UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-KSB



(Mark One)



(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Year Ended April 30, 2007

or

( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period ___________________ to ___________________



Commission File Number: 000-28915

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Sonoran Energy, Inc.

(Exact name of registrant as specified in its charter)



Washington, United States

13-4093341

(State or other jurisdiction of incorporated organization)

(I.R.S. Employer ID Number)



14180 Dallas Parkway, Ste. 400, Dallas, TX, 75224

(Address of principal executive offices) (Zip Code)



214-389-3480

(Issuers telephone number)



Securities registered under Section (g) of the act:



COMMON STOCK, NO PAR VALUE PER SHARE



Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months (or for such shorter period that the registrant was required to file such reports.), and (2) has been subject to such filing requirements for the past 90 days.        YES [X]    NO [  ]



State issuers revenues for its most recent fiscal year: $ 2,512,037.



The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and ask price of such common equity, as of June 30, 2007 was $33,143,153.



APPLICABLE ONLY TO CORPORATE REGISTRANTS



The number of shares outstanding of the Companys no par common stock as of April 30, 2007 was 129,573,150.

Traditional Small Business Disclosure Format:



YES [  ]

NO  [X]



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SONORAN ENERGY, INC.

2007 FORM 10-KSB ANNUAL REPORT



Table of Contents





Part I



Item 1.  Description of Business

Item 2.  Description of Property

Item 3.  Legal Proceedings

Item 4.  Submission of Matters to a Vote of Security Holders



Part II



Item 5.  Market for Common Equity and Related Shareholder Matters

Item 6.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7.  Financial Statements

Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 8A.  Controls and Procedures

Item 8B. Other Information



Part III



Item 9.  Executive Officers, Promoters and Control Persons; Compliance with Section 16(b) of the

Exchange Act

Item 10.  Executive Compensation

Item 11.  Security Ownership of Certain Beneficial Owners and Management and Related Shareholder

Matters

Item 12.  Certain Relationships and Related Transactions

Item 13.  Exhibits and Reports on Form 8-K

Item 14.  Principal Accountant Fees and Services



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Cautionary Statement



This report on Form 10-KSB and the documents or information incorporated by reference herein contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, among others, the following:



·

our growth strategies

·

anticipated trends in our business;

·

our ability to make or integrate acquisitions;

·

our liquidity and ability to finance our exploration, acquisition and development strategies;

·

market conditions in the oil and gas industry

·

the timing, cost and procedure for proposed acquisitions;

·

the impact of government regulation;

·

estimates regarding future net revenues from oil and natural gas reserves and the present value thereof;

·

planned capital expenditures (including the amount and nature thereof);

·

increases in oil and gas production;

·

the number of wells we anticipate drilling in the future;

·

estimates, plans and projections relating to acquired properties;

·

the number of potential drilling locations; and

·

our financial position, business strategy and other plans and objectives for future operations.



We identify forward-looking statements by use of terms such as may, will, expect, anticipate, estimate, hope, plan, believe, predict, envision, intend, will, continue, potential, should, confident, could and similar words and expressions, although some forward-looking statements may be expressed differently. You should be aware that our actual results could differ materially from those contained in the forward-looking statements. You should consider carefully the statements under the Risk Factors section of this report and other sections of this report which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements, and the following factors:



·

the possibility that our acquisitions may involve unexpected costs;

·

the volatility in commodity prices for oil and gas;

·

the accuracy of internally estimated proved reserves;

·

the presence or recoverability of estimated oil and gas reserves;

·

the ability to replace oil and gas reserves;

·

the availability and costs of drilling rigs and other oilfield services;

·

environmental risks;

·

exploration and development risks;

·

competition;

·

the inability to realize expected value from acquisitions;

·

the ability of our management team to execute its plans to meet its goals;

·

other economic, competitive, governmental, legislative, regulatory, geopolitical and technological factors that may negatively impact our businesses, operations and pricing.



Forward-looking statements speak only as of the date of this report or the date of any document incorporated by reference in this report. Except to the extent required by applicable law or regulation, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.





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PART I



ITEM 1 - DESCRIPTION OF BUSINESS



GENERAL BUSINESS DESCRIPTION



Overview



Sonoran Energy, Inc. (the "Company", "Sonoran" and sometimes "we," "us," "our" and derivatives of such words), formerly named Showstar Online.com Inc., was incorporated on July 14, 1995 in the State of Colorado as Cerotex Holdings, Inc. The shareholders of the Company approved a change in corporate domicile to Washington State, which became effective on September 15, 2000. On June 3, 2002 the Company changed its name to Sonoran Energy, Inc. and after a new Board and Management team took over the Company in 2004, began the transition into an oil and gas exploration and production company, developing and producing crude oil and natural gas. Sonoran's portfolio during the reporting period comprised assets located in Louisiana and Texas as well as an opportunity in Jordan. Our operational focus is on property enhancement through solid technical work, well re-entries, developmental and redevelopment drilling, operating cost reduction, asset redeployment and value driven acquisitions of properties in the right circumstances.



The principal assets of the company consists of proved and unproved oil and gas properties in Louisiana, East and West Texas, along with the related oil and gas production equipment necessary to produce the properties. The Company is currently concentrating its energies on domestic projects, but has signed a production sharing agreement for the Azraq block with the Government of Jordan.





Business Strategy



We are independent oil and gas company engaged in the acquisition, development, production and exploration of oil and gas properties located primarily in North America. Our primary objective is to increase shareholder value. To accomplish this objective, our business strategy is focused on the following:



Further Exploitation of Existing Properties.We seek to add proved reserves and increase production through the use of advanced technologies, including detailed reservoir engineering analysis, drilling development wells utilizing sophisticated techniques and selectively recompleting existing wells. We also focus on reducing the operating costs associated with our properties. We believe that the properties we have acquired have significant potential and in certain cases have not been actively developed in the past.



Property Portfolio Management.We continually evaluate our property base to identify opportunities to divest non-core, higher cost or less productive properties with limited development potential. This strategy allows us to focus on a portfolio of core properties with significant potential to increase our proved reserves and production.



Pursuit of Strategic Acquisitions.We continually review opportunities to acquire producing properties, leasehold acreage and drilling prospects. We seek negotiated transactions to acquire operational control of properties that we believe have significant exploitation and exploration potential. Our strategy includes a significant focus on increasing our holdings in fields and basins in which we already own an interest.



Maintenance of Financial Flexibility.We intend to create and+ maintain substantial borrowing capacity. We believe our internally generated cash flows, our borrowing capacity and access to the capital markets will provide us with the financial flexibility to pursue additional acquisitions of producing properties and leasehold acreage and to execute our drilling and development program. Another component of our financial management strategy includes the use of commodity derivatives to secure product prices for a substantial portion of our expected production.



Strategic alignment.   We have secured through the alignment with our strategic partnership a unique ability to analyze and operate both our existing properties and future potential acquisitions. When our domestic



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production has reached a critical mass, we plan to re-evaluate the suitability of adding an exploratory and/or International component to our strategy.



We generally seek to be the operator of our assets, in order to better direct and control activities and budgets.



DESCRIPTION OF BUSINESS - OIL AND GAS OPERATIONS



EXPLORATION AND DEVELOPMENT



The oil and gas industry is highly competitive and we compete with a substantial number of other companies that have greater resources. Many of these companies explore for, produce and market oil and gas, as well as, carry on refining operations and market the resultant products on a worldwide basis. The primary areas in which we encounter substantial competition are in locating and acquiring desirable leasehold acreage for our drilling and development operations, locating and acquiring attractive producing oil and gas properties, locating and obtaining sufficient rig availability, and obtaining purchasers and transporters of the oil and gas we produce. There is also competition between oil and gas producers and other industries producing energy and fuel. Furthermore, competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the government of the United States; however, it is not possible to predict the nature of any such legislation or regulation which may ultimately be adopted or its effects upon our future operations. Such laws and regulations may, however, substantially increase the costs of exploring for, developing or producing oil and gas and may prevent or delay the commencement or continuation of a given operation. The exact effect of these risk factors cannot be accurately predicted.



OIL AND GAS PRODUCTION OPERATIONS



General



During December 2006, the Company re-located its Headquarters to Dallas Texas to ensure proximity to our operations, and improved access to experienced Oil and Gas staff and our important external service providers.



Louisiana Property



The Company has various working interests in (8) production wells and four (4) associated salt water disposal wells located in Beauregard, Livingston, Rapides and Vernon parishes in Louisiana.  Production from these wells is from the prolific Austin Chalk reservoir.  Initial reentry and clean-up work was conducted on two high-value, technically challenging wells, and substantial down-hole obstructions were cleared from the wells using intervention techniques not requiring a rig.  One of the wells was successfully brought into production. Following initial clean-out and technical evaluation of the operations, a shift in work philosophy was agreed to, and the second well, as well as, a third high impact well were tentatively scheduled for intervention using a work-over unit in the next fiscal year. A number of facilities upgrades were conducted during the year which should increase production regularity in subsequent quarters. To better align company objectives with well operations, field management was shifted from contracted services to in-house staff.  This realignment resulted in improved operational efficiency and significant cost savings in field operations. Currently 5 of our 8 wells in Louisiana are producing and we plan to have all 8 wells in production in the coming fiscal year.



East Texas Property



The JRC/Lisa Layne fields in Wood County, Texas comprise six producing wells and three water disposal wells.  Five of the producing wells are completed in the Paluxy reservoir with the remaining producer completed in the Sub-Clarksville formation.   Enhancements were made to the electrical system to provide more reliable energy to the high-power down-hole pumps, and refinements were made to the water disposal system to increase up-time and improve average production rates. Replacement equipment for water storage and disposal was designed and ordered, and change-out has been scheduled for the coming fiscal year.   The upgraded water handling and disposal facilities are projected to markedly and positively impact hydrocarbon production by providing a reliable means of disposing of associated formation water.



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The Ann McKnight Unit is located in Smith County, Texas, and has two production wells and one water injection well.  Both wells produce from the Paluxy formation.  During the year, the #101 well produced utilizing a submersible electrical pump, and the #201 well produced using a rod-pumping system before failing from a tubing failure.  A full technical review was scheduled for the #201 well, with intervention planned for the coming fiscal year.  To improve facilities reliability and to reduce the incidence of flowline leaks, the central production facility was relocated closer to the vicinity of the producing and injection wells.



Further potential is envisioned for the field through the drilling of a new well at the northern end of the field where it is believed un-drained hydrocarbons may lie.



A shift in operational philosophy was implemented, such that we now operate the East Texas properties directly, without using the previous field operations management contractor. This shift has provided cost savings as well as increased focus on production regularity.



West Texas Property



The KWB Unit is located near San Angelo, Texas and comprise approximately 3,922 acres. KWB was originally discovered by Morrow Resources in 1981. Production from the field peaked in 1983 at 1,700 BOPD and 6,400 Mcfd.  KWB is located on the western side of the eastern shelf of the Permian Basin. A series of productive sands were deposited east to west giving a gross sand section of 120 feet across KWB in 5 major members. The three upper members are the oil bearing section while the lower two sections are usually water wet. The reservoir at KWB is bounded by a stratigraphic trapping mechanism with the sand sections thinning to the east.



KWB was acquired by Sonoran in 2005 but remained inactive until this year.  Following an in-depth technical review, field re-development commenced in the last quarter of the year with the construction of new roads, construction of liquid and gas pipe-line collection systems, fabrication of a central production facility and ultimately with the successful re-completion and stimulation of five wells in the Canyon formation; production of gas, natural-gas liquids, and oil commenced.  Sonoran realized first sales from the KWB field in April of 2007.



Within the KWB Unit there are 63 production well-bores and 25 plugged well-bores. Original estimates in the Strawn reservoir of KWB yielded 27-32 MMbbls of original oil in place.  Cumulative reported oil production from the Strawn was 1.9 MMbbls of oil, or only 6.5% of the original oil in-place estimate. Although the Strawn formation was the primary formation, there has also been shallow production from Cisco and Canyon sands.



During fiscal year 2007 new leases were acquired covering 332 acres of the original KWB unit. These new leases include more productive zones and allowed for the work described below in the Cisco and Canyon sands.



An aggressive redevelopment plan is under preparation, with several further recompletions planned during the upcoming fiscal year.  The primary focus of the planned work will be on the Cisco and Canyon formations, with full Strawn evaluation to follow once a technical review is completed on that zone.  Several potential infill drilling locations have been tentatively identified, with drilling planned during the next fiscal year. Other potentially productive zones will also be analyzed and possibly tested.



A second asset is located in Reeves County, Texas, which consists of four inactive wells and approximately 880 acres.  These wells were initially completed as gas wells but are currently shut-in pending review.  A technical evaluation of these wells is planned for the following fiscal year.



Azraq Production Sharing Agreement (PSA)



The Azraq block sits on the same trend as several other productive basins in the Middle East, yet remains relatively under-explored with limited use of modern seismic, drilling and production technology. The PSA covers an area of approximately 11,250 square kilometers offering a number of exploration plays.  The agreement has been signed by the King and ratified by the National Assembly of Jordan. The company is working on an agreement with an industry partner who can work with us to fully seize the potential of these assets and allow us to focus our capital on growing our US operations.





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MARKETING OF CRUDE OIL AND NATURAL GAS



Crude oil from the Louisiana properties is sold to Texon LP under the terms of an existing contract between Sonoran Energy and Texon LP on a month to month basis.  For the year ending April 30, 2007 the average value realized for oil was $ 60.79 per barrel.



Crude oil from the East Texas properties was sold to Eastex Crude Company for most of the year based on agreements effective at the time of the purchase of the working interests in November 2004 and Plains Marketing, LP under a contract dated October 1, 2005 to November 1, 2005, and month to month thereafter. For the year ending April 30, 2007 the average value realized for oil from the East Texas properties was $ 61.90 per barrel.



Natural gas sold from the Louisiana properties is sold under the terms of the Natural Gas Sales Contract between Sonoran Energy Inc. and Cokinos Natural Gas Company effective September 1, 2005 to March 31, 2006, and month to month thereafter to September 25, 2006. The Company then sold its natural gas to Texon LP starting in October 2006 under a contract effective September 1, 2006 to September 1, 2007 and monthly thereafter. For the year ending April 30, 2007 the average value realized for the gas was $6.09 per Mcf.



Natural gas from our West Texas properties is sold to Targa field Services LP under a gas purchase agreement dated February 1, 2007.    The terms of this agreement provide for the company to receive a share of the Natural Gas Liquids extracted by Targa.  The average value realized for our gas was $7.63 per Mcf for the year ending April 30, 2007.



There were no sales of crude oil from our West Texas properties during fiscal year 2007.  The company entered into a crude oil sales contract with Texon LP effective May 1, 2007.



We plan to continue to sell our current production under the terms of the above reference contracts. However, we will also continue to monitor and review these contracts to ensure that the best value for our production is being achieved.



RISKS, COMPETITION AND INDUSTRY CONDITIONS



Oil and natural gas prices are volatile, and low prices could have a material adverse impact on our business.



Our revenues, profitability and future growth and the carrying value of our properties depend substantially on prevailing oil and gas prices. Prices also affect the amount of cash flow available for capital expenditures and our ability to borrow and raise additional capital. Lower prices may also reduce the amount of oil and gas that we can economically produce and have an adverse effect on the value of our properties. Prices for oil and gas have increased significantly and been more volatile over the past twelve months. Historically, the markets for oil and gas have been volatile, and they are likely to continue to be volatile in the future. Among the factors that can cause volatility are:



·

the domestic and foreign supply of oil and gas;

·

the ability of members of the Organization of Petroleum Exporting Countries, or OPEC, and other producing countries to agree upon and maintain oil prices and production levels;

·

political instability, armed conflict or terrorist attacks, whether or not in oil or gas producing regions;

·

the level of consumer product demand;

·

the growth of consumer product demand in emerging markets, such as China;

·

weather conditions, including hurricanes;

·

the price and availability of alternative fuels;

·

labor unrest in oil and gas producing regions;

·

the price of foreign imports; and

·

worldwide economic conditions.



These external factors and the volatile nature of the energy markets make it difficult to estimate future prices of oil and gas.



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Assets we acquire may prove to be worth less than we paid because of uncertainties in evaluating recoverable reserves and potential liabilities.



Our recent growth is due significantly to acquisitions of properties and undeveloped leaseholds. We expect that acquisitions will also contribute to our future growth. Successful acquisitions require an assessment of a number of factors, including estimates of recoverable reserves, exploration potential, future oil and gas prices, operating and capital costs and potential environmental and other liabilities. Such assessments are inexact and their accuracy is inherently uncertain. In connection with our assessments, we perform a review of the acquired properties which we believe is generally consistent with industry practices. However, such a review will not reveal all existing or potential problems. In addition, our review may not permit us to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities. We do not inspect every well. Even when we inspect a well, we do not always discover structural, subsurface and environmental problems that may exist or arise.



As a result of these factors, we may not be able to acquire oil and gas properties that contain economically recoverable reserves on acceptable terms or we may acquire reserves that become uneconomic.



Estimates of oil and gas reserves are uncertain and any material inaccuracies in these reserve estimates will materially affect the quantities and the value of our reserves.



This report on Form 10-KSB contains estimates of our proved oil and gas reserves. These estimates are based upon various assumptions, including assumptions required by the SEC relating to oil and gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The process of estimating oil and gas reserves is complex. This process requires significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir.



