-Oil-Refining.pdf



Most people are under the impression that this is a done deal - it is not. Please re-read the 3rd Quarter MD&A found on Sedar. Note the following paragraph:

Initially this will include pursuing immediate cash flow by securing a modular topping facility and a supply contract from Salah ad Din and the Ministry of Oil. A new modular topping facility has been identified, and the Company is reviewing options to finance it with debt instruments.


Then please re- read the following paragraph from the Company's Dec 2010 Presentation to Investors:

Topping facility – 1,000 to 5,000 bbls/d
• Discussing potential early supply contract while exploration program develops
• Reviewing possible debt financing with supply and sales contracts



In other words, at the present time, they do not have a deal in place for the Topping Facility. What they are saying is that they will be negotiating with the Iraqi Ministry of Oil and/or the Salah ad Din Province in securing a crude oil supply contract for a diesel/kerosene refinery that they would like to construct & operate.

As per the law above, the refinery will fall under the Ministry of Oil's jurisdiction - not the Provincial Government, and as such, they will have to negotiate with the Ministry of Oil to construct the refinery.

As most of you are aware, Iraq just formed a new government in November 2010. A new Minister of Oil (Abdul Karim al-Luaidi) wasn't appointed until just recently (December 21st, 2010: http://www.iraqoilreport.com/oil/production-exports/oil-output-up-fourth-bidding-round-planned-5255/ ). As such, it would have been impossible to negotiate anything pertaining to constructing a refinery until a couple weeks ago (when the new Oil Ministry opened for business).

Although they presently do not have a deal, I believe - given their contacts - they should have one secured within the next couple of weeks. As such, I believe that the first news headline to come out of Iraq to be either (or both):

a) SONORO ENERGY SECURES CRUDE OIL SUPPLY CONTRACT FROM THE IRAQI MINISTRY OF OIL
b) SONORO ENERGY SECURES CRUDE OIL SUPPLY CONTRACT FROM IRAQ'S SALAD AD DIN PROVINCE


Once they have a Supply Contract in hand, the next step will be to negotiate a Sales Contract for the diesel fuel (enter Mr. Nasser Bin Jarallah). With the Supply & Sales contracts in place, they can then apply for the debt financing (enter Mr. Ahmed Al-Shamsi) to acquire the Topping facility. Therefore once that has been achieved, the subsequent news heading will read:

SONORO ENERGY ACQUIRES DEBT FINANCING TO CONSTRUCT & OPERATE DIESEL/KEROSENE REFINERY IN IRAQ


For a total of $30 Million, one can procure a Diesel Topping facility from Texas, and have it shipped & installed in Iraq. Inglett & Stubbs International Ltd. has been retained to construct the facility.

If they can obtain the debt financing within a month from now, the Topping facility can be shipped as early as March. As such, it could be up and running by year's end.






Oil Exploration & Production

I've seen pictures of oil just seeping out of the ground in Iraq. As such, they would not have to do much drilling. According to the "December 2010 - Presentation to Investors" they will be drilling 10 shallow holes. If they start this program now, they should have a Resource Estimate out by the end of March / beginning April. They should be into production by the Fall 2011 (October - December).

As opposed to the Topping Facility, this is a done deal. Heavy oil does not come under the Petroleum Law; rather it falls under the Mining Law, and as a consequence, falls under Provincial jurisdiction. The Salah ad Din Province has already given Sonoro exclusive exploration & production rights for their entire province.

Incidentally, the Iraqi Ministry of Industry & Minerals was just renamed the Ministry of Energy a couple of weeks ago. The new Minister of Energy is the former Minister of Oil: Husayn al-Shahristani (http://en.wikipedia.org/wiki/Hussain_al-Shahristani)





Conclusion

As such, when you ask when do I expect to hear concrete plans out of Iraq, this is my guess for the next 3 months:

1) Secure Oil Supply & Sales Contracts by Mid-February.
2) Secure Debt Financing for the Topping Facility by the end of February.
3) Acquisition of Topping Facility in March.
4) Initial Oil Resource Estimate (from the shallow drilling) by the end of March / beginning April.


note: Iraqi Ministry of Oil's website is http://www.oil.gov.iq/

[jojoba]

MHT, when do you think we'll hear concrete plans regarding Iraq?

[jojoba]

PP closed today - news out.

[jojoba]

Any idea when the 10 million PP is closing?

[jojoba]

What revenue? I hope you don't expect revenue from Iraq before 12 - 18 months.

Shouldn’t they supposed to have already revenue from Albanian JV?
They should do something about this soon even if they claim Iraq as their main priority.


Long story short, under 20 cents I will start buying again.

[TenaciousD]

its only a matter of time, this pps will look silly once revenue begins to flow.

