In an ever-evolving global energy landscape, the Middle East is a linchpin of economic resource supply and innovation in the oil and gas sector, offering unparalleled investment opportunities driven by its vast reserves and strategic geopolitical influence.
According to a report by the International Energy Agency, energy investment in the Middle East will hit US$175 billion this year.
Publicly traded, Canada-based Sonoro Energy Ltd. (TSXV:SNV) recently announced a significant Middle East-North Africa (MENA) region play that could reshape its operational landscape.
The company signed a non-binding memorandum of understanding to acquire, directly or indirectly through a subsidiary, shares representing 20 per cent of the issued capital of a UAE-based company, MENACo. This acquisition aims to establish Sonoro’s presence in the MENA region, a diverse area comprising 19 countries with varied cultures, languages and religions.
Details of the acquisition
Under the terms outlined in the deal, Sonoro intends to acquire the significant stake in MENACo from its current shareholders. In exchange, Sonoro will issue an aggregate of 40 million common shares.
This transaction, valued at approximately $4.8 million, is subject to a definitive agreement that will detail the terms and conditions. The agreement will also require all necessary approvals from the TSX Venture Exchange, regulatory bodies and shareholders.
MENACo’s operational expertise
MENACo has expertise in well management and engineering, procurement, and construction (EPC) services within the MENA region. The company is actively engaged in a master service agreement with a national oil company (NOC), focusing on the management and enhancement of oil and gas wells and facilities.
This agreement, with an initial term of five years, involves fields currently producing several hundred thousand barrels of oil per day (bpd). One of the primary goals of the NOC is to increase production by more than 100,000 bpd.
The agreement covers several key areas:
- Well re-activation/workover/re-entry: Targeting shut-in and suspended wells to bring them back into production.
- EPC projects: Upgrading and improving associated facilities and infrastructure.
- Sub-surface and reservoir optimization: Conducting studies to enhance operational efficiency.
- Maintenance and training: Supporting local personnel with training and operational enhancements.
Impact on Sonoro Energy Ltd.
After the completion of the proposed transaction, MENACo shareholders will collectively hold approximately 15.2 percent of Sonoro’s issued and outstanding shares. Importantly, the company does not anticipate the creation of any new insiders as a result of this deal.
For Sonoro, this acquisition represents an important expansion into one of the world’s most prolific oil and gas regions. The MENA region holds vast reserves and offers significant growth potential in the energy sector.
By acquiring a stake in MENACo, Sonoro can leverage its success with innovative multilateral horizontal well technology—allowing for unparalleled access to multiple reservoir sections from one vertical well bore—which it successfully applied in Canada’s Western Canadian Sedimentary Basin.
The acquisition also allows Sonoro to gain access to extensive regional expertise and established relationships, positioning itself to benefit from ongoing and future projects aimed at increasing oil production and optimizing operational efficiencies.
Investment corner
The proposed acquisition of MENACo shares is a pivotal step for Sonoro Energy Ltd. shareholders. It aligns with the company’s growth strategy by expanding its footprint in the lucrative MENA region. This deal not only promises to enhance Sonoro’s operational capabilities but also offers substantial growth potential by leveraging MENACo’s established presence and expertise in well management and EPC services.
For potential investors, this transaction underscores Sonoro’s commitment to growth and diversification. The move to acquire a significant stake in a company with a solid master service agreement and a clear path to increasing oil production is a testament to Sonoro’s strategic vision. Investors should consider the long-term benefits of this acquisition, as it positions Sonoro to capitalize on the dynamic and resource-rich MENA region, potentially leading to increased shareholder value and robust returns on investment.
You can find Sonoro Energy on the TSX Venture Exchange under the symbol V.SNV or head to its website sonoroenergy.com for more information.
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This is sponsored content issued on behalf of Sonoro Energy Ltd., please see full disclaimer here.
(Top image generated with AI.)