Actual future production, oil and gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and gas reserves will vary from those estimated. Any significant variance could materially affect the estimated quantities and the value of our reserves. Our properties may also be susceptible to hydrocarbon drainage from production by other operators on adjacent properties. In addition, we may adjust estimates of proved reserves to reflect production history, results of exploitation and development, prevailing oil and gas prices and other factors, many of which are beyond our control.



Recovery of undeveloped reserves requires significant capital expenditures and successful drilling operations. The reserve data assumes that we will make significant capital expenditures to develop our reserves. Although we have prepared estimates of these oil and gas reserves and the costs associated with development of these reserves in accordance with SEC regulations, we cannot assure you that the estimated costs or estimated reserves are accurate, that development will occur as scheduled or that the actual results will be as estimated.



We intend to fund our development, acquisition and exploitation activities in part through additional debt financing. A higher level of debt could negatively impact our financial condition, results of operations and business prospects.



As of April 30, 2007, we had approximately $12.4 million of current liabilities, including $6.9 million of a senior secured credit facility that is required to be repaid on February 28, 2008. If we incur additional debt in order to fund our development, acquisition and exploration activities or for other purposes, our level of debt, and the covenants contained in the agreements governing our debt, could have important consequences, including the following:



·

a portion of our cash flow from operations is used to pay interest on borrowings;

·

a high level of debt may impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes;

·

a leveraged financial position would make us more vulnerable to economic downturns and could limit our ability to withstand competitive pressures; and

·

any debt that we incur may be at variable rates which make us vulnerable to increases in interest rates.





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The operation of our wells may not be profitable or achieve our targeted returns.



We invest in property, including undeveloped leasehold acreage, which we believe will result in projects that will add value over time. However, we cannot guarantee that all of our prospects will result in viable projects or that we will not abandon our initial investments. Additionally, we cannot guarantee that the leasehold acreage we acquire will be profitably developed, that new wells drilled by us will be productive or that we will recover all or any portion of our investment in such leasehold acreage or wells. Drilling for oil and gas may involve unprofitable efforts, not only from dry wells but also from wells that are productive but do not produce sufficient net reserves to return a profit after deducting operating and other costs. In addition, wells that are profitable may not achieve our targeted rate of return. Our ability to achieve our target results are dependent upon the current and future market prices for oil and gas, costs associated with producing oil and gas and our ability to add reserves at an acceptable cost.



In addition, we may not be successful in implementing our business strategy of controlling and reducing our production costs in order to improve our overall return. The cost of drilling, completing and operating a well is often uncertain and cost factors can adversely affect the economics of a project. We cannot predict the cost of drilling, and we may be forced to limit, delay or cancel drilling operations as a result of a variety of factors, including:



·

unexpected drilling conditions;

·

pressure or irregularities in formations;

·

equipment failures or accidents;

·

adverse weather conditions, including hurricanes;

·

compliance with governmental requirements; and

·

shortages or delays in the availability of drilling rigs and the delivery of equipment.



Current levels of production are inadequate to support the operations of the Company and permit a profit. If we continue to be unable to generate sufficient cash flow from operations to service our debt, we may have to obtain additional financing through the issuance of debt and/or equity. We cannot be sure that any additional financing will be available to us on acceptable terms. Issuing equity securities to satisfy our financing requirements could cause substantial dilution to our existing stockholders. The level of our debt financing could also materially affect our operations.



If our revenues were to decrease due to lower oil and gas prices, decreased production or other reasons, and if we could not obtain capital through our senior revolving credit facility or otherwise, our ability to execute our development and acquisition plans, replace our reserves or maintain production levels could be greatly limited.



We depend substantially on the continued presence of key personnel for critical management decisions and industry contacts.



Our future performance will be substantially dependent on retaining key members of our existing management. The loss of the services of any of our existing executive officers or key employees for any reason could have a material adverse effect on our business, operating results, financial condition and cash flows.



The unavailability or high cost of drilling rigs, equipment, supplies, personnel and oil field services could adversely affect our ability to execute our exploration and development plans on a timely basis and within our budget.



Our industry is cyclical and, from time to time, there is a shortage of drilling rigs, equipment, supplies or qualified personnel. During these periods, the costs and delivery times of rigs, equipment and supplies are substantially greater. In addition, the demand for, and wage rates of, qualified drilling rig crews rise as the number of active rigs in service increases. As a result of increasing levels of exploration and production in response to strong prices of oil and natural gas, the demand for oilfield services has risen, and the costs of these services are increasing, while the quality of these services may suffer. If the unavailability or high cost of drilling rigs, equipment,



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supplies or qualified personnel were particularly severe in Texas and Louisiana, we could be materially and adversely affected because our operations and properties are concentrated in those areas.



The marketability of our oil and gas production depends on services and facilities that we typically do not own or control. The failure or inaccessibility of any such services or facilities could result in a curtailment of production and revenues.



The marketability of our production depends in part upon the availability, proximity and capacity of gathering systems, pipelines and processing facilities. Pursuant to interruptible or short term transportation agreements, we generally deliver gas through gathering systems and pipelines that we do not own. Under the interruptible transportation agreements, the transportation of our gas may be interrupted due to capacity constraints on the applicable system, for maintenance or repair of the system, or for other reasons as dictated by the particular agreements. If any of the pipelines or other facilities become unavailable, we would be required to find a suitable alternative to transport and process the gas, which could increase our costs and reduce the revenues we might obtain from the sale of the gas. Oil is currently trucked from our locations and is not dependent on the availability of pipelines.



Our business is highly competitive.



The oil and gas industry is highly competitive in many respects, including identification of attractive oil and gas properties for acquisition, drilling and development, securing financing for such activities and obtaining the necessary equipment and personnel to conduct such operations and activities. In seeking suitable opportunities, we compete with a number of other companies, including large oil and gas companies and other independent operators with greater financial resources, larger numbers of personnel and facilities, and, in some cases, with more expertise. There can be no assurance that we will be able to compete effectively with these entities.



Our oil and gas activities are subject to various risks which are beyond our control.



Our operations are subject to many risks and hazards incident to exploring and drilling for, producing, transporting, marketing and selling oil and gas. Although we may take precautionary measures, many of these risks and hazards are beyond our control and unavoidable under the circumstances. Many of these risks or hazards could materially and adversely affect our revenues and expenses, the ability of certain of our wells to produce oil and gas in commercial quantities, the rate of production and the economics of the development of, and our investment in the prospects in which we have or will acquire an interest. Any of these risks and hazards could materially and adversely affect our financial condition, results of operations and cash flows. Such risks and hazards include:



·

human error, accidents, labor force and other factors beyond our control that may cause personal injuries or death to persons and destruction or damage to equipment and facilities;

·

blowouts, fires, hurricanes, pollution and equipment failures that may result in damage to or destruction of wells, producing formations, production facilities and equipment;

·

unavailability of materials and equipment;

·

engineering and construction delays;

·

unanticipated transportation costs and delays;

·

unfavorable weather conditions;

·

hazards resulting from unusual or unexpected geological or environmental conditions;

·

environmental regulations and requirements;

·

accidental leakage of toxic or hazardous materials, such as petroleum liquids or drilling fluids, into the environment;

·

changes in laws and regulations, including laws and regulations applicable to oil and gas activities or markets for the oil and gas produced;

·

fluctuations in supply and demand for oil and gas causing variations of the prices we receive for our oil and gas production; and

·

the internal and political decisions of OPEC and oil and natural gas producing nations and their impact upon oil and gas prices.



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As a result of these risks, expenditures, quantities and rates of production, revenues and cash operating costs may be materially adversely affected and may differ materially from those anticipated by us.



Because the requirements imposed by laws and regulations are frequently changed, we cannot assure you that laws and regulations enacted in the future, including changes to existing laws and regulations, will not adversely affect our business. In addition, because we acquire interests in properties that have been operated in the past by others, we may be liable for environmental damage caused by the former operators.



We cannot be certain that the insurance coverage maintained by us will be adequate to cover all losses that may be sustained in connection with all oil and gas activities.



We maintain general and excess liability policies, which we consider to be reasonable and consistent with industry standards. These policies generally cover:

·

personal injury

·

bodily injury

·

third party property damage

·

directors and officers liability

·

legal defense costs

·

pollution in some cases

·

well blowouts in some cases

·

workers compensation.



There can be no assurance that this insurance coverage will be sufficient to cover every claim made against us in the future. A loss in connection with our oil and natural gas properties could have a materially adverse effect on our financial position and results of operation to the extent that the insurance coverage provided under our policies cover only a portion of any such loss.



REGULATIONS



In the United States, legislation affecting the oil and gas industry has been pervasive and is under constant review for amendment or expansion. Pursuant to such legislation, numerous federal, state and local departments and agencies have issued extensive rules and regulations binding on the oil and gas industry and its individual members, some of which carry substantial penalties for failure to comply. These laws and regulations have a significant impact on oil and gas drilling, gas processing plants and production activities, increase the cost of doing business and, consequently, affect profitability. Inasmuch as new legislation affecting the oil and gas industry is commonplace and existing laws and regulations are frequently amended or reinterpreted, Sonoran is unable to predict the future cost or impact of complying with these laws and regulations. Sonoran considers the cost of environmental protection a necessary and manageable part of its business. Sonoran has been able to plan for and comply with new environmental initiatives without materially altering its operating strategies.



Exploration and Production. Sonoran's operations are subject to various types of regulation at the federal, state and local levels. These regulations include requiring permits for the drilling wells; maintaining prevention plans; submitting notification and receiving permits relating to the presence, use and release of certain materials incidental to oil and gas operations; and regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids and materials used in connection with drilling and production activities, surface plugging and abandoning of wells and the transporting of production. Sonoran's operations are also subject to various conservation matters, including the number of wells which may be drilled in a unit, and the unitization or pooling of oil and gas properties. In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases, which may make it more difficult to develop oil and gas properties. In addition state conservation laws establish maximum rates of production oil and gas wells, generally limit the venting or flaring of gas, and impose certain requirements regarding the ratable purchase of production. The effect of these regulations is to limit the amounts of oil and gas Sonoran can produce from its wells and to limit the number of wells or the locations at which Sonoran can drill.





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Environmental. Our exploration, development, and production of oil and gas, including our operation of saltwater injection and disposal wells, are subject to various federal, state and local environmental laws and regulations. Such laws and regulations can increase the costs of planning, designing, installing and operating oil and gas wells. Our domestic activities are subject to a variety of environmental laws and regulations, including but not limited to, the Oil Pollution Act of 1990 ("OPA"), the Clean Water Act ("CWA"), the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"), the Clean Air Act ("CAA"), and the Safe Drinking Water Act ("SDWA"), as well as state regulations promulgated under comparable state statutes. We are also subject to regulations governing the handling, transportation, storage, and disposal of naturally occurring radioactive materials that are found in our oil and gas operations. Civil and criminal fines and penalties may be imposed for non-compliance with these environmental laws and regulations. Additionally, these laws and regulations require the acquisition of permits or other governmental authorizations before undertaking certain activities, limit or prohibit other activities because of protected areas or species, and impose substantial liabilities for cleanup of pollution.



Under the OPA, a release of oil into water or other areas designated by the statute could result in the company being held responsible for the costs of remediating such a release, certain OPA specified damages, and natural resource damages. The extent of that liability could be extensive, as set forth in the statute, depending on the nature of the release. A release of oil in harmful quantities or other materials into water or other specified areas could also result in the company being held responsible under the CWA for the costs of remediation, and civil and criminal fines and penalties.



CERCLA and comparable state statutes, also known as "Superfund" laws, can impose joint and several and retroactive liability, without regard to fault or the legality of the original conduct, on certain classes of persons for the release of a "hazardous substance" into the environment. In practice, cleanup costs are usually allocated among various responsible parties. Potentially liable parties include site owners or operators, past owners or operators under certain conditions, and entities that arrange for the disposal or treatment of, or transport hazardous substances found at the site. Although CERCLA, as amended, currently exempts petroleum, including but not limited to, crude oil, gas and natural gas liquids from the definition of hazardous substance, our operations may involve the use or handling of other materials that may be classified as hazardous substances under CERCLA. Furthermore, there can be no assurance that the exemption will be preserved in future amendments of the act, if any.



RCRA and comparable state and local requirements impose standards for the management, including treatment, storage, and disposal of both hazardous and non-hazardous solid wastes. We generate hazardous and non-hazardous solid waste in connection with its routine operations. From time to time, proposals have been made that would reclassify certain oil and gas wastes, including wastes generated during drilling, production and pipeline operations, as "hazardous wastes" under RCRA which would make such solid wastes subject to much more stringent handling, transportation, storage, disposal, and clean-up requirements. This development could have a significant impact on our operating costs. While state laws vary on this issue, state initiatives to further regulate oil and gas wastes could have a similar impact.



Because oil and gas exploration and production, and possibly other activities, have been conducted at some of our properties by previous owners and operators, materials from these operations remain on some of the properties and in some instances require remediation. In addition, in certain instances we have agreed to indemnify sellers of producing properties from which we have acquired reserves against certain liabilities for environmental claims associated with such properties. While we do not believe that costs to be incurred by us for compliance and remediating previously or currently owned or operated properties will be material, there can be no guarantee that such costs will not result in material expenditures.



Additionally, in the course of our routine oil and gas operations, surface spills and leaks, including casing leaks, of oil or other materials occur, and we incur costs for waste handling and environmental compliance. Moreover, we are able to control directly the operations of only those wells for which we act as the operator. Management believes that the company is in substantial compliance with applicable environmental laws and regulations.



We do not anticipate being required in the near future to expend amounts that are material in relation to our total capital expenditures program by reason of environmental laws and regulations, but inasmuch as such laws and



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regulations are frequently changed, we are unable to predict the ultimate cost of compliance. There can be no assurance that more stringent laws and regulations protecting the environment will not be adopted or that we will not otherwise incur material expenses in connection with environmental laws and regulations in the future.



Occupational Health and Safety. Sonoran is also subject to laws and regulations concerning occupational safety and health. Due to the continued changes in these laws and regulations, and the judicial construction of many of them, Sonoran is unable to predict with any reasonable degree of certainty its future costs of complying with these laws and regulations. Sonoran considers the cost of safety and health compliance a necessary and manageable part of its business. Sonoran has been able to plan for and comply with new initiatives without materially altering its operating strategies.



Sonoran is subject to certain laws and regulations relating to environmental remediation activities associated with past operations, such as the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and similar state statutes. In response to liabilities associated with these activities, accruals have been established when reasonable estimates are possible. Such accruals primarily include estimated costs associated with remediation. Sonoran has used discounting to present value in determining its accrued liabilities for environmental remediation or well closure, but no material claims for possible recovery from third party insurers or other parties related to environmental costs have been recognized in Sonoran's financial statements. Sonoran adjusts the accruals when new remediation responsibilities are discovered and probable costs become estimable, or when current remediation estimates must be adjusted to reflect new information.



TAXATION



The operations of the Company, as is the case in the petroleum industry generally, are significantly affected by federal tax laws. Federal, as well as state, tax laws have many provisions applicable to corporations which could affect the future tax liability of the Company.



ENVIRONMENTAL



The Company's activities are subject to existing federal and state laws and regulations governing environmental quality and pollution control. These laws may require the acquisition of permits relating to certain ongoing operations, for drilling, emissions, waste water disposal and other air and water quality controls. In view of the uncertainty and unpredictability of environmental statutes and regulations, the Company cannot ensure that such laws and regulations will not materially and adversely affect the business of the Company. The Company does not anticipate any material effect on its capital expenditures or earnings as the result of governmental regulations, enacted or proposed, concerning environmental protection or the discharge of material into the environment.



COMMITMENTS AND CONTINGENCIES



Sonoran is liable for future restoration and abandonment costs associated with its oil and gas properties. These costs include future site restoration, post closure and other environmental exit costs. The estimated costs of future restoration and well abandonment are reviewed annually for each well and we are recognizing the costs through annual charges to expense. State regulations require operators to post bonds that assure that well sites will be properly plugged and abandoned. Each state in which Sonoran operates requires a security bond varying in value from state to state and depending on the number of wells that Sonoran operates. Management views this as a necessary requirement for operations within each state and does not believe that these costs will have a material adverse effect on its financial position as a result of this requirement.



OTHER



The Company had 14 employees as of April 30, 2007 based in Louisiana and Texas. In addition, Sonoran currently has long term contracts for operational and other support with qualified personal within the areas of operations. The Company may also enter into additional contracts for field level personnel (i.e., pumpers, rig crews, roustabouts and equipment operators) that perform basic daily activities associated with producing oil and gas. Daily operations include inspections of surface facilities and equipment, gauging, reporting and shipping oil, and routine maintenance and repair activities on wells, production facilities and equipment. In the event



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operations are controlled by a Joint Venture agreement and or operated by other parties, the operator nominated within the Joint Venture agreement will contract necessary field personnel.



All of the Company's revenues during 2007 were derived from domestic sources.



The Company does not have any patents or trademarks, and it does not believe that its business or operations are dependent upon owning any patents or trademarks.