GLTY

D

[InterestedParty99]

This was in the Oct. 4th pr from Sonoro:

'Sonoro Iraq will seek to identify its first exploration area and facility location over the next 3 months. The Company is planning to have a topping facility operational within 18 months.'

I wonder if we can expect a pr early in the new year updating us on the exploration area and facility location?

[InterestedParty99]

IMO this is a must read. This document seems to be credible (a little dated -1998) with a map of where undeveloped heavy oil fields in Iraq are located in addition to the depth range the heavy oil can be found (700 - 210 meters).

http://www.oildrop.org/Info/Centre/Lib/7thConf/19980221.pdf

looks to me that plans to develop Iraqs heavy oil have been in place for a long time. The difference between now and then is government (willingness to work with the west) and technology to allow the processing of heavy oil(Sonoro technology).

I sure hope MHT is correct in Sonoro's ability to borrow against our exploration rights. From where I'm sitting, with enough cash, 2011 could be the breakout year we've all been waiting for.

Do your DD (and post findings if you see something worth sharing)

[InterestedParty99]

This is an exerpt from Time mag (2003). I was curious to learn what the average production from Iraq wells was. To my knowledge we are not allowed to produce from existing fields. Here's hoping our prospects are as good as the 'average' for Iraq.

Why is Iraq such a prize? Not only does it have the potential to become the world's largest producer, but no other country can do it as cheaply. That's because, for geological reasons, Iraq boasts the world's most prolific wells. In 1979, the year before Iraq's oil fields were devastated by the first of three wars, its wells produced an average of 13,700 bbl. each per day. By contrast, each Saudi well averaged 10,200 bbl. U.S. wells, which are gradually drying up, averaged just 17 bbl. It would take more than 800 U.S. wells to pump as much oil as a typical Iraqi well. Consequently, production costs in Iraq are much lower. The average cost of bringing a barrel of oil out of the ground in the U.S. is about $10. In Saudi Arabia, it's about $2.50. And in Iraq, it's less than $1, according to Fadhil Chalabi, executive director of the Center for Global Energy Studies in London and former Under Secretary of Oil in Iraq. What's more, most of Iraq's known oil deposits are waiting to be developed. That's why everyone has cast a covetous eye on the country.

[jojoba]

One word "dilution" but I am really glad for existing shareholders that I was wrong.

[mf22]

To me there's a strong support right now around .27 - .28 ... may I ask how did you come out with those numbers (0.18) ?

[jojoba]

SimplyTheFacts, yes! I did very good with SNV and SXL, and planning to continue.

[SimplyTheFacts]

"Addora and others, what is not to understand?"

Seems you were the one asking questions...

"Another Latest Private Placement? Why?"
"Board posters, what is your opinion regarding..."

Glad you made a ton of money, better than SXL I guess

[jojoba]

Addora and others, what is not to understand? Is simple math.
Bottom line, the dilution with 60 million shares means lower shares value for existing shareholders. Better hope for some news to backup this dilution, otherwise my 18 cents call may be too optimistic.

I sold everything I had left at 30 cents as soon as I saw the news. I'll watch it from the sidelines for now.

This is my opinion giving the latest developments.


Disclaimer: I did my due diligence, I spoke many times with the company IR and I read every public available information about Sonoro and its management team. I start buying SNV when was trading under 10 cents.

[MHT]

There is only one reason as to why one would tripple the P/P from $5M to $15M:


Someone who wasn't invited to the party wanted in so desperately that he flashed a lot of green at the bouncer, and I mean a lot of green.

The fact that Macquarie is buying this on behalf of someone else, as opposed to buying it for themselves like they did the last time, means that this person wants to remain anonymous (anonymous as far as other investors are concerned, but known to the Company). This information will never be made public.

I'm guessing this person is so high profile, that Richard doesn't want to bar him from the party. What if this person is an Arab Sheik with many, many connections? Or what if this is Eric Sprott? Will you show him the door just because he doesn't have an invitation?

From what I heard, the original Private Placement wasn't really that oversubsribed (at least when compared to the one from earlier on this year). As such, there was no real interest which would have warranted a 3-fold increase.

My biggest concern with the latest, is what would happen the day those 60 Million shares start hitting the street (that's an increase of 50% of the float when they become unrestricted in 4 months from now)? However, if it is truly only one individual (or entity) who took up the entire $10M for his portfolio, we probably wouldn't see those 40 Million shares any time soon.

From my investigation, it is obvious that Richard didn't need the money. So why did he do it? It must be someone so important that he didn't have the courage to show him the door.


P.S. Capital expenditures for 2011 will be $34 Million. As such, Richard will still need debt financing.

[SimplyTheFacts]

Thank you for your reply InterestedParty99, as previously mentioned, I find your posts insightful.Glad to hear you are staying invested...

