Interview with Sonoran Energy Inc.

Amid the Q1 mixed earnings picture, the semi-warmed return to the equities market and anticipatory movement regarding the 2003/4 economic outlook, one factor, in the 'how do I guarantee myself a steady and assured rate of return' frame of investment mind remains a constant…that of the oil and natural gas sector.

Despite our desires and well-intentioned plans—although some will find fruition in the years to come—the recent labor and social incidents in Venezuela and Nigeria and, most obviously, the conflict in Iraq has made apparent two vital facts: not only are we dependent on oil, and that those requirements are indeed ever increasing, but that we, as a continent, need to forge ahead with fostering home-grown supplies, releasing us from some of the outside reliance that holds us, quite frankly, somewhat hostage at times.

Sonoran Energy's primary objective is to identify, acquire and develop working interest percentages in smaller, underdeveloped oil and gas projects, in the Western US, not immediately meeting the minimum requirements of major corporations. It is their mandate to be recognized both as a consistent junior oil and gas producer as well as a stable North America supply hub.

Identifying opportunities, the criteria being that they be low cost, are undervalued and demonstrate a high rate of return, the projects must include close access to commercial distribution and modern application of oil and gas engineering technology. Management has targeted properties representing substantial growth, coupled with minimum exposure and a low-cost entry factor.

An Interview with John Punzo, President & CEO of Sonoran Energy conducted by Eric David & Sons, Inc. May 2, 2003, follows:

Eric, David & Sons, Inc. (EDS): Let's discuss the genesis of Sonoran. What was the main thrust/driving force behind Management 's new corporate directive choice, to the oil and gas sector, in 2002?

Sonoran Energy, Inc. (SE): Late in 2001, an opportunity in the energy sector was presented and, although, truth be told, I wasn't an industry veteran, the introduction to this well-respected industry group out of Bakersfield, California - Archer Explorations (and subsidiary Longbow LLC) - their esteemed management, expertise and vision, instilled in me a high level of confidence in their directive and potential for successful explorations, and indeed a foray into the sector. After a good deal of due diligence, the very positive results of which stood worthy of our dedicated shareholder base, we forged ahead with the formalization of a Strategic Partnership and Company name change, rolled back the shares outstanding and launched in June 2002.

We immediately started to search for North American acquisitions, based primarily in the Western United States. Our entry into the market was with a 3.375% working interest in a 940-acre San Antonia field in Monterey County, located just south of the prolific 500M-barrel San Ardo oilfields. The field's activity is still pending, but we're looking to realize a solid success from this property, and we have every expectation for future and notable extractions.

In future, the Company will approach what we feel is)a higher risk activity as exploration with an educated eye, but it's, rather, our present mandate to acquire properties that are of strong stock and are already actively producing. We'll build and strengthen the corporate base as such, thereby establishing asset stability and cash flow. Perhaps, once in place, then it may be a possibility that we'll pursue exploratory plays, but only when the executive and shareholders feel there's a strong enough foundation to warrant such expansion.

To date, we're very pleased with what's been accomplished and we look heartily into that future.

EDS: Do you realistically see incidents like the Venezuelan oil workers' strikes and the conflict in Iraq (and those future of the same ilk) affecting, in a long-term sense, the need for homegrown oil and gas production?

SE: President Bush and his administration have worked hard to push for the commencement of exploration of the fields north of Alaska, but it's not been not pursued as per existing environmental issues and concerns. That said, it's my opinion that they're championing the right directive for the nation and future oil consumption concerns.

There's no denying that the world is using more and more fossil fuel energy everyday. Despite the global economy, overall, experiencing a slowdown, the consumption of oil and natural gas jumped 10%. As the world's economy swing's back up, as we know is to be the case in the years to come, the demand for oil will further increase. They'll always be gluts and expansions, but the (increasing) demand will always be there.