ITEM 2 - DESCRIPTION OF PROPERTY



(a) DESCRIPTION OF PROPERTY



The principal assets of the Company consist of proved and unproved oil and gas properties along with oil and gas production related equipment acquired as part of the leases. The properties are described above in the Oil and gas production operations section in this report.



b) RESERVES, ACREAGE AND SALES PRICE



Reserve data for April 30, 2007 was prepared by Haas Petroleum Engineering Services, Inc., Independent Petroleum Engineers. Information concerning the change in volumes and the present value of future net revenue from these proved reserves is shown in Note 14 of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-KSB .



East Texas, KWB and Louisiana properties have proved net reserves as of April 30,

|                            |                  |                  |               |                  |                  |              
|--------------------------- | ---------------- | ---------------- | ------------- | ---------------- | ---------------- | -------------
|                            |                  | 2007             |               |                  | 2006             |              
|                            | Crude oil (BBLS) | Natural gas(MCF) | NPV 10
	($ M) | Crude oil (BBLS) | Natural gas(MCF) | NPV 10
	($ M)
|                            |                  |                  |               |                  |                  |              
|Proved Producing (PDP)      | 122,930          | 881,260          | $    6,264    | 279,850          | 110,610          | $    6,315   
|Proved Non-Producing (PDNP) | 172,480          | 3,006,880        | 16,680        | 197,990          | 468,630          | 8,623        
|Proved Undeveloped (PUD)    | 478,570          | 1,938,640        | 22,554        | 491,480          | 1,601,510        | 20,945       
|Total Proved                | 773,980          | 5,826,780        | $  45,498     | 969,320          | 2,180,750        | $ 35,883     



(1)  The following table shows our reconciliation of our PV-10 to our standardized measure of discounted future net cash flows (the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles, or GAAP). PV-10 is our estimate of the present value of future net revenues from estimated proved gas reserves after deducting estimated production and ad valorem taxes, future capital costs and operating expenses, but before deducting any estimates of future income taxes. The estimated future net revenues are discounted at an annual rate of 10% to determine their present value. We believe PV-10 to be an important measure for evaluating the relative significance of our gas and oil properties and that the presentation of the non-GAAP financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating gas and oil companies. Because there are many unique factors that can impact an individual company when estimating the amount of future income taxes to be paid, we believe the use of a pre-tax measure is valuable for evaluating our company. We believe that most other companies in the oil and gas industry calculate PV-10 on the same basis.



|                                                         |               |              
|-------------------------------------------------------- | ------------- | -------------
|                                                         | April 30,2007 | April 30,2006
|                                                         | ( $ M )       | ( $ M )      
|PV-10                                                    | $  45,498     | $ 35,883     
|Less: Undiscounted income taxes                          | (11,257)      | (13,853)     
|Plus: 10% discount factor                                | 5,554         | 4,188        
|Discounted income taxes                                  | (5,703)       | (9,665)      
|Standardized measure of discounted future net cash flows | $    39,795   | $ 26,218     
|                                                         |               |              

PV-10 should not be considered as an alternative to the standardized measure of discounted future net cash flows as computed under GAAP.



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The Company cautions that there are many inherent uncertainties in estimating proved reserve quantities and in projecting future production rates and the timing of development expenditures. Accordingly, these estimates are likely to change as future information becomes available, and these changes could be material.



The Company's estimated future net recoverable oil and gas reserves, noted above, have not been filed with any other Federal authority or agency.



Sonoran's
net share of the oil and gas wells and acreage after royalty and other working
interests for the past two years ending April 30, were as follows:

|                 |        |        |        |        |  | 
|---------------- | ------ | ------ | ------ | ------ |  | 
|                 | 2007   | 2006  
|                 | Gross  | Net    | Gross  | Net   
|Productive wells |        |        |        |       
|Oil              | 15     | 13     | 14     | 13    
|Gas              | 6      | 6      | 0      | 0     
|                 |        |        |        |       
|Acreage          |        |        |        |       
|Oil -developed   | 19,202 | 18,242 | 12,714 | 12,082
|-undeveloped     | 2,579  | 2,579  | 3,922  | 3,922 
|                 | 21,781 | 20,821 | 16,636 | 16,004
|                 |        |        |        |       
|Gas developed   | 240    | 240    | 0      | 0     
|-undeveloped     | 880    | 880    | 880    | 880   
|                 | 1,120  | 1,120  | 880    | 880   



Sonoran did not participate in the drilling of any new wells on any property that they had a working interest in during fiscal 2007 however several re-completions were undertaken.



Sonoran's average sales prices for April 2007 per barrel or per MCF of crude oil and natural gas, respectively, and production costs per equivalent barrel (gas production is converted to equivalent barrels at the rate of 6 MCF per barrel, representing the estimated relative energy content of gas to oil) for the past three years ending April 30, were as follows:

|                            |          |        
|--------------------------- | -------- | -------
|                            | 2007     | 2006   
|Sales price:                |          |        
|Crude oil, per Bbl          | $  61.76 | $ 59.11
|Natural gas, per Mcf        | 6.23     | 7.89   
|Average sales price per BOE | 57.32    | 58.17  
|Production costs per BOE    | 49.31    | 47.76  



The statistics for 2006 are for the East Texas property and the Louisiana properties, as there was no production on the KWB property. A large proportion of 2006 operating costs relate to operations in Louisiana where we started work in bringing high pressure wells into production in late November 2005.



The high level of operating costs are not indicative of expected values as we move forward with our operations as they have been inflated by increased commodity costs, electricity for our submersible pumps in East Texas and



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the start up nature of our assets in Louisiana. Because these assets had not been in production for a number of years they required a high level of intervention and supervision.  As we move forward and complete our work program, then the need for the high level of intervention and supervision on these wells will dramatically reduce bringing our operating costs into line with expected values for the area. Production costs exclude workover costs.



ITEM 3 - LEGAL PROCEEDINGS



Longbow, LLC v. Sonoran Energy, Inc. - Superior Court of California, County of Kern



In March, 2004, a complaint was filed by Longbow, LLC against the Company alleging that Sonoran breached the agreement to purchase Longbow's interest in the Emjayco Glide #33 Property, the Keystone-Deer Creek Property and the Deer Creek-Merzonian Property.  Subsequently, Sonoran had entered into an agreement to sell those properties to a third party, Harvest Worldwide, LLC. The case went to trial in September, 2006 and a settlement was reached out of court during the trial. Pursuant to the settlement, Longbow acquired the properties and dropped all other claims.



Sonoran Energy, Inc v. Mark Roy Anderson et al



Mark Anderson was sued, individually and in the form of his corporate alter egos, by Sonoran (Los Angeles County Superior Court Case No. BC327099), seeking rescission of all shares issued to these entities, with additional compensation due for various timing failures and legal exposures resulting from Anderson's various shortcomings. Anderson cross-complained against Sonoran, alleging certain commissions earned for projects Sonoran has undertaken that occurred during the pendency of his (Camden Holdings) consulting agreement . On June 5, 2006 the Company entered in a tentative settlement of their court case wherein Mr. Anderson has agreed to transfer control of the shares in controversy to settle debts that were to be originally assumed by Anderson, and retire obligations associated with project developments underway at the time of the original dealings.  The settlement was also dependent on the outcome of a related case which included properties and litigants located in Bakersfield, California (see above), concerning disposition of three properties tentatively sold by the Company to affiliates of Anderson in January 2004. The Bakersfield case was settled out of court in September 2006 clearing the way for the original Anderson settlement to be completed, although claims have been asserted by third-party creditors of Anderson and his related entities which are impairing the completion of the various settlement terms. The settlement details and cost are shown in Note 6 in the Notes to the Financial Statements included in this Annual Report on Form 10 K-SB.



Wells Land and Cattle Co., Inc., et.al. v. Sonoran Energy, Inc.



On or about May 18, 2007 Wells Land and Cattle Co., Inc., et.al. filed a lawsuit alleging that Sonoran was illegally disposing of saltwater into a saltwater disposal well on their property, that Sonoran routinely trespasses on its land to reach another well which is not located on plaintiffs land, that Sonoran spilled saltwater onto Plaintiffs land, and that an oil well lease covering one well has expired due to lack of production.  Plaintiff claims that damages exceed $1,000,000 and asks the court for a permanent injunction against Sonoran from trespassing on Plaintiffs property for the purpose of reaching the disposal well that is not on its property.  A trial date has not been set.  However, Sonoran intends to vigorously defend its actions in this matter and anticipates that the matter will be eventually settled for an immaterial amount.



Korker Diversified Holdings Inc. v. Savings Plus Internet and Sonoran Energy, Inc.



During August 2000, the Company was named as a defendant in a lawsuit filed in British Columbia related to Savings Pluss failure to repay a $35,000 loan that it received from Korker.  There has been relatively little action on this item until October 2006, when Korker filed a notice of intent to proceed.  There has been no activity since that filing.  The Company believes that this claim is completely without merit and plans to vigorously defend itself against any actions.



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ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



The company held its annual general meeting on May 16, 2007 at which time the shareholders were asked to elect six members to the Company's Board of Directors to serve a term as outlined in the bylaws until their successors has been elected and qualified, or until their earlier resignation or removal.



The shareholders, in a majority vote, elected the six members to the Board.



PART II



ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



(a) PRICE RANGE OF COMMON SHARES



The common stock of Sonoran is traded on the OTC Bulletin Board under the symbol "SNRN". The following are high and low bid prices for each quarter of 2007 and 2006, and reflect inter-dealer prices without retail markup, markdown or commission.



|                 |          |        
|---------------- | -------- | -------
|                 |          |        
|QUARTER ENDING   | HIGH BID | LOW BID
|July 31, 2005    | $0.70    | $0.69  
|October 31, 2005 | $1.15    | $0.52  
|January 31, 2006 | $0.90    | $0.54  
|April 30, 2006   | $0.59    | $0.35  
|July 31, 2006    | $0.51    | $0.30  
|October 31, 2006 | $0.34    | $0.13  
|January 31, 2007 | $0.27    | $0.11  
|April 30, 2007   | $0.19    | $0.11  
|July 31, 2007    | $0.45    | $0.13  



The Company has paid one dividend on its common shares in the past five years. In July 2003, the Company announced an 8% Unit dividend and warrant (one warrant for every 10 shares held) payable August 22, 2003 to shareholders of record on July 25, 2003. The warrants expired on July 25, 2005 and the exercise period was not extended.



We have never paid cash dividends on our common stock. We intend to retain earnings for use in the operation and expansion of our business and therefore do not anticipate declaring cash dividends on our common stock in the foreseeable future. Any future determination to pay dividends on common stock will be at the discretion of the board of directors and will be dependent upon then existing conditions, including our prospects, debt structure, and such other factors, as the board of directors deems relevant.



Approximately 753 shareholders of record as of April 30, 2007 held our common stock. In many instances, a registered shareholder is a broker or other entity holding shares in street name for one or more customers who beneficially own the shares.



ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Forward-Looking Statements

The information in this report on Form 10-KSB contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a safe harbor for forward-looking



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statements to encourage companies to provide prospective information about themselves provided they identify these statements as forward looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. Forward-looking statements reflect managements current expectations and are inherently uncertain. Our actual results may differ significantly from managements expectations as a result of many factors, including, but not limited to, the volatility in prices for crude oil and natural gas, interest rates, estimates of reserves,drilling risks, geological risks, transportation restrictions, the timing of acquisitions, product demand, market competition, interruption in production, our ability to obtain additional capital, and the success of our development, marketing and operational activities.

You should read the following discussion and analysis in conjunction with the consolidated financial statements of Sonoran Energy, Inc. and subsidiaries and notes thereto, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of management.

Plan of Operation

We are an independent oil and gas company engaged in the acquisition, development, production and exploitation of oil and gas properties.  Our current focus is on properties located in North America. When domestic production reaches a critical mass we will re-evaluate the suitability of adding an exploratory and international component to our strategy.  Our primary objective is to increase shareholder value. To accomplish this objective, our business strategy is currently focused on further exploitation of existing properties.We seek to add proved reserves and increase production through the use of advanced technologies, including detailed reservoir engineering analysis, drilling development wells utilizing sophisticated techniques and selectively re-completing existing wells. We also focus on reducing the per unit operating costs associated with our properties. We believe that the properties we have acquired have significant potential and in certain cases have not been properly exploited in the past.  We will also continue to look for opportunities, both internally and externally, to grow the company into a more substantial independent oil and gas company.

CRITICAL ACCOUNTING POLICIES



Use of Estimates



Under generally accepted accounting principles management is required to make use of estimates and assumptions that could affect the reported amounts on the financial statements and in disclosures in the notes to the financial statements at the date of financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.



Oil and Gas Producing Activity



The accounting for, and disclosure of, oil and natural gas producing activities requires that the Company choose between GAAP alternatives and that we make judgments regarding estimates of future uncertainties.



Sonoran Energy uses the full cost method of accounting, which requires capitalizing all acquisition, exploration, exploitation and development costs. When costs relating to unproved properties are incurred, they are capitalized in Unproved Properties. When costs are expended in drilling an exploratory well, those costs would initially be capitalized in Wells-In-Progress. When the work on an exploration well is finished, all costs relating to it, including those in Unproved Properties and Wells in Progress, are transferred to the Full Cost Pool. When costs are expended in drilling a development well, those costs are immediately added to the Full Cost Pool.



The Company reviews its unproved oil and natural gas properties periodically. While they still have economic value as unproved properties, these costs remain in unproved properties. When unproved properties become proved by virtue of having proved reserves discovered on them, then the cost associated with them is transferred to the full cost pool. If an unproved property becomes worthless, all cost associated with it is also transferred into the full cost pool. Unproved Properties are not subject to depletion.



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Depletion is calculated using the unit-of-production method. Under this method, the sum of the full cost pool and all estimated future development costs are divided by the total amount of Proved Reserves. This rate is applied to our total production for the period, and the appropriate expense is recorded. We capitalize the portion of general and administrative costs that is attributable to our acquisition, exploration, exploitation and development activities.



At the end of each quarterly period, the unamortized cost of proved oil and natural gas properties, net of related deferred income taxes, is limited to the sum of the estimated future net revenues from proved properties using current period-end prices discounted at 10%, adjusted for related income tax effects (ceiling test). When computing our full cost ceiling limitation, we evaluate the limitation at the end of each reporting period date. In the event our capitalized costs exceed the ceiling limitation at the end of the reporting date, we subsequently evaluate the limitation for price changes that occur after the balance sheet to assess impairment as permitted by Staff Accounting Bulletin Topic 12Oil and Gas Producing Activities.



The quarterly calculation of the ceiling test is based upon estimates of Proved Reserves. There are numerous uncertainties inherent in estimating quantities of Proved Reserves, in projecting the future rates of production and in the timing of development activities. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserve estimates are always different from the quantities of oil and natural gas that are ultimately recovered.



In September 2004, the SEC released SAB No. 106 concerning the application of SFAS No. 143 Accounting for Asset Retirement Obligations, or SFAS No. 143, by oil and natural gas producing companies following the full cost method of accounting. In SAB No. 106, the SEC addressed the impact of SFAS No. 143 on the ceiling test calculation and on the calculation of depreciation, depletion and amortization. SAB No. 106 became effective for us on May 1, 2006 and has not had a significant impact on our ceiling test calculation. Also, as a result of SAB No. 106, we now include the estimated asset retirement obligation that will result from future development activity in our calculation of depreciation, depletion and amortization. This change has not had a significant impact on our depreciation, depletion and amortization expense.

Asset
Retirement Obligations

We estimate
asset retirement obligations based on a combination of internal engineers'
estimates and third party quotes for plugging and abandonment costs on our oil
and gas properties.  Key inputs to the calculation include our estimate of
inflation, which we base on producer price index for oil and gas field services,
a discount rate based on our creditworthiness, and our estimate of the lives of
the related properties.



Income Taxes



Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and tax basis of assets and liabilities for financial and income tax reporting.  The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future income taxes.



LIQUIDITY AND CAPITAL RESOURCES



The Company had cash and cash equivalents of $.7 million at April 30, 2007 for a decrease of $4.1 million when compared to April 30, 2006. The components of the changes in cash for 2007 are more fully described in the Statements of Cash Flows included in Item 7 of this Form 10-KSB. Adequate funds were available to carry out all cash calls the Company chose to participate in.



On December 4, 2006, the Company closed on a Credit Agreement (the "Agreement") with NGPC Asset Holdings, LP ("NGPC"), the Administrative Agent for certain institutional investors.  Pursuant to the terms of the Agreement, NGPC has agreed to give the Company access to a $12 million reserve-based debt facility backed by NGP Capital Resources Company.  The Company gained immediate access to $7 million of the debt facility.  The Company used the initial $7 Million proceeds from the debt facility (1) to finance trade payables, (2) to repay indebtedness of the Company to Cornell Capital Partners, L.P. existing as of the date of the Agreement, (3) to finance certain acquisitions, (4) to conduct other activities on the Company's properties as described in the Agreement, (5) to enter into Hedge Agreements as may be required from time to time by NGPC, and (6) for working capital purposes in accordance with the terms of the Agreement.