I think the problem I am having is that management has not clearly outlined what exactly they plan to do, and what the potential profits of their plans could be... They have raised a lot of money now and diluted quite a bit... I think they owe shareholders a little more than the two general sentences they have provided; specifics of their plans are missing, and I hope we get some clarity soon.

Best,
Simply

[InterestedParty99]

Thanks for the challenge, SimplyTheFacts.

We have seen this type of activity in the past.  On March 30th, 2010 they increased the amount of their pp because the interest was there.  I think the interest in this pp surprised them.  I am positive they can create a plan with funds available, but what MHT posted I believed this pp was simply to bridge the gap until a loan was secured.   I don't believe the went into the pp expecting this much interest.

I agree with your point that they won't be, "aimlessly poking holes in the Iraqi desert.".  They have hired the right people to increase the odds of success and i'm sure they are developing a plan.  In addition, they have access to areas known to produce.

My point was banks don't hand out loans to oil companies that don't produce oil.  IMO the next 6 months will determine the success of the company.

I'm still long... At least for the next 6 months. ;)

[dadora]

great post simply, definately my thoughts, best dadora

[dadora]

sorry, but you probably don't understand much, if you call an 18 cents share price by year end. read the bio of the people involved, plus the iraq deal and the influence of the board members added. no offence, but don't get your reason to post things like that. best, dadora

[SimplyTheFacts]

With all due respect InterestedParty99, and I truly enjoy reading your posts, but I don't buy the idea that they just raised 15 mil to go aimlessly poking holes in the Iraqi desert in the hopes of finding some oil. Considering the failure rate in that, even in a place like Iraq; it is absurd. For me, this is an experienced management team which to date have implemented sound strategies and plans.

I think they know what they want to do and need money for it. When they have finished raising the money and have put their plans in motion, they will let us know about it. I just hope we hear some good news soon, it is overdue... guessing news right after closing of the pps.

It just makes no sense... let's raise 5 mil and because it becomes oversubscribed, let's raise another 10 mil?? And dilute to the tune of 60 million shares?? They need the money for something IMO.

[InterestedParty99]

The fact they were able to sell additional shares tells me the .25 cent price wasn't asking enough.  If we only needed enough cash to last until the Iraq government rubber stamped our agreement, this was unnecessary dilution.

The fact they are issuing additional shares tells me it is difficult to borrow on favorable terms if you don't have cash flow or an oil discovery.  Borrowing tens of millions of dollars against a contract issued by a high risk country/province rarely (if ever) happens.  Think about it, besides a tbd generator in Albania, and the cash we just raised, what do we have?  A promise the technology works?  SonAsh?  Potential customers once the technology is proven?  Exploration rights in a high risk country?

In previous posts I said we need cash flow to make this endeavor work...  I've changed my mind.  IMO, We have this last chance with the funds raised to find oil in Iraq.  If we are successful, the loans will come and money will be made.  If we don't find oil with the money we just raised, this company is toast.  Full stop.

I like the gamble.  IMO it all comes down to what the company can find with the pp cash raised.  I would imagine the stock price will start to reflect the risks associated with this approach.

IMO Albania success would only register as a blip on stock price.  We are banking on exploration to get us to the next level.

[jojoba]

Board posters, what is your opinion regarding second financing?

By my calculations there is a big probability we'll see 18 cents by year end if no substantial news in the next 3 weeks.

[jojoba]

Another Latest Private Placement? Why?

[MHT]

Latest Private Placement

So the Company mailed off the subscription agreements to the various Brokerages/Funds this past Friday afternoon (some after Market close). As opposed to giving it solely to one group (like they did last time when Macquarie got almost half), they are spreading the wealth this time around, involving numerous Funds.

I guess a lot of Brokerages/Funds thought that they would have been alloted a greater share of the PP than to what they are presently being offered.

The paperwork has to be submitted by the 16th, with the cheques clearing by the 22nd. It should make for an interesting Friday (17th) trading as far as the share price is concerned.

[mf22]

Thanks for your great comment, MHT. It's always nice to read you.

[MHT]

Sonoro NOT Affected in Albanian Flooding


I'm sure you've all already heard about the floodings this back week in Albania. Go here for some pictures:

http://www.bankerspetroleum.com/en/components/investor/bnk_dec6_flooding.pdf


Although Bankers Petroleum is suffering at the moment (see news release below), I've been assured that our plant has not been affected whatsoever, as it sits near the port and not inland.



------------------------------------------------------

CALGARY, December 6, 2010 – Bankers Petroleum Ltd. (“Bankers” or the “Company”) (TSX: BNK, AIM: BNK) would like to provide the following update on the flooding situation in Albania.


On December 4th, 2010, the banks of the Semani river which winds through the northern half of the Patos-Marinza oilfield were breached by high water levels due to heavy rainfall. The flooding, which extends into current areas of development in the field, has caused Bankers to shut in 1,800 bopd of production and shut down operations of three workover rigs and one drilling rig.