With our reliance on outside sources (most particularly the two incidents mentioned) very much now at issue, as supply from them, when put at risk, can immediately cause panic and higher prices here at home. Dependence on sources as these, or those increasingly offshore, promise to not only continue an unsure and unsecured supply for our nation, but also leave us prey to unsteady pricing. Our strongest option is to strengthen our domestic oil production, especially in light of the ever-present international crisis due to war, strikes, and terrorist threats.

EDS: Onto Sonoran's fundamentals. Please give us a brief rundown, in chronological order, of your interest holdings in actively producing situations, noting your determent factors for investment in said properties.

SE: First and foremost, our choice is one of properties that are in production; we assume a percentage of ownership with no activity interruption or management change. In essence, the oil continues to flow.

We look for positions that are undervalued, low cost, provide for a high rate of return for our shareholders, and that are favorable to the inclusion of new technology 'of the day'. To date, that recipe has been a successful one for us, and we intend, with the only change being that of stepped up acquisition, to continue on this path.

The first property acquired was an 80% working interest in the Emjayco Glide, in the Mt Poso Field, Kern County, consisting of 160 acres with 12 wells and one water injection well.

We bought it strictly for repair and to bring about output renewal. It was a lease that was abandoned in 1986 when oil was $6.75/barrel, making extraction far too costly as compared to the rate of investment return.

We've been fortunate in the outcome and have every confidence of continued success. All but 4 of the wells have been turned on and are producing about 30 barrels/day. ETA for the activation of the remaining wells is 2-3 months.

The second property purchased was another 80% working interest in the Keystone Oilfield, in the Deer Creek Field outside of Bakersfield CA. It's 93 acres with 12 producing wells, 2 water injection wells, and is steadily producing 35 barrels oil/day. When we took it over, it was only producing 25-barrels/day, so we're quite pleased with the increased output.

Adjacent to Keystone, lays our third acquisition, the Merzonian Lease, representing an additional 20 acres. We have a 50% working interest and present production is 25 barrels/day.

And I proudly add that it's just been very recently announced that new reserves have been discovered on those (Deer Creek Field) holdings. A recent geologic review indicates that the producing reservoirs on the combined 113-acre leasehold are under-exploited, stating that up to five new well locations are required to produce an additional 250,000 barrels of proved undeveloped (PUD) reserves.

The fourth entity, also just recently announced, is a group of three small working interests in natural gas productions in California's Sacramento Basin. Together, they produce approx 3700 MCF/day. Individually, our ownership runs from a 1.25 - 10% working interest.

This is just the beginning of our growth in this area and we are now are focusing on rolling up additional like opportunities.

These are prime examples of what we look for in strategic and long-term investment properties.

EDS: What's your average daily production of both oil and gas?

SE: At present, we produce approximately 90 barrels of oil/day, with extremely positive upside potential, and 3700 MCF gas.

EDS: What is the average well life?

SE: We've done our economics on them and find that they'll all be producing for another 20 yrs +.

EDS: How active is Sonoran regarding the employment of new industry technology? In your best estimation, how much more effective and efficient would it be in your property situations.

SE: New technology, as far as geological work goes, that's become available in the past 10-15 years, includes the likes of horizontal drilling. In our properties, to date, such drilling can't be done, but we're actively looking into other measures that will, in a cost effective manner, increase our production output such as acidizing and reperforating.

EDS: Who are you closest competitors?

SE: That's a difficult question to answer, as the majority of the properties that we look to acquire are individually owned, thereby not appealing to the well-known 'big boys'. Groups like Sonoran fly a little 'under the larger radar' in that respect. To be sure, there aren't many like us out there, to the best of my knowledge. That really puts us into a bit of a niche market…one primed for full-throttle and unfettered movement forward.

EDS: Who is your main purchaser at this point and what are, if any, the long term affiliate arrangement s?

SE: We sell our product, at the daily spot price, to a refinery called Pacific Marketing and Transpiration, based in California. They are the sole purchaser.

EDS: Speaking dollars and cents, what are your financial forecasts for the Company 12- 24 months down the road?

