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Calgary, Alberta / TheNewswire / April 26, 2016 - Sonoro Energy Ltd. ("Sonoro" or the "Company") (TSXV: SNV) is pleased to provide an update to the March 8, 2016 announced non-brokered private placement, the proposed acquisition of all of the issued and outstanding shares of Stockbridge Oil and Gas Ltd. ("Stockbridge") (the "Transaction") and the purchase of an option to acquire a future cash payment.
As previously announced, on March 7, 2016 the Company entered into a share purchase agreement (the "SPA") among Stockbridge and the shareholders of Stockbridge (the "Stockbridge Shareholders") to purchase all of the issued and outstanding shares of Stockbridge (the "Stockbridge Shares"). The Company, Stockbridge and the shareholders of Stockbridge entered into an amending agreement on April 25, 2016 to the SPA to provide for an outside closing date of May 30, 2016. In addition, the Company wishes to clarify that Chris Atkinson, a director of the Company, is a non-arm's length party to the Transaction, as he is also a director of Mercia Investment Ltd., one of the Stockbridge Shareholders selling its Stockbridge Shares to the Company pursuant to the SPA. As a result, the Transaction is a "Related-Party Transaction" under Multilateral Instrument ("MI") 61-101. However, the Company is exempt from having to obtain minority Company shareholder approval for the Transaction pursuant to the financial hardship exemption under MI 61-101.
With respect to the previously announced private placement on March 8, 2016, the Company still intends to seek to raise up to a maximum of $1.5 million by way of a non-brokered private placement (the "Offering") of a maximum of 300 million common shares of the Company ("Common Shares") at a price of $0.005 per Common Share. However, the Company now intends to close an initial tranche (the "Initial Tranche") of $240,000, representing the issuance of 48 million shares, on or about April 28, 2016. The Company expects to close on the remaining tranche (the "Final Tranche") for at least an additional $860,000 (and up to $1.26 million should demand warrant), representing the issuance of up to an additional 172 million Common Shares (and up to 252 million Common Shares should demand warrant) on or about May 30, 2016, concurrent with the closing of the Transaction. In addition, the Company wishes to clarify that it may pay finders a 6% commission on any funds raised in either the Initial Tranche or the Final Tranche, subject to TSX Venture Exchange ("TSX Venture") approvals.
The Offering is still being made pursuant to a waiver granted by the TSX Venture which permits the Company to offer the Common Shares at a price below the TSX Venture's $0.05 minimum pricing requirement.
Stockbridge Oil and Gas Ltd. is a private British Virgin Island Corporation which indirectly wholly owns Stockbridge Budong-Budong BV, a Netherlands corporation, that holds a Production Sharing Contract ("PSC") for oil and gas exploration and production rights covering 1,094 km2 onshore, located in the Budong Budong subdistrict in the province of West Sulawesi, Indonesia.
Both the Final Tranche and the Transaction are expected to close on or before May 30, 2016.
Completion of both the Offering and the Transaction remains subject to final approval from the TSX Venture.
The Budong Budong PSC
As previously noted, the Budong Budong PSC relates to property located onshore in the province of West Sulawesi, Indonesia and lies across from the Makassar Straight and to the south and east of Kalimantan, where several oil and gas fields are in production and produce products that are refined locally.
Highlights and key terms of the PSC are:
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-1,094.73 km2 area after final relinquishments, representing 20% or the original area
-Stockbridge is operator with a 99.5% working interest
-Exploration period ends Jan 15, 2017
-100% cost recovery (accumulation of over US$70mm to date)
-25% of contractor oil and gas share sold at 25% of benchmark price (holiday for 5 years)
-Production split of 62.5% to contractor for oil and 71.4% for gas (before tax)
-10% FTP to government
-Income and distribution tax of 44%
-After cost recovery expended, and after taxes and FTP, contractor take is ~31.5%
-20 Year production license with plan of development
Transaction Key Terms
Key terms of the Transaction continue to be:
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-At the closing of the Transaction, the Company will issue 250 million shares to the Stockbridge Shareholders, representing a total value of $2.5 million at a per share value of $0.01 per share (this represents a 100% premium to the closing price of Sonoro shares as of March 7, 2016).
-Certain changes and additions to the board of directors of Sonoro (the "Board") will be made when the Transaction is completed:
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-Stockbridge will have the right to appoint two Board members, one of which will be Bill Marpe.
-Chris Atkinson will be appointed Chair of the Board.
-All existing members of the Board will continue to serve as directors.