The rain has currently ceased, the river is back within the banks, water levels are beginning to recede and as of this morning, 1,200 bopd of production have been restored. While new rainfall may add to delays in resumption of activity, Bankers is optimistic that activity will resume at full capacity in short order.

A full assessment of property and equipment damage is underway. Bankers is happy to report that all employees and consultants are safe and no injuries have been sustained. Additionally, the Company is pleased to be assisting the local communities.

Please refer to Bankers website www.bankerspetroleum.com for pictures of the flooding.

Bankers active production on December 4th, prior to curtailing activities due to flooding, was 11,200 bopd with multiple horizontal wells in the early ramp up stage of production and several new wells planned for the remainder of this month.

[small_timer]

Sonoro December Presentation - 2011 Capital Works and Exploration Plan

Found this on the company website - here is the link:

http://www.sonoroenergy.com/upload/media_element/31/01/sonoro_corp_pres_web_dec.pdf

[r2k4000]

Your the man! (or woman I guess I can't be sure) I agree with everything you have written here. Very nicely put together.

[MHT]

My Take


My last post was the week prior to the release of the 3Q Results where I commented on the rash of power outages throughout Albania. Their Nov 29th Management Discussion & Analysis provides an honest update as to their progress to date.



CASH
On September 30th, they had $700,000 on hand after having spent $2.1 million in the previous 3 months (a one-time charge of $250,000 to Berkeley, $255,000 for Albania which their JV partner will pay back, etc).

Their burn rate was about $400,000 per month, mostly attributable to the travelling back & forth to Europe & the Middle-East. It doesn't take a rocket scientist to figure out that if they only had $700,000 at the end of September, and burn through $400,000 a month, they are left with negative $100,000 on December 1st.


DEBT FINANCING
Although they were cash poor, I was hoping that they were going to get the debt financing in time without having to go to the Equity Market to raise more cash.

Although they told me personally over the phone that they were going to go down the debt financing road, they finally put it in print within their Q3 Management Discussion & Analysis report.


Nevertheless, upon closer examination, I see that they got caught up in a catch-22 in the last minute:

In order to acquire debt financing, one would have to have enough assets to put up as collateral. They do have that in the form of exclusive oil exploitation rights for 30 years within a 24,000 square KM area within Iraq, and a minimum guaranteed supply contract from the Al-Salah ad Din Province for their topping facility. On SEDAR, you can download the entire agreement with the Province. All of the signatures are there; however, what is missing is the rubber stamp needed from the Iraqi National Government.

A new National Government was just formed last month. As per law, no documents can be stamped until the new government is in session, which won't happen until January. So what we have here is an agreement in principle, which is missing the rubber stamp needed to make it official. Nevertheless, without this rubber stamp, they are unable to provide any collateral in order to get the loan. Had the government not changed, they would have had their rubber stamp; hence the loan.

It's obvious that Sonoro's management also thought that they were getting the loan this year. They knew of their financial situation -that they would be cash poor by December 1st- and would have done a Private Placement in October had they thought this would have become reality (when the share price was trading above $0.40). They were actually buying additional shares for themselves on the open market right into the second week of November. Why would they do that if they didn't think they had the loan? Nevertheless, they will still get the loan, but it will now be in the new year. I don't see anything that would preclude the new government from rubber stamping the agreement, especially since this new government is all about bringing investments into Iraq.




ALBANIA
What can I say other than that this is a frustrating exercise. After a very short negotiation session, Richard convinces an Albanian company to partner up with him, where they provide all of the capital to bringing the plant into production. The Albanian company dives in with both feet. Then we run into problems which is beyond their control and could not have been foreseen: Ash Cloud restricting their travelling to Europe, Albania Government's new policy on Environmental Assessments, power outages due to Albania's changing to a new power grid system, etc. All the while, their JV partner sinks money into this, without ever doing any due diligence in ensuring that the Sonic Reactor can do what Sonoro claims it can.

So the machine is now up and running, but requires an oil cooler to run 24/7. Before the JV Partner pays anymore money, they are now sending the batch samples to a lab to confirm what Sonoro has been stating all along. They then thereafter want to first find a buyer for their batch samples, before they spend the additional $400,000 needed for the oil cooler. It will get done, but this will delay the process by a few more month. As far as I am concerned, it's been delayed by so much thus far, what is an extra 3 months?

I suggest for the future that they no longer get into these types of JVs. Instead, once the pilot plant is up and running, and the world sees what the Sonic Reactor can actually do, they get into the business of selling the Reactor to customers with a royalty program attached to the amount of barrels of oil upgraded using the Reactor (much like the EIG agreement). In other words, don't upgrade the oil yourself, but get a piece of the action for every barrel that is upgraded. As such, they won't have to worry about capitalisation to building new plants, finding buyers, or be dependent to the price of oil. You might make less, but at least it's guaranteed without the headache.