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On June 25, 2007, NGPC completed a collateral value redetermination, which increased the funds available under the Agreement to $10,000,000 subject to obtaining $2,000,000 of additional equity and substantial completion of updated title opinions on certain properties in Louisiana and West Texas.  The company obtained the required equity during June and expects to complete the title work during August so that funds will be available in September. The Company believes that the equity obtained subsequent to year end and the additional funding from NGPC will provide sufficient funds to stabilize production and complete workovers on certain key assets. These activities should move the companys production level to the point where cash flow from operations will cover current operating expenses and provide partial funding for its development program.   The company believes that it will be able to obtain additional funding as needed to continue to meet the anticipated liquidity and capital resource needs of the Company for the fiscal year ending April 30, 2008



The Company is not a party to off-balance sheet arrangements and does not engage in trading activities involving non-exchange traded contracts. In addition, the Company has no financial guarantees, debt or lease agreements or other arrangements that could trigger a requirement for an early payment or that could change the value of the Company's assets. Management continues to examine various alternatives for increasing capital resources including, among other things, participation with industry and/or private partners and specific rework of existing properties to enhance production and expansion of its sales of crude oil and natural gas.



ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS



Results of Operations for the Fiscal Year Ended April 30, 2007 compared to the Fiscal Year Ended April 30, 2006



REVENUES



Revenue increased to $2,512,037 for the year ended April 30, 2007 from the $1,938,234 for the year ended April 30, 2006 due primarily to increased production from our Louisiana properties.



|                            |         |        
|--------------------------- | ------- | -------
|                            | 2007    | 2006   
|                            |         |        
|Oil Bbls                   | 29,050  | 24,376 
|Gas  Mcf                   | 43,493  | 12,739 
|BOE                         | 36,298  | 26,499 
|                            |         |        
|Oil Revenue ($M)           | 1,782   | 1,441  
|Gas  Revenue ($M)          | 319     | 100    
|Total revenue               | 2,101   | 1,541  
|                            |         |        
|Oil  Price per Bbl         | $ 61.35 | $ 59.11
|Gas Mcf per Mcf            | 7.33    | 7.89   
|Average sales price per BOE | 57.88   | 58.15  
|                            |         |        
|LOE/BOE                     | 49.31   | 47.76  





Scottsdale Oil Field Services in 2007 added $411,192 of consulting revenue for the year ended April 30, 2007 compared to $396,890 for the year ended April 30, 2006.  The last of the consulting contracts ended in the last quarter of this fiscal year and the Company has not actively sought any further contracts.



OIL AND GAS PRODUCTION COSTS



Production costs increased to $1,789,825 for the year ended April 30, 2007 as compared to $1,265,718 for the year ended April 30, 2006.  The increase in cost is almost entirely attributed to the Louisiana operations which represent 86% of the total increase.  The addition of the Strickland 17 #1, which was not producing in 2006,



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accounted for $124,762 of the increase. Also included is an increase of $97,107 in workover expense from $41,110 for the year ended April 30, 2006 to $138,218 for the year ended April 30, 2007 related to the repair and maintenance of the saltwater handling system in East Texas. Continued high operating costs for our Louisiana properties during the year prompted a shift in operating philosophy, whereby we discontinued the use of a contract operator and hired employees to handle field operations.   We also discontinued the use of certain rental equipment.  The company is vigorously disputing the validity of certain charges by the former field operator and has withheld payment on a significant portion of these expenses. Projected annualized savings on Louisiana properties attributable to the conversion from contact operator control to company employees is $431,500 based on current expenses compared to average operating cost prior to the conversion.



PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION



The provision for depletion, depreciation and amortization was $611,553 for the year ended April 30, 2007 compared to $245,444 for April 30, 2006.   During this fiscal year the Company recorded a $16.2 million increase in proved properties plus increased production resulted in an increase in depletion expense of $300,000. The increase in expense also reflects the addition to fixed assets.



IMPAIRMENT AND LEGAL SETTLEMENT EXPENSE



Impairment of goodwill:



During December 2006, we became aware that SOSLs business with outside customers would cease sometime during 2007.   As there is no future expected return to the levels at purchase date, the Company recorded an impairment charge on the Goodwill of the total value of $394,585 which is shown on the income statement.



Legal Settlement expense:



The net amount of obligations relieved through the legal settlements that took place in June and September 2006, plus the value of our obligations incurred under those settlements, less costs we have incurred through April 30, 2007 has been recorded on our consolidated statements of operations for the year ended April 30, 2007 under litigation settlement expense, as follows:



Costs incurred in settlement of litigation

$

879,366

Liabilities relieved in settlements

(782,522)

Liabilities incurred in settlements

840,542

Total

$

937,386





GENERAL AND ADMINISTRATIVE EXPENSES



General and administrative expenses decreased $3.5 million for the year ended April 30, 2007, when compared to the same period for 2006. The primary reasons for the decreases were a reduction in stock based compensation of $ 3,718,000, salaries and wages of $436,000 and consulting fees of $342,500.  The decreases were partially offset by increased non-recurring legal fees of $550,000 for the two court cases settled in 2006, accounting and auditing fees of $160,000 and relocation expense of $100,000.



OTHER INCOME (EXPENSE)



Interest expense of $1,344,007
in the year ended April 30, 2007 increased $623,195 when compared to $558,621 incurred in the year ended April 30, 2006.



The Company increased its interest bearing debt by $6.3 million during the year ended April 30, 2007 through the issuance of $1.1 million of new convertible debt plus entering into a new financing for $6.9 million offset by the repayment of $1.7 million of old convertible debt.  The early payout of the Cornell Financing resulted in an additional charge to interest of $154,000 that would have been amortized over the life of the Cornell loan.



21

---







The new financing carried fees and set-up costs totaling $675,939 that are being amortized over the 15 month term of the loan resulting in a charge to interest of $225,313.  In addition, the new financing carried warrants that were valued at $318,563 that are being amortized over the 15 month term of the loan resulting in a charge to interest of $106,185.The difference between the average monthly interest costs of the two loans added an additional $261,000 to expense this year due to the higher borrowed amount.



RECENT ACCOUNTING PRONOUNCEMENTS



In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment. SFAS No. 123(R) revises SFAS No. 123, Accounting for Stock-Based Compensation, and focuses on accounting for share-based payments for services provided by employee to employer. The statement requires companies to expense the fair value of employee stock options and other equity-based compensation at the grant date. The statement does not require a certain type of valuation model, and either a binomial or Black-Scholes model may be used.  The Company adopted this SFAS 123(R) beginning May 1, 2006 and began using the Black Schole model. the use of the model affected the valuation the Company put on the stock based compensation and did not material impact the financial reporting.

On July 13, 2006, the FASB released FIN 48, Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement 109.  FIN 48 requires companies to evaluate and disclose material uncertain tax positions it has taken with various taxing jurisdictions.  We are currently reviewing FIN 48 and are unable to determine the effect, if any, that FIN 48 will have to our operating results, financial position, or future cash flows.



22

---





ITEM 7 - FINANCIAL STATEMENTS







SONORAN ENERGY, INC. AND SUBSIDIARIES

Index to Consolidated Financial Statements



|                                                                                                      |     
|----------------------------------------------------------------------------------------------------- | ----
|                                                                                                      |     
|                                                                                                      | Page
|                                                                                                      |     
|Reports of Independent Registered Public Accounting Firms                                             | F-2 
|                                                                                                      |     
|Consolidated Balance Sheet as of April 30, 2007                                                       | F-3 
|                                                                                                      |     
|Consolidated Statements of Operations for the years ended April 30, 2007 and 2006                     | F-4 
|                                                                                                      |     
|Consolidated Statement of Changes in Shareholders' Equity for the years ended April 30, 2007 and 2006 | F-5 
|                                                                                                      |     
|Consolidated Statements of Cash Flows for the years ended April 30, 2007 and 2006                     | F-6 
|                                                                                                      |     
|Notes to Consolidated Financial Statements                                                            | F-7 
|                                                                                                      |     









F-1

---



Report of Independent Registered Public Accounting Firm



To the Board of Directors

Sonoran Energy, Inc.

Dallas, Texas



We have audited the consolidated balance sheet of Sonoran Energy, Inc. and subsidiaries (the Company) as of April 30, 2007, and the related consolidated statement of operations, changes in shareholders equity and cash flows for the year then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sonoran Energy, Inc. and subsidiaries as of April 30, 2007 and the results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.



Hein & Associates LLP

Dallas, Texas

August 13, 2007





F-2

---



Report of Independent Registered Public Accounting Firm



To the Board of Directors

Sonoran Energy, Inc.

Dallas, Texas



To the Board of Directors and Shareholders

Sonoran Energy, Inc.



We have audited the accompanying consolidated statements of operations, changes in shareholders' equity/deficit, and cash flows of Sonoran Energy, Inc. and its subsidiaries for the year ended April 30, 2006.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Sonoran Energy, Inc. and its subsidiaries for the year ended April 30, 2006 in conformity with accounting principles generally accepted in the United States of America.







/s/ Epstein, Weber & Conover, PLC

Scottsdale, Arizona

July 28, 2006







F-2a

---







SONORAN ENERGY, INC. AND SUBSIDIARIES



Consolidated Balance Sheet

April 30, 2007



|                                                                                                                    |                 
|------------------------------------------------------------------------------------------------------------------- | ----------------
|                                                                                                                    |                 
|Assets                                                                                                              |                 
|Current assets:                                                                                                     |                 
|Cash and cash equivalents                                                                                           | $        703,508
|Accounts receivable, net of allowance of $40,728                                                                    | 183,650         
|Materials inventory                                                                                                 | 41,376          
|Prepaid and other current assets                                                                                    | 467,711         
|Total current assets                                                                                                | 1,396,245       
|                                                                                                                    |                 
|Oil and gas properties  full cost method                                                                           |                 
|Proved, net of accumulated depletion and amortization of $769,582                                                   | 19,698,085      
|Unproved                                                                                                            | 11,878,475      
|Fixed assets, net of accumulated depreciation of $107,031                                                           | 270,973         
|Total capital assets                                                                                                | 31,847,533      
|                                                                                                                    |                 
|Other assets                                                                                                        |                 
|Certificate of deposit                                                                                              | 50,000          
|Oil and gas put options                                                                                             | 124,800         
|Loan fees                                                                                                           | 584,895         
|Intangible assets, net of accumulated amortization of $42,000                                                       | 168,000         
|Total other assets                                                                                                  | 927,695         
|                                                                                                                    | $    34,171,473 
|Liabilities and Shareholders Equity/(Deficit)                                                                      |                 
|Current liabilities:                                                                                                |                 
|Accounts payable                                                                                                    | $      3,334,751
|Accrued liabilities                                                                                                 | 1,168,704       
|Notes payable-Legal settlement                                                                                      | 840,542         
|Senior secured credit facility, net of discount of $212,377                                                         | 6,731,476       
|Notes payable, current portion                                                                                      | 387,150         
|Total current liabilities                                                                                           | 12,462,623      
|                                                                                                                    |                 
|Long-term liabilities:                                                                                              |                 
|Deferred rent                                                                                                       | 37,369          
|Convertible debentures, net of discount of $101,529 (Note 10)                                                       | 984,971         
|Notes payable, net of current portion                                                                               | 161,716         
|Asset retirement obligation                                                                                         | 1,427,570       
|                                                                                                                    | 15,074,249      
|                                                                                                                    |                 
|Commitments and contingencies                                                                                       | -               
|                                                                                                                    |                 
|Shareholders equity/(deficit)                                                                                      |                 
|Series A convertible preferred stock, no par value, 25,000,000 shares authorized, 0 shares issued and outstanding | -               
|Common stock, no par value, 250,000,000 shares authorized                                                           |                 
|129,573,150 issued and outstanding                                                                                  | 63,332,827      
|Paid in capital                                                                                                     | 4,020,139       
|Accumulated deficit                                                                                                 | (48,255,742)    
|Total shareholders equity                                                                                          | 19,097,224      
|                                                                                                                    | $34,171,473     



See accompanying notes to consolidated financial statement



F-3

---





SONORAN ENERGY, INC. AND SUBSIDIARIES



Consolidated Statements of Operations







|                                                      |                               |                 
|----------------------------------------------------- | ----------------------------- | ----------------
|                                                      | For the Years Ended April 30,
|                                                      | 2007                          | 2006            
|                                                      |                               |                 
|Revenue:                                              |                               |                 
|Oil and gas sales                                     | $      2,100,845              | $      1,541,344
|Other                                                 | 411,192                       | 396,890         
|Total revenue                                         | 2,512,037                     | 1,938,234       
|                                                      |                               |                 
|Expenses:                                             |                               |                 
|Oil and gas production costs                          | 1,789,825                     | 1,265,718       
|Ad valorem and other taxes                            | 222,634                       | 209,791         
|Accretion of discount on asset retirement obligations | 67,842                        | 72,326          
|Depletion, depreciation and amortization              | 611,553                       | 245,444         
|Impairment of goodwill                                | 394,585                       | -               
|Legal settlement expense                              | 937,386                       | -               
|General and administrative expense                    | 5,865,156                     | 9,406,838       
|                                                      |                               |                 
|Total expenses                                        | 9,888,981                     | 11,200,117      
|                                                      |                               |                 
|Operating loss                                        | (7,376,944)                   | (9,261,883)     
|                                                      |                               |                 
|Other
	Expense                                        |                               |                 
|Other                                                 | (341,762)                     | (309,134)       
|Interest expense                                      | (1,344,007)                   | (558,621)       
|Total other expense                                   | (1,685,769)                   | (867,755)       
|                                                      |                               |                 
|Net loss                                              | $ (9,062,713)                 | $(10,129,638)   
|                                                      |                               |                 
|                                                      |                               |                 
|Net loss per common share:                            |                               |                 
|Basic and diluted                                     | $    (0.09)                   | $      (0.17)   
|                                                      |                               |                 
|Weighted average common shares outstanding:           |                               |                 
|Basic and diluted                                     | 98,456,954                    | 61,208,887      
|                                                      |                               |                 
|                                                      |                               |                 



See accompanying notes to consolidated financial statements



F-4

---





SONORAN ENERGY, INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Shareholders Equity/ (Deficit)

For the Years Ended April 30, 2006 and 2007



Series A

Convertible

Additional



Preferred Stock               Common Stock            Paid In     Accumulated

Shares         Amount           Shares           Amount         Capital             Deficit                Total

|                                                        |             |             |             |             |            |               |             
|------------------------------------------------------- | ----------- | ----------- | ----------- | ----------- | ---------- | ------------- | ------------
|                                                        |             |             |             |             |            |               |             
|                                                        |             |             |             |             |            |               |             
|                                                        |             |             |             |             |            |               |             
|                                                        |             |             |             |             |            |               |             
|Balance at April 30, 2005                               | 1,000,000   | $1,950,000  | 31,372,389  | $24,014,930 | $1,430,887 | $(29,063,391) | $(1,667,574)
|                                                        |             |             |             |             |            |               |             
|Common stock sales                                      | -           | -           | 15,296,179  | 9,603,991   | -          | -             | 9,603,991   
|Exercised stock warrants                                | -           | -           | 50          | 50          | -          | -             | 50          
|Common stock issued for conversion of preferred shares  | (1,000,000) | (1,950,000) | 2,000,000   | 1,950,000   |            |               | -           
|Common stock issued to officers for compensation        | -           | -           | 4,752,120   | 2,423,581   | -          | -             | 2,423,581   
|Common stock issued to Directors for services           | -           | -           | 1,549,998   | 877,999     | -          | -             | 877,999     
|Common stock issued in exchange for office rent         | -           | -           | 320,000     | 128,000     | -          | -             | 128,000     
|Common stock issued in exchange for consulting          | -           | -           | 1,382,691   | 725,000     | -          | -             | 725,000     
|Common stock issued as a donation                       | -           | -           | 10,000      | 6,400       | -          | -             | 6,400       
|Common stock issued to employees for compensation       | -           | -           | 675,000     | 348,000     | -          | -             | 348,000     
|Common stock issued in exchange for asset purchase      | -           | -           | 20,026,514  | 16,061,476  | -          | -             | 16,061,476  
|Common stock issued for payment of debt                 | -           | -           | 5,647,389   | 3,305,642   | -          | -             | 3,305,642   
|Common stock issued for payment of legal settlement     | -           | -           | 313,333     | 247,533     | -          | -             | 247,533     
|Beneficial conversion feature on convertible note       | -           | -           | -           | -           | 336,833    | -             | 336,833     
|Net loss, year ended April 30, 2006                     | -           | -           | -           | -           | -          | (10,129,638)  | (10,129,638)
|                                                        |             |             |             |             |            |               |             
|Balance at April 30, 2006                               | -           | -           | 83,345,663  | $59,692,602 | $1,767,720 | $(39,193,029) | $22,267,293 
|Issuance of common stock and warrants, net of cost      | -           | -           | 42,000,000  | 2,459,478   | 1,640,522  |               | 4,100,000   
|Issuance of common stock to Directors for services      | -           | -           | 50,001      | 33,501      | -          | -             | 33,501      
|Common stock issued for payment of legal settlement     | -           | -           | 2,104,057   | 401,603     | -          | -             | 401,603     
|Common stock issued in exchange for consulting services | -           | -           | 224,627     | 156,500     | -          | -             | 156,500     
|Common stock issued to officers for compensation        | -           | -           | 900,000     | 306,000     | -          | -             | 306,000     
|Common stock issued to employees for compensation       | -           | -           | 100,000     | 30,000      | -          | -             | 30,000      
|Common stock issued for payment of debt                 | -           | -           | 1,849,869   | 583,192     | -          | -             | 583,192     
|Common stock options                                    | -           | -           | -           | -           | 150,000    | -             | 150,000     
|                                                        |             |             |             |             |            |               |             
|Subtotal                                                | -           | -           | 130,574,217 | $63,662,876 | $3,558,242 | $(39,193,029) | $28,028,089 
|                                                        |             |             |             |             |            |               |             



