Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemption granted to issuer from the requirement to prepare its interim financial report in accordance with Canadian GAAP, but only to the extent necessary to enable the issuer to omit from the interim financial report disclosure of a subsequent event that is the subject of a confidential material change report that has been filed confidentially with the securities regulatory authority or regulator.

Applicable Legislative Provisions

National Instrument 52-107, s. 3.2(1)(a).

Citation: Sonoro Energy Ltd., Re, 2012 ABASC 220

May 30, 2012

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
(the Jurisdictions)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
SONORO ENERGY LTD.
(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempt from the requirement in subsection 3.2(1) of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) for its interim financial report for the three months ended 31 March 2012 (the Interim Financials) only to the extent necessary to enable the Filer to omit from the Interim Financials disclosure of a subsequent event that is the subject of a Form 51-102F3 Material Change Report filed on a confidential basis in accordance with paragraph 7.1(2)(a) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102).

Furthermore, the Decision Makers have received a request from the Filer that this decision and the application be kept confidential and not be made public until the earlier of:

(a) the date on which the Filer publicly announces the Agreement (as herein defined); and

(b) 30 June 2012.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this Application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation subsisting under the laws of British Columbia.

2. The Filer's head office is located in Calgary, Alberta.

3. The Filer is an oil exploration and development company, whose principal interests are located in Iraq.

4. The Filer is a reporting issuer in Alberta, British Columbia and Ontario.

5. The Filer is listed on the TSX Venture Exchange under the symbol "SNV".

6. The Filer's fiscal year end is 31 December.

7. The Filer is not in default under securities legislation in any jurisdiction.

8. The Filer contemplates filing the Interim Financials on 30 May 2012.

Confidential Material Change Report

9. On 8 May 2012 the Filer, through its wholly owned subsidiary Sonoro Iraq B.V. (Sonoro Iraq), entered into a Farmout Agreement (the Agreement) with Berkeley Petroleum Mesopotamia Limited (Berkeley) and Geopetrol Iraq Corp. The Filer has not publicly disclosed the Agreement and instead filed a Form 51-102F3 Material Change Report on 9 May 2012 (the CMCR) confidentially under paragraph 7.1(2)(a) of NI 51-102 on the basis that the disclosure of the Agreement would be unduly detrimental to the interests of the Filer.

10. Prior to 28 May 2012 the Filer expected that public disclosure of the Agreement would occur on or before 30 May 2012. On 28 May 2012 the Filer was informed by Berkeley that the Agreement would have to remain confidential beyond 30 May 2012. The Filer anticipates publicly disclosing the Agreement on or around 8 June 2012.

11. The instruction under section 1.11 of Form 51-102F1 Management's Discussion & Analysis (the MD&A Exemption) provides that an issuer does not have to disclose information in its management discussion and analysis (MD&A) if, under section 7.1 of National Instrument 51-102, the issuer has filed a Form 51-102F3 Material Change Report regarding the transaction on a confidential basis and the report remains confidential. The Filer intends to rely on the MD&A Exemption in omitting disclosure with respect to the Agreement from its MD&A for the three months ended 31 March 2012.

12. There is no equivalent relief in respect of the Interim Financials as that of the MD&A Exemption, but the Agreement constitutes a subsequent event that would need to be disclosed in the Interim Financials for the Filer to meet the requirements of paragraph 3.2(1)(a) of NI 52-107.

13. The Filer contemplates filing the Interim Financials on 30 May 2012 prepared in all respects in accordance with paragraph 3.2(1)(a) of NI 52-107 with the exception that the Filer would omit from the Interim Financials any disclosure with respect to the Agreement. Accordingly the Filer will not be in a position to comply with paragraph 3.2(1)(b)(ii) of NI 52-107. The Agreement would then be publicly disclosed as soon as possible, and in any event not later than 30 June 2012.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is:

(a) that the Filer is exempt from the requirement in subsection 3.2(1) of NI 52-107 in relation to the Interim Financials only to the extent necessary to enable the Filer to omit from the Interim Financials any disclosure with respect to the Agreement in the subsequent event note to the Interim Financials; and

(b) that the application and this order will remain confidential until the earlier of the date that the Filer publicly discloses the Agreement and 30 June 2012.

"Blaine Young"
Associate Director, Corporate Finance