SE: Sonoran's goal in the 12 months - 24 months, starting from June 2002, is to reach the production markers of 1,000 barrels oil/day and 2,500 - 5,000 MCF natural gas/day, and we feel well on the way to attaining that level.

Based on a very conservative pricing of $20/barrel of oil, which translates, encompassing both entities, to approximately US$7.3 million in annual income.

EDS: Any prediction as to price of a barrel of oil at the end of this year and next?

SE: Based on the available information from OPEC, it looks as though they would like to cut oil production again in June 2003, thereby looking to keep the existing price of a barrel of crude between US$25 - $27/barrel.

As has always been indicative of commodities, prices will fluctuate, but my feeling is that in the next 12 - 18 months, we'll see it stand in the $22 - $27 range.

EDS: What, if at all, will be your financing needs in the next 12 month period. Are you self-sufficient at this point? What are the current loans outstanding regarding working property purchases?

SE: I'm pleased to report that we are now self-sufficient and cash flow positive, and, that from the next quarter onwards, the investment community will start to see ever increasing improvements in that capacity. Our overhead and expenditures out are kept well in line. We do have a debt position from the pre-Sonoran entity that we're settling on via cash payment.

Other than that, the only debt we have is that owing for the properties purchased (as below-referenced remark addressing dilution).

EDS: Please tell us more about your strategic affiliates, Archer Exploration, Inc and Longbow LLC. What are their roles in relation to the corporate head of Sonoran? Do you anticipate these two to be long-term affiliates?

SE: We've had a wonderful relationship to date with both of these Companies and fully anticipate that the future will be much of the same.

Collectively, their executives bring over 85 years of industry experience to the fold, and their professional histories derive from such larger corporations as Chevron, Mobil, and the US Department of Energy.

I truly feel blessed that we have associated ourselves with such expertise and vision and, as such, formulate a 'complete package'. Longbow is the operational arm, pursuing oil and gas acquisition, exploration, and exploitation opportunities; Archer is the geology side, identifying exceptional oil and gas projects, and I'm the capital formation, the face of and corporate administrative component of the Company.

So collectively, we three come as a 'one stop industry shop'. The mixture of the classically industry trained, as represented by Archer and Longbow, and that of the long-term, hard fought, public street education, as brought on board by myself and my CFO, makes for a winning combination.

EDS: Let's talk a little bit about Sonoran's company structure.

How many shares are currently outstanding and what is the percentage Insider/Management ownership?

SE: There are a little over 8 million shares outstanding, inclusive of most recent S-8 filing, March 2003, for legal and biz development consulting. Myself, my family and other insiders own approximately 40%.

EDS: Are additional Management buy-in's expected?

SE: We definitely will be initiating more in the way of Management buy-in within the next 12 months. That's the strongest indication of insider support in the eyes of the investment community as a whole, one in which we strongly believe and will look to participate in.

EDS: What is the overall share dilution, inclusive of potential conversion of property debt to common shares?

SE: To date, there's been no conversion of that debt (regarding our property acquisition) to equity and our fervent goal is to maintain that. Further on that note, we will always look to raise capital via the debt market rather than via equity, keeping our dilution at low levels.

In my opinion, that's been a failing of a number of small companies in past markets. Many have ended up capitalizing everything with corporate stock and dilute themselves out of reach, and, ultimately, to their deathbeds. It's our every intention to keep the total number of outstanding shares to a minimum.

EDS: What has been the lifespan of Management?

SE: The Management, carried over from the past entity, consists of my Comptroller and myself. It has grown to incorporate not in-house management as such, but rather, management relations via association, meaning the oil 'experts' at Archer and Longbow. And we're very interested in and looking to pursue, having them come on in a Directorial sense in the near future. We've kept Sonoran a tight ship.

EDS: Any plans to expand to purchasing properties outside of California?

SE: I can see, in the future tense, the Company entertaining additional purchases within the North American framework (Mexico, Northern Canada), but no where outside of the continental boundaries as we're truly not comfortable with the world scenario at present.