---





|                                                                                                                                                                                                                                                                                                                                                                                          |   |   |             |             |            |               |            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | - | ----------- | ----------- | ---------- | ------------- | -----------
|SONORAN ENERGY, INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Shareholders Equity/(Deficit)
For the Years Ended April 30, 2006 and 2007

Series A
Convertible
Additional

Preferred Stock               Common Stock            Paid In     Accumulated
Shares         Amount           Shares           Amount         Capital             Deficit                Total
|Carry forward                                                                                                                                                                                                                                                                                                                                                                             | - | - | 130,574,217 | $63,662,876 | $3,558,242 | $(39,193,029) | $28,028,089
|Stock returned to Treasury for cancellation                                                                                                                                                                                                                                                                                                                                               | - | - | (1,001,067) | (330,049)   | -          | -             | (330,049)  
|Issuance of warrants and beneficial conversion feature in connection with convertible debentures                                                                                                                                                                                                                                                                                          | - | - | -           | -           | 143,335    | -             | 143,335    
|Issuance of warrants in connection with senior secured credit facility                                                                                                                                                                                                                                                                                                                    | - | - | -           | -           | 318,562    | -             | 318,562    
|Net loss, year ended April 30, 2007                                                                                                                                                                                                                                                                                                                                                       | - | - | -           | -           | -          | (9,062,713)   | (9,062,713)
|                                                                                                                                                                                                                                                                                                                                                                                          |   |   |             |             |            |               |            
|Balance at April 30, 2007                                                                                                                                                                                                                                                                                                                                                                 | - | - | 129,573,150 | $63,332,827 | $4,020,139 | $(48,255,742) | $19,097,224
|                                                                                                                                                                                                                                                                                                                                                                                          |   |   |             |             |            |               |            







See accompanying notes to consolidated financial statements

F-5

---







SONORAN ENERGY, INC. AND SUBSIDIARIES

Consolidated Statement of Cash Flows



|                                                                           |                               |                 
|-------------------------------------------------------------------------- | ----------------------------- | ----------------
|                                                                           | For the Years Ended April 30,
|                                                                           | 2007                          | 2006            
|Cash flows from operating activities:                                      |                               |                 
|Net loss                                                                   | $  (9,062,713)                | $   (10,129,638)
|Adjustment to reconcile net loss to net cash used in operating activities: |                              
|Amortization of deferred finance charge                                    | 91,244                        | 204,751         
|Amortization of beneficial conversion feature                              | 243,906                       | 134,833         
|Accretion expense                                                          | 67,842                        | 72,326          
|Amortization of warrant discount                                           | 106,185                       | -               
|Depletion, depreciation and amortization                                   | 653,553                       | 245,444         
|Financing fees for debt                                                    | 307,126                       | 331,336         
|Stock issued for payment of expenses                                       | -                             | 725,000         
|Stock compensation expense                                                 | 676,001                       | 3,649,180       
|Stock issued for donation expense                                          | -                             | 6,400           
|Legal expense settlement                                                   | 937,386                       | -               
|Put option valuation adjustment                                            | 369,490                       | -               
|Impairment of goodwill                                                     | 394,585                       | -               
|Loss on debt repaid with stock                                             | -                             | 388,316         
|Changes in operating assets and liabilities:                               |                               |                 
|Receivables, prepaids and deferred other                                   | (27,728)                      | (34,296)        
|Oil and gas put option                                                     | (494,290)                     |                 
|Accounts payable, accrues expenses and other liabilities                   | 1,531,020                     | 2,820,716       
|                                                                           |                               |                 
|Net cash used in operating activities                                      | (4,206,393)                   | (1,585,632)     
|                                                                           |                               |                 
|Cash flows from investing activities:                                      |                               |                 
|Additions to property and equipment                                        | (235,326)                     | (99,597)        
|Additions to oil and gas properties                                        | (9,013,568)                   | (2,802,294)     
|Payment for certificate of deposit                                         | -                             | (249,780)       
|Redemption of certificate of deposit                                       | 300,000                       | -               
|Cash acquired in business combination                                      | -                             | 29,345          
|Net cash used in investing activities                                      | (8,948,894)                   | (3,122,326)     
|                                                                           |                               |                 
|Cash flows from financing activities:                                      |                               |                 
|Proceeds from exercised options and warrants                               | -                             | 50              
|Repayment of loans and advances                                            | (10,074)                      | (126,069)       
|Payment of debt issuance costs                                             | (676,139)                     | -               
|Proceeds from issuance of convertible debt                                 | 420,000                       | -               
|Proceeds from senior secured credit facility                               | 6,943,853                     | -               
|Repayment of Convertible debenture                                         | (1,751,172)                   | -               
|Proceeds from sale of common stock                                         | 4,100,000                     | 9,603,991       
|Net cash provided by financing activities                                  | 9,026,468                     | 9,477,972       
|                                                                           |                               |                 
|Net change in cash and cash equivalents                                    | (4,128,819)                   | 4,770,014       
|Cash and cash equivalents, beginning of period                             | 4,832,327                     | 62,313          
|Cash and cash equivalents, end of period                                   | $ 703,508                     | $   4,832,327   
|                                                                           |                               |                 
|Supplemental disclosure of cash flow information:                          |                               |                 
|Cash paid for income taxes                                                 | $  -                          | $-              
|Cash paid for interest                                                     | $   437,141                   | $12,768         
|                                                                           |                               |                 
|Non-cash investing and financing activities:                               |                               |                 
|Common stock issued for payment of debt and current liabilities            | $ 658,643                     | $   3,305,642   
|Common stock issued for business combinations                              | $   -                         | $  16,061,476   





See accompanying notes to consolidated financial statements

F-6

---





SONORAN ENERGY, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

April 30, 2007



Note 1:    Nature of Organization and Summary of Significant Accounting Policies



Nature of Organization



Sonoran Energy, Inc. (the "Company") was incorporated under the laws of Colorado as Cerotex Holdings, Inc. on July 14, 1995.  The Company's shareholders approved a change of corporate domicile to Washington State, which became effective on September 15, 2000.  Prior to June 2002, the Company developed software and an art site on the Internet.  The Internet project was terminated in April 2002.  On June 3, 2002, the Company changed its name to Sonoran Energy, Inc. and entered the oil and gas industry.  The Company's primary objective is to identify, acquire and develop oil and gas projects.



The Company has acquired interests in producing properties through leases on which it drills and/or operates oil or gas wells in efforts to discover and/or to produce oil and gas.  The Company's interests in the properties vary depending on the per cent interest available at the time of acquisition.  At April 30, 2007, the Company owned working interests in oil and gas properties located within the states of Louisiana and Texas.



Basis of Consolidation



The consolidated financial statements include the accounts of Sonoran Energy, Inc. Scottsdale Oil Field Services Ltd. and Baron Oil AS and its wholly owned subsidiary.  All significant intercompany balances and transactions have been eliminated in consolidation.



Use of Estimates



In preparing financial statements in conformity with accounting principles generally accepted in the United States, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period. The most significant estimates pertain to proved oil and natural gas reserve volumes, future development, dismantlement and abandonment costs, share-based compensation expenses, estimates relating to certain oil and natural gas revenues and expenses and the fair market value of derivatives and equity securities. Actual results may differ from managements estimates.



Cash Equivalents



For the purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.



The Company places its cash and cash equivalents with high quality institutions. At times such cash may be in excess of the FDIC insurance limit.



Fixed Assets



Fixed assets are recorded at cost, less accumulated depreciation.  Major items and betterments are capitalized; minor items and repairs are expensed as incurred.  Depreciation is computed under the straight-line method over the estimated useful lives of the assets ranging from 3 years to 5 years. Depreciation on equipment totaled $62,547 and $41,316 for the years ended April 30, 2007 and 2006, respectively.







F-7



---





The Companys fixed assets are made up of the following:



|                         |             
|------------------------ | ------------
|                         |             
|Computers and software   | $    226,892
|Vehicles                 | 16,668      
|Furniture and fixtures   | 116,774     
|Leasehold improvements   | 17,670      
|                         | 378,004     
|Accumulated depreciation | (107,031)   
|Equipment total          | $  270,973  



Goodwill



Goodwill represents the excess of the aggregate price paid by us over the value of the net equity acquired in the acquisition of Scottsdale Oil Field Services in 2006. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we are no longer required to amortize goodwill, but are required to review goodwill for impairment at least annually or whenever events indicate that the carrying amount of the asset may not be recoverable in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets



During December 2006, we became aware that SOSLs business with outside customers would cease sometime during 2007.   As there is no future expected return to the levels at purchase date, the Company recorded an impairment charge on the Goodwill of the total value of $394,585 which is shown on the income statement.



Intangible Assets



Our intangible assets consist of proprietary computer programs. These intangible assets are amortized on a straight-line basis over five years resulting in a charge to expense of $42,000 for the year ending April 30, 2007.  The Company did not record amortization expense on these assets in 2006.



Oil and Gas Producing Activity



The accounting for, and disclosure of, oil and natural gas producing activities requires that the Company choose between GAAP alternatives and that we make judgments regarding estimates of future uncertainties.



Sonoran Energy uses the full cost method of accounting, which requires capitalizing all acquisition, exploration, exploitation and development costs. When costs relating to unproved properties are incurred, they are capitalized in Unproved Properties. When costs are expended in drilling an exploratory well, those costs would initially be capitalized in Wells-In-Progress. When the work on an exploration well is finished, all costs relating to it, including those in Unproved Properties and Wells in Progress, are transferred to the Full Cost Pool. When costs are expended in drilling a development well, those costs are immediately added to the Full Cost Pool.



The Company reviews its unproved oil and natural gas properties periodically. While they still have economic value as unproved properties, these costs remain in unproved properties. When unproved properties become proved by virtue of having proved reserves discovered on them, then the cost associated with them is transferred to the full cost pool. If an unproved property becomes worthless, all cost associated with it is also transferred into the full cost pool. Unproved Properties are not subject to depletion.



Depletion is calculated using the unit-of-production method. Under this method, the sum of the full cost pool and all estimated future development costs are divided by the total amount of Proved Reserves. This rate is applied to our total production for the period, and the appropriate expense is recorded. We capitalize the portion of general and administrative costs that is attributable to our acquisition, exploration, exploitation and development activities.



---



At the end of each quarterly period, the unamortized cost of proved oil and natural gas properties, net of related deferred income taxes, is limited to the sum of the estimated future net revenues from proved properties using current period-end prices discounted at 10%, adjusted for related income tax effects (ceiling test). When computing our full cost ceiling limitation, we evaluate the limitation at the end of each reporting period date. In the event our capitalized costs exceed the ceiling limitation at the end of the reporting date, we subsequently evaluate the limitation for price changes that occur after the balance sheet to assess impairment as permitted by Staff Accounting Bulletin Topic 12
- Oil and Gas Producing Activities.



The quarterly calculation of the ceiling test is based upon estimates of Proved Reserves. There are numerous uncertainties inherent in estimating quantities of Proved Reserves, in projecting the future rates of production and in the timing of development activities. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserve estimates are always different from the quantities of oil and natural gas that are ultimately recovered.



In September 2004, the SEC released SAB No. 106 concerning the application of SFAS No. 143 Accounting for Asset Retirement Obligations, or SFAS No. 143, by oil and natural gas producing companies following the full cost method of accounting. In SAB No. 106, the SEC addressed the impact of SFAS No. 143 on the ceiling test calculation and on the calculation of depreciation, depletion and amortization. SAB No. 106 became effective for us on January 1, 2005 and has not had a significant impact on our ceiling test calculation. Also, as a result of SAB No. 106, we now include the estimated asset retirement obligation that will result from future development activity in our calculation of depreciation, depletion and amortization. This change has not had a significant impact on our depreciation, depletion and amortization expense.



The Company recorded depletion expense of $509,079 and $204,128 for the years ended April 30, 2007 and 2006, respectively.



Revenue Recognition



The Company utilizes the accrual method of accounting for crude oil revenues whereby revenues are recognized as the Company's entitlement share of the oil and gas, for the Companys account,  that is produced and delivered to a purchaser based upon its net revenue interest in the properties.    The Company utilizes the accrual method of accounting for its consulting services recognizing income when services are provided.



Net loss per share



Net loss per basic share excludes dilution and is determined by dividing loss available to common shareholders by the weighted average number of common shares outstanding during the period.  Net loss per diluted share reflects the potential dilution that could occur if securities and other contracts to issue common stock were exercised or converted into common stock.  Due to the Company's losses, any inclusion of other securities to issue common stock would have an anti-dilutive effect on loss per diluted share. The diluted net loss per shares excludes the effect of common stock options and warrants exercisable into 57,019,865 shares of common stock and debt convertible into approximately 4,020,000 shares of common stock because inclusion of such would be anti-dilutive for the year ended April 30, 2007.  The diluted net loss per share excludes the effect of common stock options and warrants exercisable into 20,734,294 shares of common stock and debt convertible into approximately 3,243,000 shares of common stock because inclusion of such would be anti-dilutive for the year ended April 30, 2006.



Accounts Receivable



The Company's accounts receivable at April 30, 2007 reflect amounts that are due from working interest owners in oil wells that the Company operates and the sale of crude oil and natural gas to several primary customers.



The Company determines any required allowance by considering a number of factors including length of time trade accounts receivable are past due and the Company's previous loss history.  Receivables are considered past



---



due when they are unpaid greater than thirty days.  The Company records a reserve account for accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.  The Company has reviewed its Joint Interest Billing summary and identified potential uncollectible accounts in the amount of $40,728 which have been recorded as an allowance for doubtful accounts with a charge to bad debt expense of $40,728 for the year ended  April 30, 2007.  There was no allowance or expense recorded in 2006.



Income Taxes



Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and tax basis of assets and liabilities for financial and income tax reporting.  The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.  Deferred taxes are also recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future income taxes.



Stock-Based Compensation



Effective May 1, 2006, we adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (SFAS No. 123(R)), which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and directors based on estimated fair values. We adopted SFAS No. 123(R) using the modified prospective transition method. In accordance with modified prospective application provisions of SFAS No. 123(R), compensation cost for the portion of awards that were outstanding as of May 1, 2006, for which the requisite service was not rendered, are recognized as the requisite service is rendered, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R). Additionally, compensation costs for awards granted after May 1, 2006 are recognized over the requisite service period based on the grant-date fair value. In accordance with the modified prospective transition method, our consolidated financial statements for prior periods have not been restated to reflect the impact of SFAS No. 123(R). In connection with the adoption of FAS 123(R) on May 1, 2006 we have not recorded compensation expense for options outstanding on that date because the requisite service period for all options outstanding had elapsed as of that date. However, we have recognized stock-based compensation expense of approximately $150,000 representing the grant-date fair value of options granted during the year ended April 30, 2007, and for which the requisite service period elapsed.





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Fair Value of Financial Instruments



The Company's financial instruments, including cash, accounts receivables, current liabilities, and short-term debt, are carried at cost, which approximates their fair value because of the short-term maturity of these instruments. Convertible debentures are carried at cost which approximates fair value because of fair value interest rates and discounts associated with the beneficial conversion feature.



Derivative financial instruments



In connection with the NGPC Credit Agreement, the company entered into oil and natural gas derivative financial instruments to protect against commodity price decreases and to achieve a more predictable cash flow. SFAS No. 133 requires that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivatives fair value be recognized currently in earnings unless specific hedge accounting criteria are met, or exemptions for normal purchases and normal sales as allowed by SFAS No. 133 exist. We have not designated our derivative financial instruments as hedging instruments and, as a result, we recognize the change in the derivatives fair value currently in earnings





Note 2:   Continuance of Operations

These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The general business strategy of the Company is to develop and operate its existing oil and gas properties, and to acquire additional properties.   The Company has negative working capital, has incurred operating losses and requires additional capital to fund development activities, meet its obligations and maintain its operations. These conditions raise doubt about the Company's ability to continue as a going concern.  These concerns are currently mitigated by the fact that NGPC recently approved an increase in our collateral value and made $3,000,000 in funding available.  The additional funding was contingent upon receipt of $2,000,000 of additional equity and substantial completion of updated title opinions on certain properties in Louisiana and West Texas.  We have obtained the required equity, and expect to meet the title requirements by mid August.  The company forecasts that the equity obtained and additional borrowing capacity will provide sufficient funds to complete its primary development activities and achieve profitable operations.  Accordingly, these financial statements do not include any adjustments that might result from this uncertainty.



Note 3:    Related Party Transactions



During the year ended April 30, 2007 Directors of the Company advanced funds to the Company in exchange for $295,000 in Convertible notes bearing interest at 10% on $270,000 and 12% on $25,000. The notes contain provisions for warrants at $0.55 per share and a convertible strike price of $0.23.



During the year ended April 30, 2007 the Company hired a Consultant, to assist in developing the Louisiana program, from a Company managed by a member of the Board of Directors and incurring $189,000 in fees until February 2007 when the contract was completed.