NEW PRICE TARGETS
Although they were most probably caught off-guard and now require an equity financing, this should be their last. $5 Million should last them something like 10 months, if you include a drilling program in Iraq. It will provide them with enough cash, that they won't have to force those 18-cent warrants once the share price appreciates over 36 cents again. My prediction is that the share-price will stay around the 25 to 27-cent level for the next week or so. As we get closer to the closing of the placement, it will go back up to 30 cents, and over 30 cents in the new year. Once they get the Iraqi rubber stamp, it will trade in the 35 to 45-cent range. The Albanian news will finally make it break out.

Earlier this year (March 2010), I had predicted 20 cents by the end of summer and 50 cents by Christmas, but that was based on Albania being on-line. Given the recent delays, we'll probably now only see that price around Easter. Nevertheless, that's a 100% appreciation from this price level. Management is committing at least $1 Million of their own money in this Private Placement, so you know that they believe it's going to happen. Where it is trading today, will most probably the cheapest share price we'll see from here on in.

[InterestedParty99]

Great news.
 
My gut says this pp was done for two main reasons:
1.  Difficult to get a bank loan without cash flow.  We didn't have enough cash to complete any one activity that could generate cash flow and still fulfill other commitments.  I believe we're going to see an announcement of a topping facility in short order.  Even with the amazing exploration possibilities in Iraq, the company needs to demonstrate cash flow to get a loan on favorable terms.
2.  Give a 'taste' to some of the folks who are making this deal possible (The company executives are in for 1m - Nice touch.).  Would not surprise me to discover some Middle East banker (who down the road provides us with a loan) was also involved in this round of pp...  
 
I don't care for the dilution but it's a fact of life for the industry we're in.  My hope is these dollars are directed to the topping facility (10,000bpd capacity will run 2.5m for the generators....  Although that may not be the companies cost)
 
In the end, until we report our first dollar made by the implementation of our technology and/or production from one of our wells we will continue to bounce around in penny stock territory.  I think Wadsworth realizes this so we're about to see a very focused push to finally deliver on a cash generating investment.  THEN, we'll see financing of future projects instead of private placements.  We should also see a stock price more reflective of the company’s potential.
 
IMHO
 
In addition, it would be nice to see the company dump/sell the fly ash technology for a few million bucks.  You can drill plenty of shallow wells with that kind of cash (I’ve been told by outside sources it takes between 3 – 7 days to drill a shallow well… if you are able to find a rig to drill).

[SimplyTheFacts]

Yes I fully realize that "the lower financing is also in the favor of insiders;" maybe someday someone would come up with a novel idea where management would actually work towards the best interest of the shareholders... ;)

And yes, I have seen financing done above the market price plenty of times... It's OK, I'll get over it, just having a bad day :)

[jojoba]

Iraq Oil Exports to Rise With New Offshore Facilities
Dec 06, 2010

By Kadhim Ajrash and Nayla Razzouk

http://www.firstenercastfinancial.com/e_news.php?cont=40728

Dec. 6 (Bloomberg) -- Iraq’s oil exports will increase next year when two new offshore mooring facilities for tankers are completed and the country’s Kurdish region resumes shipments of crude, Oil Minister Hussain Shahristani said.

Shahristani also told reporters in Baghdad today that a $12.5 billion agreement between Iraq, Royal Dutch Shell Plc and Mitsubishi Corp. for the capture of flared-off natural gas will not be ready this week.

Lawyers representing the companies and the government will meet tomorrow to discuss the final draft of the agreement, which still requires approval from Iraq’s Council of Ministers, he said.

While Iraq generates most of its revenue from oil sales, the government is seeking to produce gas as fuel for power plants and for export. The country awarded licenses in October in its first auction of gas concessions since the U.S.-led invasion that ousted Saddam Hussein in 2003.

Iraq has the world’s fifth-largest oil reserves, excluding oil in its semi-autonomous northern Kurdish territory, and its gas reserves rank fifth in size in the Middle East, according to data from BP Plc.

The Kurdistan Regional Government told the central government that it was ready to export 150,000 barrels of oil a day in 2011 through a pipeline to Turkey, Shahristani said. Kurdistan’s oil exports will be handled by the State Oil Marketing Organization.

Repaying Expenses

Iraq’s central government may reimburse some of the expenses of companies that have signed contracts with Kurdish authorities, with ownership of those assets transferring over to the government in Baghdad, he said.

“The companies can present invoices for costs on equipment or drilled wells in Iraq, and if they are reasonable, like the ones signed by the Oil Ministry with other companies, the costs will be paid and the ownership will be transferred to Iraq,” Shahristani said.

