Sonoro Energy has announce that the company, through a wholly-owned subsidiary, has entered into an agreement to purchase a drilling rig for their planned asphalt operations in Salah ad Din Province.
The drilling rig will be transferred to a joint venture company ("JV Co"), to be established by Sonoro and its partners, Berkeley Petroleum Mesopotamia Limited ("Berkeley") and Geopetrol Iraq Corp.
The Company spent considerable time and effort reviewing various rig rental alternatives in the Middle East region during the last year, including conducting rig inspections and detailed negotiations with potential drilling service companies.
The quality and availability of suitable rental rigs in the Middle East has led the Company and its partners to decide to purchase a drilling rig. A new 750 horse power drilling rig was identified in the region and Sonoro is in the final stages of completing an extensive rig inspection, in addition to having had the vendor perform extensive commissioning work to prepare the rig for operations in the province of Salah ad Din.
The Company determined that this rig is of superior quality to the currently available rental rigs in the region and can operate at competitive market day rates. In addition, the Company believes that owning a rig is more beneficial with respect to mobilization and lead times and provides more flexibility and control for its future drilling programs.
Finally, the ability to finance the majority of the drilling rig purchase price at competitive terms made the rig purchase option attractive from a financial perspective. The purchase of the rig is subject to certain conditions, including final technical acceptance of the drilling rig by Sonoro.
The Partners are in the process of establishing the JV Co to own and operate the rig. Sonoro, through a wholly-owned subsidiary, will own 40% of JV Co and Geopetrol and Berkeley will own 40% and 20% of the JV Co respectively. The Partners have committed to contributing sufficient equity (in proportion to their respective JV Co interests) to fund 36% of the rig purchase price plus additional capital to cover initial operations.
Sonoro's contribution will be approximately $US 1,000,000 to the equity of JV Co. The remaining 64% of the rig purchase price is being financed by a loan facility to JV Co from an affiliate of Geopetrol and will have a term of two years at an interest rate of 6% per annum, secured by the drilling rig.
Richard Wadsworth, Sonoro Chairman & CEO said:
"We are very pleased to have agreed to the purchase of this new drilling rig with our partners. This was a long and carefully considered process with our partners and we are pleased to have settled on the purchase of a brand new drilling rig. We expect that having our own drilling rig will also allow for greater efficiency and control, as well as savings on our subsequent drilling programs on additional resource opportunities that we have identified".