During the year ended April 30, 2007 the Company hired a Consulting firm, to assist with investor relations, from a Company managed by a member of the Board of Directors and incurring $170,180 in fees.  The fees were almost all earned four months prior to the member joining the Board.



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Note 4:   Other Assets



Certificate of Deposit



The Company was required to post a $50,000 Bond with a state government for the operations in the U.S. The funds are held by a financial institution in an investment certificate, which bear interest at a variable rate.



Deferred finance charges



The Company incurred commitment fees and finder fees for the Cornell Capital convertible debentures totaling $689,000. The term of the debenture was three years and the Company amortizes the commitment and finders fees over the life of the debenture. The debt was paid off in December 2006 resulting in a charge to interest expense of $307,126 and $204,571 for 2007 and 2006, respectively.



Oil and gas put options



Pursuant to our senior credit agreement, we are required to enter into financial contracts to reduce the risk of changes in the commodity prices of a portion of our production at specified prices for oil and natural gas. The objective of the contracts is to reduce our exposure to commodity price risk associated with expected oil and natural gas production. By achieving this objective we intend to protect the outstanding debt amounts and maximize the funds available under our existing senior credit agreement, which should enable us to support our annual capital budgeting and expenditure plans.

During our the quarter ended January 31, 2007 we paid $494,290 to enter into financial contracts to set price floors of $50 per barrel for oil and $5 per Mcf for natural gas until December 1, 2008.  At
April 30, 2007, the contracts had average monthly volumes of 10,000 barrels of oil and 42,500 Mcf of gas.  We have no derivative hedging contracts that set a price ceiling. We do not designate our derivatives as cash flow or fair value hedges.



We do not hold or issue derivative financial instruments for speculative or trading purposes. We are exposed to credit losses in the event of nonperformance by the counterparty to our financial hedging contracts. We anticipate, however, that our counterparty, Chevron, will be able to fully satisfy their obligations under the contracts. We do not obtain collateral or other security to support our financial hedging contracts subject to credit risk but we monitor the credit standing of the counterparty.

Changes in the fair values of our derivative instruments are recorded immediately in earnings in other income on our statements of operations.  Amounts due from our counterparty resulting from the settlement of our derivative instruments are recorded as other income or expense in the consolidated statements of operations.

We computed the fair value of our derivative instruments using quotes for exchange-traded options with similar terms. In accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, we recorded the $494,290 payment as Derivative Assets. SFAS 133 also provides that derivative instruments be measured at fair value on the balance sheet date.  A fair market valuation of the options at April 30, 2007 put the value at $124,800 resulting in a charge of $369,490 that has been shown in the income statement as other income and expense for the year ended April 30, 2007. There were no realized gains or losses during either year ended April 30, 2007 or 2006 related to these contracts.



Intangible Assets



The Company amortizes Intangible Assets over the useful life of the asset which has been set at 5 years resulting in a charge to earnings of $42,000 for the year ended April 30, 2007. We did not charge amortization in 2006.



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Note 5:    Notes  Payable-Legal Settlement



The legal settlement relates to the following two cases that were settled in June and September 2006:

Longbow, LLC v. Sonoran Energy,
Inc. - Superior Court of California, County of Kern   In March, 2004, a complaint was
filed by Longbow, LLC against the Company alleging that Sonoran breached the
agreement to purchase Longbow's interest in the Emjayco Glide #33 Property, the
Keystone-Deer Creek Property and the Deer Creek-Merzonian Property.
 Subsequently, Sonoran had entered into an agreement to sell those
properties to a third party, Harvest Worldwide, LLC. The case went to trial in
September, 2006 and a settlement was reached out of court during the trial.
Pursuant to the settlement, Longbow acquired the properties and dropped all
other claims.   Sonoran Energy, Inc v. Mark Roy
Anderson et al Mark Anderson was sued, individually and in the form of his corporate alter
egos, by Sonoran (Los Angeles County Superior Court Case No. BC327099), seeking
rescission of all shares issued to these entities, with additional compensation
due for various timing failures and legal exposures resulting from Anderson's
various shortcomings. Anderson cross-complained against Sonoran, alleging
certain commissions earned for projects Sonoran has undertaken that occurred
during the pendency of his (Camden Holdings) consulting agreement . On June 5,
2006 the Company entered in a tentative settlement of their court case wherein
Mr. Anderson has agreed to transfer control of the shares in controversy to
settle debts that were to be originally assumed by Anderson, and retire
obligations associated with project developments underway at the time of the
original dealings.  The settlement was also dependent on the outcome of a
related which included properties and litigants located in Bakersfield,
California (see above), concerning disposition of three properties
tentatively sold by the Company to affiliates of Anderson in January 2004. The
Bakersfield case was settled out of court in September 2006 clearing the way for
the original Anderson settlement to be completed, although claims have been
asserted by third-party creditors of Anderson and his related entities which are
impairing the completion of the various settlement terms.




We have agreed to pay down a note on the three Bakersfield properties, along
with certain other liabilities. Anderson's shares will be held in trust until
such time as the liabilities we assumed are discharged. Until that time, we have
agreed to issue shares of our common stock, pay cash, and issue convertible
notes to settle such liabilities.



Through April 30, 2007 and late 2006 we have paid settlement expenses in the form of cash, issuance of shares, and issuance of convertible debentures. Additionally, a portion of Andersons shares were used to satisfy certain outstanding legal fees.



Issuance of 2,112,665 shares common stock in settlement of note payable

$

484,586

Issuance of 304,725 shares of common stock in settlement of other liabilities

164,551

Issuance of 10% convertible debentures in settlement of note payable

225,000

Issuance of 10% convertible notes in settlement of other liabilities

161,500

Payment of cash in settlement of note payable

26,130

Settlement of legal fees with Anderson stock

(117,401)

Return of performance bond

(65,000)

Total costs incurred

$       879,366



Additionally, we had previously reported liabilities related to these matters on our consolidated balance sheets as follows:



Deferred gains on oil and gas property sales

$

484,046

Deferred commissions payable

250,000

Note payable (included in loans payable)

48,476

Total

$

782,522



Pursuant to the terms of the settlements mentioned above, we have guaranteed or promised to pay a note payable and other liabilities with balances at April 30, 2007 as follows:



Note payable, secured by Bakersfield properties, bearing interest

at 10% per annum, and requiring principal payments in the

form of common stock of 200,000 shares per month

$  900,482

Liabilities due to Mark Anderson

375,000

Other liabilities



130,000

Total

$

1,405,482





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We have computed the value of our obligations under the note payable and other liabilities by subtracting our estimate of the value of the shares surrendered by Anderson.  Approximately 4 . 3 million of Andersons shares are held in trust by attorneys or by the holder of the note payable mentioned above which have been pledged to settle our liabilities. We computed the value of these shares using the closing price of our common stock on April 30, 2007 less an estimate of costs to sell those shares amounting to approximately $564,940. The net amount of our obligations less the value of shares of our common stock pledged to settle those obligations is recorded on our consolidated balance sheet under current liabilities as follows:



Balance of obligations

$

1,405,482

Less: common shares pledged

(564,940)

Total

$

840,542



The net amount of obligations relieved through the settlements of the matters above, plus the value of our obligations incurred under those settlements, less costs we have incurred through April 30, 2007 has been recorded on our consolidated statements of operations for the year ended April 30, 2007 under litigation settlement expense, as follows:



Costs incurred in settlement of litigation

$

879,366

Liabilities relieved in settlements

(782,522)

Liabilities incurred in settlements

840,542

Total

$

937,386



We will continue to measure our obligations under the terms of the settlements using the method described above. The obligations will be reduced as we issue shares of our common stock to settle such obligations and as shares pledged by Anderson are liquidated to settle those obligations. Other changes in the value of those obligations will be recognized in earnings as they occur.



Note 6:    Credit Agreement



On December 4, 2006, we executed a Credit Agreement (the "Facility") with NGPC Asset Holdings, LP ("NGPC"), the Administrative Agent for certain institutional investors.  Pursuant to the terms of the Facility, NGPC agreed to give the Company access to a $12 million of borrowings with an initial borrowing base of $7 million. The Company agreed to use the proceeds from the Facility (1) to finance trade payables, (2) to repay indebtedness of the Company to Cornell Capital Partners, L.P. existing as of the date of the Agreement, (3) to finance certain acquisitions, (4) to conduct other activities on the Company's properties as described in the Agreement, (5) to enter into Hedge Agreements as may be required from time to time by NGPC, and (6) for working capital purposes in accordance with the terms of the facility secured by first liens on substantially all of our properties.  Additionally, we agreed to pay interest, at prime plus 4% (12.25 at April 30 , 2007) or Libor plus 6% (11.32% at April 30, 2007) monthly, on amounts borrowed and grant NGPC an overriding royalty on all of the Company's production.  The Company also issued 2,870,000 warrants to purchase the Company's common stock at a price of $0.20 per share.  The warrants are exercisable for a period of 7 years after the payoff of any funds borrowed.  All outstanding principal and interest is due at maturity, February 28, 2008.



The Company has recorded the funds used of $6,943,853 and interest charges for the year ended April 30, 2007 of $573,645. The Company has recognized a value of $318,562 for the warrants associated with the loan and recorded this amount as a discount on the debt and a corresponding increase to additional paid in capital on the Balance Sheet.



The warrants were valued using the Black-Scholes method with the following assumptions:



Expected life (1). . . . . . . . . . . . . . . . . . . . . . . . . . . .  5 years

Risk-free rate (2). . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.10%

Expected Dividends (3). . . . . . . . . . . . . . . . . . . .. . . .   0.00%

Volatility factor (4) . . . . . . . . . . . . . . . . . . . . . . .   .  135.14%



(1)

Based on our estimate of time until the warrants will be exercised due to the volatility of our stock

(2)

Based on the quotes for U.S. Treasury issues with three year maturities.

(3)

We have not historically, nor do we anticipate, paying dividends.

(4)

Based on historic trading
prices, measured daily for a period three year prior to issuing the warrants.



The company incurred other costs in connection with this facility of $676,139 which are included in loan fees on our Balance Sheet. The debt issuance cost of $676,139 and the warrants at fair value of $313,562 are being amortized over 15 months, the term of the facility. Total amortization of $225,380 of the debt issuance costs and $106,185 of the discount are included in interest expense on our statements of operations for the year ended April 30, 2007.



The Facility requires us to maintain certain financial ratios and other negative covenants, the most restrictive of which are:



●

a current ratio of at least 1.00 : 1.00;

●

a debt to EBITA ratio of no more than 3.50:1.00;

●

an interest coverage ratio of at least 2.50:1.00;



and to limit our general and administrative expense to $575,000 per quarter. As of April 30, 2007, we were not in compliance with our covenants and accordingly we have classified amounts outstanding under the facility in current liabilities on our balance sheet.  In addition, the agreement defined the departure of Frank Smith and William McFie as a violation of its changes in control covenant.  NGPC has granted waivers of   these covenant violations for the period ended April 30, 2007.





Note 7:    Notes  Payable-other



Notes and loan payables consist of the following  items:



Enertia software, acquisition of software, 3 year term, interested imputed

at 11.32%, payment of $8,525 per month



$  240,775

Premium Assignment Group-finance current year insurance premiums,

9 month term, interest at 3.4%, payments vary



247,427

Other loans

60,664







548,866

Enertia software - long term





161,716

Total current notes payable







$   387,150



The notes are repayable over the next three years as follows:



2008

$    208,125

2009

102,300

2010

76,725

$  387,150





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Note 8:    Income Taxes



A reconciliation of the U.S. statutory federal income tax rate to the effective tax rate is as follows:



|                                            |                      |               |         
|------------------------------------------- | -------------------- | ------------- | --------
|                                            | Year Ended April 30,
|                                            | 2007                 | 2006         
|U.S. Federal statutory graduated rate       | 34.00%               | $ (3,082,000) | 34.00%  
|State income tax, net of federal benefit    | 6.00%                | (544,000)     | 6.00%   
|Other                                       | (1.97)%              | 179,000       | 0.00%   
|Net operating loss for which no tax benefit |                      |               |         
|is currently available                      | (38.03)%             | $  3,447,000  | (40.00%)
|                                            | 0.00%                | $           0 | 0.00%   



The valuation allowance offsets the net deferred tax asset for which there is no assurance of recovery. The change in the valuation allowance for the years ended April 30, 2007 and 2006 totaled $3,447,000 and $4,045,000 and, respectively.  A current tax benefit $3,434,000 and $2,468,000 was recorded for the years ended April 30, 2007 and 2006, respectively.  These amounts were offset by and equal deferred income expense due primarily to the increase in the valuation allowance.



At April 30, 2007, the Company had net operating loss carryforwards of approximately $33,166,000. The net operating loss carryforwards expire from 2022 through 2027.



At April 30, 2007, the Company had a deferred income tax asset of $13,426,000.  Of that amount, $13,266,000 related primarily to net operating loss carryforwards and $160,000 relates to book and tax differences in the recognition of stock based compensation, accrued compensation to officers and amortization of intangible assets.  The deferred income tax asset is offset by a valuation allowance and deferred tax liability of $16,000 related to book and tax differences for the amortization of goodwill and intangible assets.



The valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the deferred tax asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax assets is no longer impaired and the allowance is no longer required.



The information on book tax differences provided above is based on our financial records.  The company has never filed US Federal Tax returns.  As returns are filed, the company will have to develop detail tax records and will have to make certain elections that could alter the relationship between book and tax income.  The company has initiated a project to develop appropriate tax records so that the delinquent returns can be completed.  The company expects to have its filing current by December 31, 2007.  Since the company has never been profitable, we believe there is no significant exposure to penalties or interest.  In addition, any changes in the deferred tax asset would be completely offset by an equal increase, or decrease, in our valuation allowance.



Should the Company undergo an ownership change as defined in Section 382 of the Internal Revenue Code, the Company's tax net operating loss carryforwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses



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Note 9:    Convertible Debentures



Our convertible debentures consist of the following:

|                                                                                                                                                                                                                                                                                                  |                          |               
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | --------------
|                                                                                                                                                                                                                                                                                                  | April 30,
2007           | April 30,
2006
|Note payable to Cornell Capital Partners, bearing interest at 5% per annum, convertible into common stock at $0.54 per share, repaid Dec. 1, 2006                                                                                                                                                 | $                      - | $  1,751,172  
|                                                                                                                                                                                                                                                                                                  |                          |               
|10 % Convertible Debentures issued from August 29, 2006 through December 31, 2006, convertible into common stock at $0.23 per share, bearing compound interest at 10% per annum. Outstanding principal and accrued interest are due at maturity, ranging from August 1, 2008 to December 1, 2008. | 1,061,500                | -             
|                                                                                                                                                                                                                                                                                                  |                          |               
|12% Convertible Debentures issued March 20, 2007 convertible into common stock at $0.23 per share, bearing compound interest at 12% per annum. Outstanding principal and accrued interest are due at maturity on March 19, 2009.                                                                  | 25,000                   | -             
|                                                                                                                                                                                                                                                                                                  |                          |               
|Discount                                                                                                                                                                                                                                                                                          | (101,529)                | (202,100)     
|                                                                                                                                                                                                                                                                                                  | 984,871                  | 1,549,072     
|                                                                                                                                                                                                                                                                                                  |                          |               
|Less: Current portion                                                                                                                                                                                                                                                                             | 984,971                  | 1,549,072     
|                                                                                                                                                                                                                                                                                                  | $  -                     | $    -        



During December 2006, we repaid all of the Cornell Capital Convertible notes in cash.  At the same time, we had unamortized loan costs of approximately $154,000, which we charged to interest expense.



In connection with the issuance of the 10%
and 12% convertible notes, we issued 10,000 warrants for each $10,000 of principal amount. A total of 1,086,500 warrants were issued. The warrants are exercisable one year from issuance and expire three years from issuance. Upon issuance, we recorded the warrants as a discount to the 10% convertible debentures and a corresponding increase to additional paid in capital using the Black-Scholes method, using the following assumptions:



Expected life (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 years

Risk-free rate (2). . . . . . . . . . . . . . . . . . . . . . . . . . . .4.43% to 4.79%

Expected Dividends (3). . . . . . . . . . . . . . . . . . . . . . . . . . .  . . 0.00%

Volatility factor (4) . . . . . . . . . . . . . . . . . . . . . . . . .              133.4%



(1) Based on our estimate of time until the warrants will be exercised due to the volatility of our stock

(2) Based on the quotes for U.S. Treasury issues with three year maturities.

(3) We have not historically, nor do we anticipate, paying dividends.

(4)  Based on historic trading prices, measured daily for a period three years prior to issuing the warrants.



In accordance with EITF 00-27, we first allocated proceeds from the issuance of notes between the notes and the detachable warrants. This resulted in an effective conversion ratio that was less than the market price of our stock on certain issuances. We recorded a debt discount equal to the difference between the effective conversion ratio and the market price of our stock on the date of issuance of the notes for which such conversion was beneficial to the holder.



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The following summarizes the discount on convertible notes issued during the year ended April 30, 2007:



Warrants, at fair value

$   98,734

Beneficial conversion features, Intrinsic value

43,344

142,078

Less: amortization of discount

(40,549)

Discount at April 30, 2007

$ 101,529



Note 10:  Asset Retirement Obligation



In June 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations.  SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset.  Subsequently, the asset retirement cost is allocated to expense using a systematic and rational method.  The provisions of SFAS No. 143 were effective for fiscal years beginning after June 15, 2002.