Oil supplies from the Kurdish region of northern Iraq halted a year ago after it failed to agree with the central government about how to pay operators including DNO International ASA and Addax Petroleum Corp.

“Iraq’s oil production is rising steadily, but our export facilities are still not up to the required capacity to absorb production levels,” he said. “There are four offshore moorings under construction in southern Iraq, and when two of them start working next year, crude exports will rise.”

Doubling Capacity

Iraq plans to start work in mid-December on offshore oil facilities in the south, where export capacity is due to more than double by mid-2012, the head of the state-owned South Oil Co. said on Nov. 26. Export capacity will increase to 4.5 million barrels a day by mid-2012 from the current 1.8 million barrels a day, Director General Dhia Jaafar al-Musawi said.

The country plans to build two offshore “megapipelines” and three single-buoy moorings where tankers can load crude in the Persian Gulf. Each mooring will add some 900,000 barrels a day in offshore loading capacity. Half of the surveying and the clearing away of unexploded munitions required for this expansion has been done, al-Musawi said.

Iraq exported 58.7 million barrels, or about 1.89 million barrels a day, in October, the State Oil Marketing Organization said. The exports generated the highest revenue this year with $4.526 billion.

Pipeline to Syria

Iraq and Syria have completed technical talks about a planned pipeline for transporting Iraqi oil to Mediterranean ports, AlWatan daily reported, citing an official speaking with the Kurdistan Independent News Agency. The results of the talks were positive, and Iraqi officials will report on the discussions within three days, the Damascus-based newspaper reported, citing comments by an adviser to the Iraqi government, Salam Al-Quraishi, talking to AKNEWS, the Kurdish news agency.

The 225-kilometer (140-mile) pipeline would transport Iraqi crude across Syria to the Mediterranean Sea and have an export capacity of about 1.7 million barrels of oil a day, he said.

A pipeline with a capacity of 600,000 barrels a day already links Iraq’s northern oil fields in Kirkuk to the Mediterranean port of Ceyhan, Turkey.

To contact the reporter on this story: Nayla Razzouk in Amman at [e-mail]

[jojoba]

SimplyTheFacts, the lower financing is also in the favor of insiders, they want more shares at this level: " Management and insiders intend to subscribe for a minimum of 4,000,000 units ($1,000,000) under the private placement."

[jojoba]

I don't like it either, but I've never seen a financing done above the market price. At least the warrants are priced higher.

[SimplyTheFacts]

Didn't like the .25 price. What, the Financiers didn't see enough potential in the company to agree to do it at .35 ?

I'm naturally still very positive on the company and what they are doing, but I never like to see financing done below market price.

[jojoba]

Sonoro Energy Announces $5 Million Private Placement
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
TSX Venture Exchange Symbol: SNV

CALGARY, Dec. 6 /CNW/ - Sonoro Energy Ltd. ("Sonoro" or the "Company") (TSXV: SNV) is pleased to announce a non-brokered private placement of up to 20,000,000 units at a price of $0.25 per unit for gross proceeds of up to Cdn $5,000,000. Each unit is to be comprised of one common share ("common share") and one-half of one warrant, with each whole warrant exercisable into one common share for a period of one year after closing at an exercise price of $0.50 per share.

Sonoro intends to pay a finders' fee of 6% in connection with this private placement based on the gross proceeds realized from subscribers referred to Sonoro by the finders, with such finder's fee payable in cash or shares. Management and insiders intend to subscribe for a minimum of 4,000,000 units ($1,000,000) under the private placement.

The proceeds from the private placement will be used to advance the Company's project in the Republic of Iraq, including shallow drilling activities, seismic and data acquisition, topping facilities engineering and for general working capital requirements, including the ongoing development of the Company's technologies. Closing of the private placement may occur in stages and is subject to the satisfaction of standard conditions, including the receipt of all necessary regulatory and TSX Venture Exchange approvals. The securities issued pursuant to this private placement will be subject to a four-month hold period. The securities will not be registered with the U.S. Securities and Exchange Commission and may not be offered or sold within the United States without registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933 and any applicable state securities laws.
Sonoro Energy Ltd. has 129,357,454 common shares outstanding, and trades on the TSX Venture Exchange under the symbol SNV.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. Statements in this release that are forward-looking statements, including the amount of the offering and its completion, are subject to risks and uncertainties, including those specific factors disclosed under the heading "Risk Factors" and elsewhere in the company's periodic filings with Canadian securities regulators. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The company does not assume the obligation to update any forward-looking statement except in compliance with applicable securities laws.


For further information:
RICHARD WADSWORTH
PRESIDENT & CEO
T +1 403.262.3252
E [e-mail]

[InterestedParty99]

I have not seen any posts related to the modular topping facility.  
 
