Can Budong Budong Be the Next Big Success for Richard Wadsworth and Sonoro Energy?

This past week, prices for Brent crude, the world’s benchmark, reached their highest price since July 2015, supported largely by commitments from members of the Organization of the Petroleum Exporting Countries (OPEC) to curb output amid a global supply glut. The debate is back on as to the balancing of the market and where oil will go from here, with some experts, including Jodie Gunzberg, head of commodity and real asset indices at S&P Dow Jones Indices, of the opinion that $80-$85/barrel oil in the future is not out of the question.

On the global front, Indonesia is taking all measures to try and attract $200 billion in new investments in its energy sector over the next decade to revitalize what was once a thriving resource hub. The Energy of Mineral Resources Ministry has been hard at it, modifying its contract for oil and gas companies and working to simplify its complex regulatory regime in a bid to advance production back towards the 1.5 million barrels per day it was producing during its peak in the mid-1990s.

Most production today is coming from mature fields, but Calgary, Canada-based exploration company Sonoro Energy Ltd. (TSX-Venture:SNV) is hoping to be part of a change in the country to new discoveries. To be fair, it’s not exactly new fields that Sonoro is aiming for. The seasoned and successful industry vets leading the company have their sights set on specific areas with a history of shallow successes of oil exploration—where huge oil seeps are viewed by some as the biggest and best ever documented in the country, yet still woefully underexplored.

Sonoro is targeting regions that majors like Shell (NYSE:RDS.A), Gulf and Total have had success. The company’s principle asset is an 1,100-square kilometer block called Budong Budong in West Sulawesi. Oil and gas at Budong Budong has been discovered at shallow depths between 450-750 meters in two, separate wells (LG-1 and KD-1).

Sonoro raised C$3.6 million in May to fund exploration work to prove out the resource that is underscored by an independent prospective report estimating Budong Budong to host an unrisked prospective recoverable equivalent of 15.9 million barrels in a net-mean-case scenario. The property is being developed under a Production Sharing Contract license that was granted a one-year extension in January.

Through its wholly-owned subsidiary Stockbridge Oil and Gas Ltd. and drill contractor PT Advanced Services Indonesia, Sonoro has mobilized from Balikpapan to Budong Budong. Drilling of an appraisal well next to the LG-1 began on Monday, Oct. 2, with that activity expected to proceed cautiously in the top hole section, given the documented hydrocarbon overpressure encounters in the region. In October, Sonoro expects testing and evaluation of the drilling data to be completed, which should have investors looking forward to evidence that CEO Richard Wadsworth has once again put his company in a position for success.

Wadsworth, who has more than 25 years of international oil and gas experience, previously founded Bankers Petroleum, building the company from the ground up. Bankers at one point produced about 20,000 barrels of oil production daily, and was sold for C$575 million in cash to China’s Geo-Jade Petroleum last year.

As the investment axiom goes, past performance is not a guarantee of future results, but the odds seem to be looking good for Sonoro given the resume of Wadsworth, the extensive experience of the Sonoro team in the region and the fact that oil has already been shown to be hosted in the ground of Budong Budong.