-In order to complete the Transaction, at the time of the closing of the Transaction:
-Sonoro has agreed to seek approval from its shareholders to complete a share consolidation on a ten for one basis within six months of the closing, subject to TSX Venture approval (the "Consolidation").
Completion of the Transaction is subject to final approval by the TSX Venture.
The Offering
Subject to certain limitations discussed below, parties interested in participating in the private placement Offering should contact the Company pursuant to the contact information set forth below.
The Initial Tranche is expected to close on or about April 28, 2016 and the Final Tranche is expected to close concurrently with the closing of the Transaction on or before May 30, 2016.
Pursuant to the terms of the Offering, a maximum of 300,000,000 Common Shares will be raised for gross proceeds of up to $1,500,000. The Offering is subject to a minimum aggregate subscription of 48,000,000 Common Shares for gross proceeds of $240,000. The proceeds of the Offering are intended to be used primarily to fund exploration activities relating to the Budong Budong PSC, the exercise of the Option (as defined below), legal and printing expenses relating to the holding of the Meeting and for general corporate purposes.
The securities issued in connection with the Offering will be subject to a four month and one day hold period from the date of issuance of such securities. All persons who participate in the Offering will be required to agree to vote in favor of the Consolidation, and to consent in writing to the Transaction, the Offering and the Option.
Completion of the Offering is subject to final approval by the TSX Venture.
Option
The Company continues to intend to enter into an Option Agreement (the "Option Agreement") with Transition Resources Limited ("Transition") and Merdeka Energy Holdings Limited ("Merdeka"), whereby Transition and Merdeka will grant the Company an option (the "Option") to acquire the benefit of a future contingent payment from ConocoPhillips Petroleum Holdings B.V. ("CPP") of US$15 million (the "Benefit Payment"). The Option Agreement is still expected to be executed concurrently with the closing of the Final Tranche and the Transaction.
The Benefit Payment is payable to Transition and Merdeka if CPP receives approval from the Government of Indonesia for a plan of development for the Kuala Kurun PSC, pursuant to a purchase and sale agreement dated November 20, 2013 among CPP, Transition and Merdeka, as amended on July 11, 2014. Under the Option Agreement, Transition and Merdeka will seek to obtain written consent from CPP to assign entitlement to the Benefit Payment to the Company, and if such consent cannot be obtained, Transition and Merdeka agree to hold the Benefit Payment in trust for the benefit of the Company.
Pursuant to the Option Agreement, on or before the 30th day after the execution of the Option Agreement, the Company will pay a non-refundable fee of C$250,000 (the "Non-Refundable Fee"), to be satisfied through the issuance of 25 million Common Shares to the shareholders of Transition and Merdeka, subject to the approval of the TSX Venture. The Option may be exercised by the Company until September 30, 2016 at an exercise price of US$1 million. If the Option is exercised, the Non-Refundable Fee will be credited towards the exercise price.
About Sonoro
Sonoro is an international oil and gas resource exploration and development company. The Company's primary focus had been on its asphalt license agreement in the Salah ad Din province. With this license under Force Majeure since July 3, 2014 and requiring additional federal approval, the Company is refocusing its efforts to Southeast Asia in connection with the Transaction.
Forward-looking Statements
This press release contains "forward-looking statements" which may include estimates of future production, cash flows and earnings, business plans for the development of markets and the estimated amounts and timing of capital expenditures, the completion of capital raising and other statements about future events (often, but not always, using words or phrases such as "expects", "anticipates" or "intends" or stating that certain events or results "may" be achieved).
Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those reflected in the statements. Forward-looking statements are based on the estimates and opinions of the management team at the time the statements are made.
Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated.
The Company has no obligation to update these forward-looking statements should circumstances or management's estimates or opinions change.
Persons reading this release should be aware that our future performance is subject to a wide range of risk factors including:
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-the Company's inability to raise sufficient funds to complete the Offering and the Transaction
-volatility in market prices for oil, natural gas and other hydrocarbons
-economic conditions internationally
-industry conditions (including changes in laws and regulations)
-the results of technology development and commercial development of that technology
-the ability of the Company to access new markets and secure partners to develop those markets
-unexpected changes in the development of the Company's technology
-the Company's ability to access sufficient capital
All of these factors are beyond the Company's control and may have a material negative effect on the Company's performance.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
ON BEHALF OF THE BOARD OF SONORO ENERGY LTD.
"Richard Wadsworth" Chairman and CEO
Suite 600, 520-5th Ave S.W.
Calgary, Alberta T2P 3R7
Tel: (403) 262-3252
Web Site: http://www.sonoroenergy.com/
This press release is not to be disseminated in the United States
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