Quote, “The Company will focus much of its effort on the exploration and development of its exclusive license in the Salah ad Din Province in the Republic of Iraq. Initially this will include pursuing immediate cash flow by securing a modular topping facility and a supply contract from Salah ad Din and the Ministry of Oil. A new modular topping facility has been identified, and the Company is reviewing options to finance it with debt instruments.”
 
 
IMO, this is a big deal.  The release says, “a facility has been identified” so I’m guessing we’ll find a pipeline already runs through the building and they have access to power to run the generators.  In our contract with Salah ad Din Province it suggests we have the right to use any facility/equipment that is not currently utilized within the province.
 
My guess is any oil that is not being upgraded within Salah ad Din Province has a real chance of finding its way to our generators.  Anything that keeps more of the profit within the province will be welcome.  Salah ad Din Province currently produces 300,000bpd of oil, I wonder what a PR stating we have been granted a supply contract of up to 30,000bpd would do to the stock?  The breakout of this stock may be much closer than the 18 months to develop our own production.
 
IMHO
 
 
 

[mf22]

Hey guys,

what should we expect from now on? any thoughts?

[SimplyTheFacts]

News From Management D & A

Albanian PetroSonic Joint Venture

The joint venture continued to purchase and receive equipment through the third quarter with the concrete base completed, the building to house the Sonic reactor delivered, installed and optimized, and tanks and vessels completed and delivered to site. In addition, equipment such as the de-asphalted oil heater, separation vessel, and exchangers were all delivered to site.

Delays have occurred in tying in power to the site and subsequently, with getting the Sonic
reactor into optimized resonance with the different electrical configuration suitable for local conditions. Both of these issues have been resolved and the Sonic generator is now in operation although local city power upgrades and related outages continue to create an operational challenge.

The Sonic unit has been testing local heavy crude oil from our joint venture partners with the estimated minimum expected 6 degree API increase in the de-asphalted oil and samples being sent for further analysis. The joint venture is expected to review these results with several potential off-takers for the de-asphalted oil. Once this has been satisfactorily concluded, the joint venture will look to complete the installation of the facility with appropriate power solutions for
continuous operations.

The joint venture partner has continued to support local costs with the construction of the facility, however, it has not completed its commitment in paying for additional sourced equipment from abroad towards its $1million commitment. The Company has incurred approximately $255,780, which it would expect to receive from the joint venture partner as the project proceeds subsequent to final results and off-takers being confirmed. It is expected that an additional $400,000 of capital expenditures is required to complete the project with the majority of this cost being the
naptha condenser and oil cooler. Timing for such completion, subject to favorable analysis and off-take interest, is now expected in early 2011. The Company will rely on the joint venture
partner to cover these costs and complete its commitment.

SonoAsh Joint Venture

The Company achieved what it believes to be unparalleled results from its batch and continuous flow through processing of non-recycled bituminous coal combustion fly ash. A first set of international patent applications are currently being prepared for filing in countries having large volumes of non-recycled coal combustion fly ash, including China, India, United States, Australia, Japan, South Korea, Indonesia and European countries. The first of a second set of international patent applications is being prepared for filing now.

The Company believes that its results are a significant step in moving this technology application through the test phase into commercial piloting. The Company will be reviewing the results with Nalco Mobotec, before year end, to determine the next steps which may include partnering with a power plant operator for a pilot facility as the next phase of development.

[r2k4000]

Management Discussion and Analysis out now on Sedar. Some good information on recent developments, and you can really see the direction that the company is heading (the exploration and production of heavy oil). Looks like SonoAsh made some good progress as well. A couple of slightly worrisome things IMO, with regards to some of their partners not meeting specified obligations (EIG and their Albanian JV partners). However the company does expect to fully re-coop those.
Looks like JV results are now expected early 2011...due to some issues with power at their JV facility. Other than that they look like they are on track and the company is moving forward nicely.


Good Luck.

[mf22]

Hey MHT,

Will they release their 3rd Quarter and Management Discussion & Analysis this week for sure?

Thanks.

[MHT]

Don't Worry about ARMO


Although Bankers signed a deal with the ARMO Refinery, ARMO isn't big enough to handle all of Bankers' oil. Besides, the oil will only be getting heavier from here on in (lower API), which will create some difficulties for them. Sooner of later, they will be coming to Sonoro, once it has been established that the technology works.

Looking at the local press in Albania, it would appear that they've had a rash of power interuptions as of late. Unfortunately, the PetroSonic Generator requires electricity to function. I would assume that this most probably affected their operation.

Regardless of the above, Iraq is where it is at. Developments in Iraq will be 100 times bigger than anything we could ever expect out of Albania. I guess we'll have to wait until next week to see where they are at, once they release their 3rd Quarter and Management Discussion & Analysis.