I have no intention of risking our shareholders' capital with a venture that could be well jeopardized by a revolt or political uprising. And one, quite frankly, that we would have little control over. However, if an area is identified that is relatively calm in those capacities, and the Company is in a more lucrative cash position, then a consideration to move forward could well be considered…but it would be very much down-the-road and would have to be an outstanding opportunity.

EDS: Congratulations on joining the ranks of the Independent Petroleum Association of America. What are the immediate recognized and longer-term benefits of this membership?

SE: Members of the IPAA are well recognized and much respected in the oil & gas sector throughout North America; they really do cover the entire spectrum. We are extremely proud to be part of the Organization. And for Sonoran to take a serious stand in this industry and to remain well informed, it was a necessity for us to join and keep such ranks and company. Ultimately, it will be a tremendous working tool for us.

EDS: We also understand that you'll soon be off to California investigating another potential acquisition. Anything that you're free to comment on regarding that expansion?

SE: Yes, the trip to California is for the purpose of addressing another candidate acquisition; we're actually looking at several. One is a particularly large potential and we're working feverishly to try and close it. And, if successful, our goal of 1,000 barrels/day will be almost immediately attainable.

If all goes well, bearing in mind there lays a fair bit of work ahead and it is indeed a very large property, we're looking at closing, barring any unforeseen matters, within the next 60 - 90 days.

We are also working on a large financing, incorporating both some lenders from the past, as well as a new entity, but, unfortunately, I'm not at liberty to say anything more…suffice to say that if successful, there'll be a great news release coming out and a wonderfully profitable long-term relationship established. It'll truly establish Sonoran as a very strong and respected Company in the industry.

EDS: Sounds promising. Is it in the Company's plans to file for more senior exchange listing?

SE: As the above comes to fruition, our next step will be to most definitely apply for a more senior listing, as we'll be meeting the stringent membership criteria.

EDS: Any final words referencing the nature of the world of oil and gas mining, US consumption patterns and how your Company is jockeying position to achieve its greatest benefit?

SE: Fossil fuel consumption will continue to rise; of that, there's no doubt. We will always be in tremendous need of oil, and we need to cut our reliance on outside sources. The world isn't as it once was. We have to look within ourselves to fill that need.

What does this mean to our shareholders? We will continue to grow and share value will rise. Are we undervalued today? Tremendously, mainly because very few people know of us. But we're slowly changing that via the launch of fundamentally inspired investment forums as offerings as this and (soon to be planned) broker and accredited investor meetings: presentation to those in greatest appreciation of a sound, long-term investment. The desire to move forward in that vane has always been of much interest, but we've been waiting for the right time to present to those people with a solid corporate promise, rather than, "Here's my dream and where I hope it may go…Are you interested". I want to be able to stand in front of the investment community and openly and honestly say, "Here's what we started with, here's what we've accomplished, and here's where we believe we're realistically heading." That's what I want for Sonoran, and its valued shareholders.

Jennifer Gardiner, an Investor Relations veteran and a freelance business writer, is presently consulting with Eric, David and Sons, Inc. Working primarily with micro and smallcap Companies, she has assembled and actively maintains international relationships in her roles as Marketing/Communications Strategist, and Investor/Public Relations Managerial consultant.

The information contained in this release, other than historical information, and specifically that which relates to future plans, events or performance may be considered within the provisions of the Private Securities Litigation Reform Act of 1995 as forward-looking statements that involve risks and uncertainties, including risks associated with uncertainties pertaining to customer orders, demand for services, development of markets for the Company's products and services and other risks identified in publicly released information and on the Company's website. Projections and other forward-looking statements and management expectations regarding future events and/or financial performance of the Company - although given in good faith - are inherently uncertain and actual events and/or results may differ materially.

Please view the EDS disclosure/disclaimer on snrn at here.

2003 © Eric, David & Sons, Inc. All Rights Reserved.

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