North Africa Update
The Company has submitted the farm-out to Joint Oil for approval. The Company and Viking have held a series of discussions with Joint Oil, the Tunisian Minister of Industry and the Tunisian National Oil Company ("ETAP") since the farm-out agreement was executed with Viking. Joint Oil has established some conditions for securing its approval to the assignment to Viking. Some of these conditions are acceptable to the Company and Viking, while others remain subject to negotiation. Discussions continue with the expectation that an agreement can be concluded which is acceptable to all parties. While we believe the farm-out should be approved on its merits alone, no assurance can be made that Joint Oil will approve it or that the farm-out will close. The farm-out can be terminated by the Company or Viking or mutually extended after March 31, 2013.
Western Canadian Strategic Alternatives
FirstEnergy Capital Corp. ("FirstEnergy") opened a dataroom on January 9, 2013 for parties interested in gathering more information regarding the Western Canadian property packages. Bids were due on March 19, 2013. The Board of Directors and Management are in the process of evaluating the bids and is receiving advice from FirstEnergy. The Company will announce the results of the strategic alternatives process, and any resulting future plans, as they are finalized.
2012 Operating Highlights
Bill Dirks, Sonde's Chief Operating Officer added, "We have worked diligently to set the stage to react to the outcome of our Western Canadian strategic alternatives process. Our key operational goals are to maximize value from existing production, prepare for near-term drilling of our oil-oriented resource plays, and develop new exploration concepts to ensure Sonde's future growth. We have permitted or are in final permitting stages for horizontal wells at Michichi (Detrital oil play, 3 locations), Eaglesham (Wabamun oil play, 2 locations), Sturgeon Lake (Duvernay oil play, 1 location), Windfall (Duvernay oil play, 1 location) and Ante Creek North (Duvernay and Montney oil plays, 1 location each). Sonde's undeveloped acreage in these plays is enviable (Duvernay, 95,742 acres net, Montney, 44,488 acres net, Wabamun, 50,736 acres net and Detrital/Banff 46,677 acres net). 85% of this acreage has been purchased within the past 18 months, and as such, there are no immediate land expiry issues."
Western Canada Drilling Program
During the twelve months ended December 31, 2012, Sonde drilled and stimulated three short radius horizontal oil wells in Michichi (2 wells in the Detrital play, and 1 in the Banff). These wells, in addition to the 13-17 Detrital horizontal well brought online in February, 2012, are all producing. This activity has set the stage for additional horizontal infill drilling at Michichi, where Sonde has high-graded another 20 horizontal locations on its land (19 Detrital and 1 Banff locations).
During the twelve months ended December 31, 2012, Sonde spudded and completed its initial Montney oil well, the 4-19-67-25W5, in Ante Creek North. An extended test confirmed the previously announced short-term production data, with high water cuts (approx. 95%) throughout the production period. The well is capable of approximately 120 boe/d hydrocarbon production; however, it provides insufficient production to support the required pipeline and processing infrastructure on its own. If Sonde can prove an extension to this pool with follow-up drilling, the 4-19 can be tied-in as part of a future development plan. Proved or probable Montney reserves were added in 2012 as a result of drilling the Ante Creek North license.
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