The following table is a reconciliation of the Company's liability for asset retirement obligations:

|                       |   |          
|---------------------- | - | ---------
|                       |   |          
|Balance April 30, 2006 | $ | 795,589  
|Change in assumptions  |   | 564,139  
|Liability Settled      |   | -        
|Accretion Expense      |   | 67,842   
|Balance April 30, 2007 | $ | 1,427,570



The addition during 2007 relates to increased estimated costs associated with the Louisiana and KWB wellbores.



Note 11:    Shareholders' Equity



Preferred Stock

The Company is authorized to issue 25 million shares of no par value preferred stock, which may be issued in series with such designations, preferences, stated values, rights, qualifications or limitations as determined by the Board of Directors.  As of April 30, 2007, the Company had no preferred stock issued and outstanding.

Series A preferred stock, was issued in 2004 for the purchase of oil and gas interests, and was convertible to 1,000,000 restricted shares of the Company's common stock 180 days after the date of closing (August 9, 2004), plus additional shares based on the market price at the time of conversion, at the option of the preferred stockholder.  The holder of the shares exercised their option on May 25, 2005 resulting in the issue of 2,000,000 common shares.



Common Stock



The company is authorized to issue 250,000,000 shares of common stock with no par value. As of April 30, 2007, the company had issued 129,573,150 shares.  Included in the issued amount are 2,000,000 shares that were issued after the year end for a private placement of $200,000 received from two directors in April 2007.



Stock-Based Compensation



During the
year ended April 30, 2007, the Company issued 1,051,001 shares of its common
stock to officers, employees and directors in recognition of their services. The
value of the stock issued was recorded at the quoted market price on the date of
the grant and totaled $369,501. The services are included in the accompanying
financial statements under "general and administrative expense".



The
Company granted an ex Chief Financial Officer 1,200,000 restricted shares and
1,000,000 option during the year ended April 30, 2007, both vesting over 11
months.  The individual left the Company effective April 30, 2007,
resulting in the final grants being 900,000 shares of fully-vested, restricted
stock and 749,997 stock options.  The Company also granted a new employee
50,000 restricted common shares on hiring.



During the
year ended April 30, 2007, the Company issued 224,627 shares of its common stock
to outside service providers, in exchange for financial consulting, investor
relations and other consulting services. The value of the stock issued was
recorded at the value of the services and totaled $156,500. The services are
included in the accompanying financial statements under "general and
administrative expense".



---



During the
year ended April 30, 2006, the Company issued 6,977,118 shares of its common
stock to officers, employees and directors in recognition of their services. The
value of the stock issued was recorded at the quoted market price on the date of
the grant and totaled $3,649,580.  The services are included in the accompanying
financial statements under "general and administrative expense".



During the year ended April 30, 2006, the Company issued 1,382,691 shares of its common stock to outside service providers, in exchange for financial consulting, investor relations and other consulting services. The value of the stock issued was recorded at the value of the services and totaled $725,000. The services are included in the accompanying financial statements
under "general and administrative expense".



During the
year ended April 30, 2006, the Company issued 10,000 shares of its common stock
as a donation. The value of the stock issued was recorded at the value of the
donation and totaled $6,400.  The donation is included in the accompanying
financial statements under "general and administrative expense".



Common Stock Options



Stock options



As discussed in Note 1. Summary of significant accounting policies, certain of our employees were granted stock options. The options expire in 2years following the date of grant and have a weighted average remaining life of 2 years



The following table summarizes stock option activity related to our employees during fiscal year 2006 and 2007:



|                                       |  |            |  |                  |   |                  |  |           |  |      |  |  |  |   |   |  | 
|-------------------------------------- |  | ---------- |  | ---------------- | - | ---------------- |  | --------- |  | ---- |  |  |  | - | - |  | 
|                                       |  |            |  | Weighted average |   | Weighted average |  | Aggregate | 
|                                       |  | Stock      |  | exercise price   |   | remaining terms  |  | intrinsic | 
|                                       |  | Options    |  | per share        |   | (in years)       |  | value     | 
|Options outstanding at April 30, 2005  |  | 10,100,000 |  |                  | $ | .53              |  |           |  |      |  |  |  |   |   | 
|Granted                                |  | -          |  |                  | $ |                  |  |           |  |      |  |  |  |   |   | 
|Forfeitures                            |  | 150,000    |  |                  | $ |                  |  |           |  |      |  |  |  |   |   | 
|Exercised                              |  | -          |  |                  | $ |                 |  |           |  |      |  |  |  |   |   | 
|Options outstanding at April  30, 2006 |  | 9,950,000  |  |                  | $ | .53              |  |           |  |      |  |  |  |   |   | 
|Granted                                |  | 749,997    |  |                  | $ | .33              |  |           |  |      |  |  |  |   |   | 
|Forfeitures                            |  | 8,700,000  |  |                  | $ | .53              |  |           |  |      |  |  |  |   |   | 
|Exercised                              |  | 0          |  |                  | $ | 0                |  |           |  |      |  |  |  |   |   | 
|Options outstanding at April 30, 2007  |  | 1,999,997  |  |                  | $ | .46              |  |           |  | 1.38 |  |  |  | $ | 0 |  | 
|Options exercisable at April 30, 2007  |  | 1,999,997  |  |                  | $ | .46              |  |           |  | 1.38 |  |  |  | $ | 0 |  | 





The weighted average grant date fair value of stock options granted during the years ending April 30, 2007 and April 30, 2006 were $0.33and $0, respectively. The total intrinsic value of stock options exercised for the year ended April 30, 2007 and April 30, 2006 were $0 and $0 million, respectively.



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The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The following assumptions were used for the options included in the above table:



|                         |  |         |   |         |  
|------------------------ |  | ------- | - | ------- | -
|                         |  | 2007    |   | 2006    |  
|Expected life            |  | 2 years |   | 2 years |  
|Risk-free rate of return |  | 4.22    | % | 4.22    | %
|Volatility               |  | 118.95  |   | 122.15  |  
|Dividend yield           |  | 0       | % | 0       | %





As required by SFAS 123(R), the granting of options are share-based payment transactions and are to be treated as compensation expense by us with a corresponding increase to additional paid-in capital. Volatility was determined based on the weighted average of historical volatility of the common stock of the company for the past year.  Total share-based compensation for the year ended April 30 2007 was $336,000, of which $ 336,000 is included in general and administrative expense.  As discussed in Note 1. Summary of significant accounting policies. Total share-based compensation to be recognized on unvested awards is $0 over a weighted average period of  0 years as of  April 30, 2007.





If the Company had applied the fair value recognition provisions of SFAS 123(R)
to stock-based compensation during the year ended April 30, 2006, the pro forma
effect on net loss would have been insignificant.



Common Stock Dividend and Warrants



The Company did not declare a dividend during 2007.



As part of a private placement done during the year ended April 30, 2007, an investor was granted warrants to purchase additional shares. The exercise price on 50,000,000 warrants was set at $0.10 per share. As part of the Senior Debt Facility the lender was granted 2,870,000 warrants wait an exercise price of $0.20.



As part of a private placement done during the year ended April 30, 2006, investors were granted warrants to purchase additional shares. The exercise price on 4,763,438 warrants was set at $0.95 per share, the price on 184,214 warrants was set at $1.25 per share and the price on 1,661,642 warrants was set at $1.50 per share.



Note 12:    Commitments



Concentrations



During the year ended April 30, 2006, the Company sold all of its crude oil from Louisiana to Texon LP, gas from Louisiana to Cokinos Energy Corp and all of its crude oil from East Texas to Eastex Crude Company and Plains Marketing, LP. Effective September 1, 2006, the company entered into a one year gas sales agreement for its Louisiana gas with Texon LP which replaced the contract with Cokinos.  The company has also entered into a series of agency agreements under which Texon will provide marketing services for the company in areas where they are not the direct purchaser of our production.  The agency arrangement provides the company with access to broader markets while it develops the production levels and internal expertise required for more effective marketing of its production.



While the Company is concentrating its marketing arrangements, it is management's belief that the oil and gas the Company produces could be sold to other crude oil purchasers, refineries or pipeline companies.  The Company sells its oil pursuant to short-term contracts at market prices.  Market demand for the Company's production is subject to various influences that can never be assured.  The base values for the Company's crude oil sales is set by major oil companies in response to area and market strengths and international influences.



---





Lease Commitments



The Company has leased office premises in Chandler, Arizona and Dallas, Texas. Future minimum payments required are:



Year 2008                                                $  370,388

Year 2009                                                    376,290

Year 2010                                                    379,253

Year 2011

284,836

Year 2012

219,465

$1,630,232



Rent expense was $ 241,312 and $200,836 for 2007 and 2006, respectively.



Effective May 7, 2007 the Company amended the Dallas facility lease to include an additional 3,866 square feet of adjoining office space.  These incremental costs are included in the above table



The Company is currently seeking a sublease arrangement for its Chandler, Arizona facility at or near the current lease obligation. The future minimum payments included above for this office space is $499,000 for the lease expiring June 30, 2010.



Contingencies

Dispute with a Former Field Operations Contractor

A former contract operator has filed a $1.2MM lien against our properties in Louisiana alleging non-payment of invoices.  The Company disputes the validity of many of these invoices and believes that the operator may have significantly overcharged us for the services that they provided.  We dismissed the former operator and hired employees to handle the field operations internally.  We are withholding payments from the former operator pending our efforts to reach an acceptable settlement arrangement.  We currently have $847,000 recorded in accounts payable to the former operator.  The difference between the lien filed and the amounts recorded represent the sum of certain invoices with which we disagree entirely.  We intend to continue contesting these charges and believe that the liability will be settled for less than the $847,000 currently recorded.

Wells Land and Cattle Co., Inc., et.al. v. Sonoran Energy, Inc.



On or about May 18, 2007 Wells Land and Cattle Co., Inc., et.al. filed a lawsuit alleging that Sonoran was illegally disposing of saltwater into a saltwater disposal well on their property, that Sonoran routinely trespasses on its land to reach another well which is not located on plaintiffs land, that Sonoran spilled saltwater onto Plaintiffs land, and that an oil well lease covering one well has expired due to lack of production.  Plaintiff claims that damages exceed $1,000,000 and asks the court for a permanent injunction against Sonoran from trespassing on Plaintiffs property for the purpose of reaching the disposal well that is not on its property.  A trial date has not been set.  However, Sonoran intends to vigorously defend its actions in this matter and anticipates that the matter will be eventually settled for an immaterial amount.



Korker Diversified Holdings Inc. v. Savings Plus Internet and Sonoran Energy, Inc.



During August 2000, the Company was named as a defendant in a lawsuit filed in British Columbia related to Savings Pluss failure to repay a $35,000 loan that it received from Korker.  There has been relatively little action on this item until October 2006, when Korker filed a notice of intent to proceed.   There has been no activity since that filing.  The Company believes that this claim is completely without merit and plans to vigorously defend itself against any actions.



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Note 13:    Oil and Gas Reserves and Related Financial Information



Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities



Costs incurred in oil and gas property acquisition, exploration and development activities are summarized as follows:





All of our operations are directly related to oil and natural gas producing activities located in Louisiana and Texas.



Capitalized Costs Relating to Oil and Gas Producing Activities



|                                               |  |            |            |            |            |            | 
|---------------------------------------------- |  | ---------- | ---------- | ---------- | ---------- | ---------- | 
|April 30,                                      |  | 2007       |            | 2006       |           
|Proved oil and gas properties                  |  | $          | 20,465,594 |            | $          | 3,755,117  | 
|Unproved oil and gas properties                |  | 11,878,475 |            | 19,053,245 |           
|Total capitalized costs                        |  | 32,344,069 |            | $          | 22,808,362 |           
|Less accumulated depreciation and amortization |  | (767,509   | )          | (260,503   | )         
|                                               |  |            |            |            |           
|Net Capitalized Costs                          |  | $          | 31,576,560 |            | $          | 22,547,859 | 



Costs Incurred in Oil and Gas Producing Activities



|                                      |  |           |           |            |   |            | 
|------------------------------------- |  | --------- | --------- | ---------- | - | ---------- | 
|For the Fiscal Years Ended April  30, |  | 2007      |           | 2006       |  
|Acquisition of proved properties      |  | $         | -         |            | $ | -          | 
|Acquisition of unproved properties    |  | -         |           | 16,059,146 |  
|Development costs                     |  | 8,712,103 |           | 2,545,091  |  
|Workover expenses                     |  | 138,218   |           | 41,110     |  
|                                      |  |           |           |            |  
|                                      |  |           |           |            |  
|Total Costs Incurred                  |  | $         | 8,850,321 |            | $ | 18,645,347 | 



Results of Operations from Oil and Gas Producing Activities



|                                                                |  |            |           |            |   |           |  
|--------------------------------------------------------------- |  | ---------- | --------- | ---------- | - | --------- | -
|For the Fiscal Years Ended April 30                             |  | 2007       |           | 2006       |  
|Oil and gas revenues                                            |  | $          | 2,100,845 |            | $ | 1,541,344 |  
|Production costs                                                |  | (1,789,825 | )         | (1,265,718 | )
|Production and ad valorem taxes                                 |  | (222,634   | )         | (209,791   | )
|Depletion, depreciation and accretion                           |  | (679,395   | )         | (317,770   | )
|Results of oil and gas producing operations before income taxes |  | $          | (591,009  | )          | $ | (251,935  | )
|Provision for income taxes*                                     |  | -          |           | -          |  
|Results of Oil and Gas Producing Operations                     |  | $          | (591,009) |            | $ | (251,935) |  



* Since we did not have a provision for federal income taxes for 2007 or 2006, we did not compute a tax provision for the disclosure listed above.



Proved Oil and Gas Reserve Quantities (Unaudited)



At April 30, 2007 the estimated oil and gas reserves presented herein were derived from reports prepared by Haas Petroleum Engineering Services, Inc., an independent engineering firm.  The Company cautions that there are many inherent uncertainties in estimating proved reserve quantities and in projecting future production rates and



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the timing of development expenditures. Accordingly, these estimates are likely to change as future information becomes available, and these changes could be material.



Estimated quantities of proved reserves, all located within the United States, as well as the changes in proved reserves during the year ended April 30, 2006, are presented in the following tables:



|                                                 |                 |  |                  
|------------------------------------------------ | --------------- |  | -----------------
|                                                 | Crude Oil
(Bls) |  | Natural Gas (Mcf)
|Proved reserves at April 30, 2005                | 321,667         |  | -                
|Sale of reserves                                 | -               |  | -                
|Purchase of reserves                             | -               |  | -                
|Revisions to previous estimates                  | 57,202          |  | 92,480           
|Extensions, discoveries and improved discoveries | 614,837         |  | 2,101,009        
|Production                                       | (24,376)        |  | (12,739)         
|Proved reserves at April 30, 2006                | 969,330         |  | 2,180,750        
|Sale of reserves                                 | -               |  | -                
|Purchase of reserves                             | -               |  | -                
|Revisions to previous estimates                  | (200,650)       |  | (67,047)         
|Extensions, discoveries and improved discoveries | 34,350          |  | 3,756,570        
|Production                                       | (29,050)        |  | (43,493)         
|Proved reserves at April 30, 2007                | 773,980         |  | 5,826.780        
|                                                 |                 |  |                  
|Proved developed reserves                        | 295,410         |  | 3,888,140        





Proved reserves are estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data indicate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.



Proved reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.



Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserve Quantities



The table below sets forth a standardized measure of the estimated discounted future net cash flows attributable to the Company's proved oil and gas reserves. Estimated future cash inflows were computed by applying year-end prices of oil and gas (with consideration of price changes only to the extent provided by contractual arrangements) to the estimated future production of proved oil and gas reserves at April 30, 2006 discounted at 10 percent. The future production and development costs represent the estimated future expenditures to be incurred in developing and producing the proved reserves, assuming continuation of existing economic conditions.



|                                                                  |                           |  |                          
|----------------------------------------------------------------- | ------------------------- |  | -------------------------
|                                                                  | Year Ended
April 30, 2007 |  | Year Ended
April 30, 2006
|                                                                  |                           |  |                          
|Future cash inflows                                               | $     101,097,060         |  | $    79,565,910          
|Future cash outflows:                                             |                           |  |                          
|Production costs                                                  | (23,381,790)              |  | (20,348,480)             
|Development costs                                                 | (8,104,570)               |  | (5,396,120)              
|Future income taxes                                               | (11,257.364)              |  | (13,853,986)             
|Future net cash flows                                             | 58,353,336                |  | 39,967,324               
|Adjustment to discount future annual net cash flows at 10 percent | (18,558,105)              |  | (13,749,435)             
|Standardized measure of discounted future net cash flows          | $      39,795,231         |  | $  26,217,889            



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The following table summarizes the principal factors comprising the changes in the standardized measure of estimated discounted net cash flows:



|                                                |                |  |               
|----------------------------------------------- | -------------- |  | --------------
|                                                | 2007           |  | 2006          
|Standardized measure, beginning of period       | $   26,217,889 |  | $4,696,398    
|Net changes in prices and production costs      | 86,365         |  | 1,855,206     
|Net changes in future development costs         | (9,782,604)    |  | -             
|Sales of oil and gas, net of production costs   | (293,358)      |  | (316,736)     
|Extensions and discoveries                      | 19,223,500     |  | 19,582,393    
|Purchase of reserves                            | -              |  | -             
|Sales of reserves                               | -              |  | -             
|Revisions of previous quantity estimates        | (6,165,567)    |  | 400,628       
|Previously estimated development costs incurred | 8,994,687      |  | -             
|Net change in income taxes                      | 1,563,235      |  | -             
|Accretion of discount                           | 2,621,799      |  | -             
|Other                                           | (2,670,715)    |  | -             
|Standardized measure, end of period             | $   39,795,231 |  | $   26,217,889
|                                                |                |  |               



Note 14:   Segmented Information



The Company is presently operating in two segments:



|                    |               |               
|------------------- | ------------- | --------------
|                    | 2007          | 2006          
|Oil and Gas:        |               |               
|Revenue             | $   2,117,575 | $    1,556,588
|Income              | (8,993,591)   | (10,131,166)  
|Assets              | 33,876,124    | 29,652,633    
|Consulting Services |               |               
|Revenue             | $     394,462 | $      381,646
|Income              | 45,995        | 1,528         
|Assets              | 0             | 0             



Consulting services consisted of engineers performing services based outside the Corporate offices with no Company assets being allocated to this function. The last of the consulting contracts ended in the last quarter of this fiscal year and the Company has not actively sought any further contracts.