[InterestedParty99]

No luck on that front.

[jojoba]

Do you have any link or website for albanian Sonoro partner Albnafta?

[InterestedParty99]

It looks like Sonoro has competition in Albania… 
 
It is well documented that Bankers Petroleum is working towards capacity of 24,500bopd and my hope was Sonoro would have a role to play in upgrading oil Bankers produced.  Reading thru a Bankers PR I noticed a reference to ARMO Refinery (http://www.armorefinery.com/index.php?id=33) (select English in the top right corner)
 
On Armo’s site it mentions, “ARMO Company and Bankers Petroleum signed in Tirana a long-term cooperation agreement, which guarantees the supply of ARMO’s refineries with the gross oil that Bankers drags out from the underground of the territory of Albania.”
 
On Bankers website, “In a signing ceremony on November 5, 2010 in Tirana, Albania attended by Deputy Minister of Economy, Trade and Energy, Mr. Sokol Dervishi, President of the Albanian refinery ARMO, Mr. Rezart Taci and President and CEO of Bankers, Mr. Abby Badwi, it was announced that ARMO has agreed to buy significant volumes of Patos-Marinza 2011 production at an average price of 64% of Brent oil price. Deputy Minister Dervishi thanked both parties for this cooperation and commented "signing of this very important contract will increase the domestic refining capacities and as a result of that will create many jobs and provide better working conditions for Albanian citizens".”
 
Here are a few reasons I believe this development has a negative impact on Sonoro:
1.       The Albania government owns 15% of ARMO – Vested interest
2.       Sonoro generators have limited benefit to the Albania economy compared to a refinery, in Albania, that has invested over $120 Million in upgrades
3.       An environmental assessment “delayed” the construction phase of our pilot in Albania.  Environmental assessments are requested by a local government, Is this coincidence?
4.       Agreement to buy “Significant volumes” at an average price of 64% of Brent oil price means Sonoro upgrading is not involved in this transaction.
5.       After “Significant volumes” have been purchased how much oil will be left for Sonoro to upgrade?
 
 
My guess is Sonoro has effectively been squeezed out of Albania deal due to Bankers need to keep the Albania government happy.  If my suspicion is true it means the Sonoro Albania PR won’t be much to crow about (perhaps an announcement of upgrading a few thousand bopd but nowhere near the larger numbers I expected).  I believe this is why we  have not seen PR relating to Albania.
 
It does seem to fit Sonoro’s style (think of the Alberta upgrader), no good news to report so they simply don’t report anything until they have something better to announce (Albania).
 
I am still long on Sonoro (Iraq could be HUGE) but do believe this to be a bit of a setback if true.
 
On the positive side, Albania should still represent a proving ground for our technology.
 
Interested to hear others comments.
 
Good luck to all.
 
 
 
 
 
 

[TenaciousD]

the pays nothing to brag about but the power is a rush !!! just kidding, I'll add you as a third line of defence as well as if you want to contribute to the ibox, hopefully we will be getting a lot busier here soon.

D

[InterestedParty99]

How much does it pay? ;)

You guys are doing a great job.

My guess for this week is we will not see any news as it is the US Thanksgiving week.

Good luck to all.

[TenaciousD]

These kind of things take time, I would rather wait for substantial news than have a bunch of pps driven fluff pr's. The fundamentals are still here, give it time, we have seen the potential for this to jump quickly on good news and low volume, the right deal in pace and we will all have a very merry Christmas :)

GLTY

D

[TenaciousD]

Are you interested in becoming an assistant mod?

EOM

D

[TenaciousD]

First my apologies to the board, I have been playing with silver the last few weeks so I have neglected SNV. My answer would be no. The only conversation we have had in regards to SNV is that things are still on track and that the Iraq deals just move slower because of obvious difficulties due to U.S. Iraq relations these days. I live in Canada and consider myself lucky my "contact" that sounds so clandestine, I won't say that anymore as it offers the impression I have secret sources, his name is Jeff, he is my friend and he knows high ups in the company because he has done work for them in the past and still does to this date. He knows better than to cross the line and quite honestly I would never want to say something that would influence whether someone bought or sold, that has to be a decision made by the individual based on there research and DD. He did tell me that supposedly it took over 4 hours coming through U.S customs from Iraq and that although business as usual over there everything has so many measures and checks in place a task that would take a day or two her can take a week easy there. This is not his personal experience just relaying a conversation he had.

Bottom line I really don't have anything to contribute at this time and if anything MHT usually provides me with more insight than I ever get from my friend. I am still long here and if I do hear something worth a post I will definitely relay it to the group but as always its just an opinion or hearsay I don't want to mislead anyone.

I'll bug him again next week Friday if no news just to see if he can shed any light as to progress.

Cheers

D