Note 15:    Subsequent Events



Dispute with a Former
Field Operations Contractor



A former contract operator
has filed a $1.2 million lien against our properties in Louisiana alleging
non-payment of invoices.  The Company disputes the validity of many of
these invoices and believes that the operator may have significantly overcharged
us for the services that they provided.  We dismissed the former operator
and hired employees to handle the field operations internally.  We are
withholding payments from the former operator pending our efforts to reach an
acceptable settlement agreement.  We currently have $847,000 recorded in
accounts payable to the former operator.  The difference between the lien
filed and the amounts recorded represent the sum of certain invoices with which
we disagree entirely.  We intend to continue contesting these charges and
believe that the liability will be settled for less than the $847,000 currently
recorded.



On June 25, 2007, NGPC completed a collateral value redetermination, which increased the funds available under the November 28, 2006 Credit Agreement to $10,000,000 subject to obtaining $2 Million of additional equity and resolution of certain property title issues.  The company obtained commitments for the required equity during June and expects to resolve the title issues during August.



On June 27, 2007, the largest shareholder of Sonoran Energy, Inc. (the "Company") exercised 10,000,000 of its options to purchase shares of common stock at a price of $0.10 per share for a total of $1,000,000 paid to the Company.  The options were granted to the shareholder in November 2006.



On July 13, 2007, the Company sold 5,000,000 shares of restricted common stock to an investor at a price of $0.20 per share for a total of $1,000,000 paid to the Company. The shares were sold under the auspices of Regulation S as sales to a non-U.S. person.



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ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



On January 22, 2007, Sonoran Energy, Inc. (the "Company") was informed that its external independent accountants, Epstein, Weber & Conover, PLC ("Epstein"), would no longer be serving in that capacity as a result of Epstein's combination with Moss Adams LLP.  Epstein further informed the Company that it would not continue to be engaged to audit the financial statements of the Company.  Epstein audited the Company's financial statements for the Company's most recent fiscal years ended April 30, 2005 and 2006



During the Company's most recent fiscal year ended April 30, 2006 and the subsequent interim period through January 12, 2007, there were no disagreements with Epstein on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Epstein would have caused them to make reference to the subject matter of their disagreement in their report.



During the Company's most recent fiscal year ended April 30, 2006  and the subsequent interim period through January 12, 2007, there were no reportable events as such term is defined by paragraph (a)(1)(iv) of Item 304 of Regulation S-K promulgated by the Securities and Exchange Commission.



The report of Epstein accompanying the audit for the Company's most recent fiscal year ended April 30, 2006 did not contain any adverse opinion or disclaimer or opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.



On February 2, 2007, Sonoran Energy, Inc. (the "Company") engaged Hein & Associates, LLP ("Hein) as its new independent accountants. Prior to February 2, 2007, the Company had not consulted with Hein regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's consolidated financial statements, and no written report or oral advice was provided to the Company by Hein concluding there was an important factor to be considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K.



ITEM 8A - CONTROLS AND PROCEDURES



(a) Disclosure Controls and Procedures. Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that a company files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.



We maintain disclosure controls and procedures designed to ensure that material information related to our company is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.



Evaluation of Disclosure Controls and Procedures



An evaluation was performed under the supervision of management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this report. Based on the evaluation and communications from Hein & Associates LLP to our Audit Committee in August 2007, our chief executive officer and chief financial officer concluded that the Company's



---



disclosure controls and procedures were not effective in reporting, on a timely basis, information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, and this Annual Report on Form 10-KSB, due to internal control deficiencies relating to the review of sensitive calculations prepared by finance staff, the failure to establish review procedures to detect errors in the calculation of depletion, accrual of certain liabilities and valuation of equity transactions, and failure to detect errors in the estimation of future net cash flows related to our proved oil and gas reserves.



Hein & Associates LLP advised the Audit Committee that each of these internal control deficiencies constitutes material weaknesses as defined in Statement of Auditing Standards No. 60. Certain of these internal control weaknesses may also constitute material weaknesses in our disclosure controls. Due to these material weaknesses, the Company, in preparing its financial statements for the year ended April 30, 2007, performed additional disclosure procedures relating to these items to ensure that such financial statements were stated fairly in all material respects in accordance with U.S. generally accepted accounting principles.



Changes in Internal Control over Financial Reporting



A new Chief Financial Officer assumed his responsibilities late in April 2007 and a new Controller began after  the end of the fiscal year.  Additionally, we have modified our internal control procedures to reallocate certain responsibilities between members of our accounting department.  The changes in our key accounting personnel constitute a significant change in our internal control over financial reporting.



Additionally, given the identification of the above material weaknesses, the Company has implemented a course of action reasonably assured to remediate these material weaknesses. This course of action includes: the decision to (i) implement a new integrated financial accounting system, (ii) provide focused manpower to strengthen our review procedures, (iii) oversee all sensitive calculations and (iv) documenting and enforcing existing policies and procedures and establishing new processes regarding review of financial information, including sensitive calculations and accruals of liabilities.

ITEM 8B - OTHER INFORMATION

None.

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PART III



ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT



Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's Officers and Directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the Securities and Exchange Commission (the "SEC"). Such Officers, Directors and ten percent shareholders are also required by SEC rules to furnish the Company with copies of all such forms that they file. The Company's initial registration statement on Form 10-SB became effective on or about April 5, 2000. Management is confident that all filings required are current as of the statement date.



|                 |     |                         |                    
|---------------- | --- | ----------------------- | -------------------
|Name             | Age | Current Position/Office | Position Held Since
|Peter Rosenthal  | 45  | Director/President/CEO  | 2004               
|Khaldoun Awamleh | 50  | Director                | 2005               
|Robert M. King   | 46  | Director                | 2006               
|Brad Farrow      | 50  | Director                | 2006               
|Brain Rafferty   | 49  | Director                | 2007               
|Mehdi Varzi      | 62  | Director                | 2003               
|Charles Waterman | 69  | Director                | 2003               



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PETER ROSENTHAL, CHAIRMAN, CEO, PRESIDENT, DIRECTOR



Prior to joining Sonoran Energy, Inc Peter held the position of General Manager - Aberdeen Operations with Amerada Hess Corporation Prior to joining Amerada Hess Ostenfeld-Rosenthal worked for Elf Petroleum Norge, as a Specialist Engineer, Project Manager and Implementation Superintendent from 1993 to 1997. He has worked both onshore and offshore during his time with Elf.



Previous to that he was a consulting engineer assisting with the development of new concepts for floating Oil & Gas facilities, developing technical and commercial proposals for clients such as Chevron, Mobil and Shell, and project management of various projects, mainly within structural reliability and risk analysis (both technical and financial).



KHALDOUN AWAMLEH, DIRECTOR

From 1992 to 2001, Mr. Awamleh was owner and General Manager of Arab Infotech Center, a computer hardware and software company. From 2001 to 2002, Mr. Awamleh served as Chairman of Jordan Aviation, a charter airplane company. Mr. Awamleh currently serves on the board of directors of five companies, including Sonoran Energy, Inc. Mr. Awamleh began serving as a director and partner of Axiolog, an e-logisitic company, in 1999. In 2004, Mr. Awamleh began serving as a director of Allied Soft, a software company, and Cyber City, a qualified industrial zone. Mr. Awamleh also serves as Chief Executive Officer of Cyber City. Also in 2004, Mr. Awamleh began serving as a director for Dibah Construction Company. Mr. Awamleh also owns Al Jawarah Hotal Suites in the United Arab Emirates and is a Partner in the Arab American University in Jenin - West Bank.



BRAD FARROW, DIRECTOR



Since 1985, Brad Farrow has led implementations for RLG International clients throughout North America and Western Europe. He introduced RLG's TMP® process (Theoretical Maximum Performance) to the drilling industry in 1996 and has helped to establish RLG as the consultant of choice for offshore performance coaching. Brad spent six years leading RLG's European Operations from Scotland. His current role as a Managing Director includes overseeing the European Operations and directing RLG's international and offshore oil and gas portfolio. Additionally, he is a director of Technical Limit Services Ltd., a performance coaching organization specializing in offshore drilling operations.



Mr. Farrow holds a Bachelor of Science degree from Concordia University in Montreal and an MBA from the University of Western Ontario. He joined the Board of Sonoran Energy, Inc on June 27, 2006.



ROBERT M. KING, DIRECTOR



Robert M. King is a strategic financial executive who has spent most of his career involved with the oil and gas industry, first as a banker, managing lending and corporate finance relationships with diversified energy companies, then as a senior financial officer of two different independent oil and gas companies, and finally as Co-Founder and Managing Director of a private equity group focused on natural gas development opportunities.



Mr. King was the Senior VP and Chief Financial Officer of Nuevo Energy Company from 1996 through 2001. From 2002 to September 2004, he was co-founder and Managing Director of Red Oak Capital Management, LLC, a private firm which raises capital for development drilling projects and provides other similar advisory services for small oil and gas companies.

Mr. King lives in Houston, Texas, where he has been involved in the management of a major nonprofit human services organization since 2004.  He joined the Board on July 18, 2006.



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BRIAN RAFFETY, DIRECTOR



In 1980, Mr. Rafferty began his career in cross-border investor relations at Ogilvie, Taylor Associates, Inc., a financial communications firm specializing in representing non-US companies and trade associations.  In 1982, Mr. Rafferty co-founded Taylor Rafferty, which, for over two decades, has specialized in assisting international companies to build cross-border shareholdings and global capital markets capabilities.  In 2005, Taylor Rafferty was acquired by Shanghai-based, Tokyo Stock Exchange-listed Xinhua Finance.  With 75 employees and offices in New York, London, Tokyo, Seoul, Shanghai, Beijing and Hong Kong, Taylor Rafferty is a leader in cross-border capital markets communications.



Taylor Rafferty is retained by over 60 companies from the US, Europe, Asia, South America and Africa.  Its clients represent some $750 billion in equity market value with an average market capitalization of over $10 billion.  Mr. Rafferty has assisted non-US clients in virtually every type of international capital markets activity.



MEHDI VARZI, DIRECTOR



Mr. Varzi established Varzi Energy as an independent oil and gas consultancy in June 2001 after a 33-year career spanning oil, diplomacy and international finance. From 1982 - 2001, Mr. Varzi worked in the City of London, first as an oil consultant, specializing in OPEC and international oil market developments from 1982-1986 with stockbrokers Grieveson Grant; then as a Director of Energy Research with Kleinwort Benson (1986-1995), and then in the same position with Dresdner Kleinwort Wasserstein (1995-2001), retiring as Managing Director of Energy Research in 2001. From 1972-1981, Mr. Varzi served in the Iranian Ministry of Foreign Affairs, and was posted to the Iranian Embassy in Ankara from 1977-1981. From 1968-1972, Mr. Varzi served as a Senior Analyst in the International Affairs Section of the National Iranian Oil Company. Mr. Varzi regularly conducts briefings on world oil issues for private and state oil and gas companies and is currently involved in a number of oil and gas projects in the Middle East.



CHARLES WATERMAN, DIRECTOR



Mr. Waterman is the Chief Executive Officer and founding member of Jefferson Waterman International, a Washington, DC-based consultancy that advises clients on political, economic and military trends worldwide. Waterman has held several leading positions within the U.S. Central Intelligence Agency and as National Intelligence Officer in the Middle East (1963 to 1985), Mr. Waterman coordinated the intelligence input to policy deliberations in the Near East and South Asia. As a member of the Foreign Service, he spent many years living and working overseas in Kuwait, Cairo, Beirut, Amman and Jiddah. A recognized expert in the Middle East and the former Soviet Union, Mr. Waterman has extensive knowledge of the defense and petroleum industries, and has published extensively in foreign affairs journals.



Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers, directors and persons beneficially owning more than 10% of the Company's common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. The Company has undertaken an extensive review of the Section 16(a) reports filed on behalf of each person subject to Section 16(a) prior to April 30, 2005, to determine whether all of their reportable transactions in the Company's common stock were timely reported and to ensure proper reporting of all of their beneficial holdings. The review revealed that there were a number of holdings and transactions that were not timely reported and the Company has undertaken to assist the subject persons to file the necessary forms. The Company has also developed new procedures to ensure improved compliance with Section 16(a) on an on-going basis.



Based solely on copies of such forms furnished as provided above, to the Company's knowledge all reports required under Section 16(a) during the most recent fiscal year or prior years, except that none of the newly appointed/elected members of the Board of Directors has filed a Form 3.  These reports are intended to be filed as soon as possible.



---





Audit Committee Financial Expert



The entire Board of Directors of Sonoran Energy, Inc. served as the Company's Audit Committee until November 9, 2006 at which time three independent Board members were appointed by the Board to assume the responsibilities of the Audit Committee.  Mr. Robert King was designated as the audit committee financial expert as that term is defined in Item 401(e)(2) of Regulation S-B.



Code of Ethics



We have adopted a "Code of Ethics for Directors, Officers and Employees", a code of ethics that applies to all employees, including our executive officers.



In the event that we make any amendments to, or grant any waivers of, a provision of the Code of Ethics for Directors, Officers and Employees that applies to the principal executive officer, principal financial officer, or principal accounting officer that requires disclosure under applicable SEC rules, we intend to disclose such amendment or waiver and the reasons therefore on a Form 8-K or on our next periodic report.



ITEM 10 - EXECUTIVE COMPENSATION



The Board of Directors appointed three external Board members to a Compensation Committee on November 9, 2006.  The Committee is reviewing the present compensation structure, both in the Company and the industry,  and has the responsibility for recommending on-going programs for Sonoran Energy.



SUMMARY COMPENSATION TABLE



The following table sets forth the aggregate annual remuneration of Sonoran's Chief Executive Officer and the other executive officers whose annual salary and bonus exceeded $100,000 in the fiscal year ended April 30, 2007 (collectively, the "named executive officers"), and for the fiscal years ended April 30, 2006 and April 30, 2005, the Company's most recent and meaningful fiscal years. All amounts are in U.S. dollars unless otherwise noted.



|                            |             |            |           |                  |                   |                                  |                                                                             |                            |           |  | 
|--------------------------- | ----------- | ---------- | --------- | ---------------- | ----------------- | -------------------------------- | --------------------------------------------------------------------------- | -------------------------- | --------- |  | 
|Name and Principal Position | Fiscal Year | Salary
($) | Bonus
($) | Stock Awards
($) | Option Awards
($) | Non Equity Incentive Program
($) | Chamge in Pension Value and Nonqualified Deferred Compensation Earnings
($) | All Other Compensation
($) | Total
($)
|                            |             |            |           |                  |                   |                                  |                                                                             |                            |          
|Peter Rosenthal             | 2007        | 299,663    | 0         | 0                | 0                 | 0                                | 0                                                                           | 113,677                    | 413,340  
|Director/CEO/               | 2006        | 350,000(2) | 0         | 672,000          |                   | 0                                | 0                                                                           | 165,596                    | 1,187,596
|                            | 2005        | 350,000(1) | 0         | 535,500          | 765,000           | 0                                | 0                                                                           | 180,000                    |          
|                            |             |            |           |                  |                   |                                  |                                                                             |                            |          
|Frank T Smith Jr            | 2007        | $158,582   | 0         | 306,000          | 149,999           | 0                                | 0                                                                           | 0                          |          
|Ex-Dir./Pres./CFO           | 2006        | n/a        | n/a       | n/a              | n/a               | n/a                              | n/a                                                                         | n/a                        | n/a      
|                            | 2005        | n/a        | n/a       | n/a              | n/a               | n/a                              | n/a                                                                         | n/a                        | n/a      
|                            |             |            |           |                  |                   |                                  |                                                                             |                            |          
|Bill McFie                  | 2007        | 220,509    | 0         |                  | 0                 | 0                                | 0                                                                           | 14,700                     | 235,209  
|Vice-President              | 2006        | 250,000(2) | 0         | 510,000          | 0                 | 0                                | 0                                                                           | 18,000                     | 778,000  
|                            | 2005        | 250,000(1) | 0         | 203,000          | 580,000           | 0                                | 0                                                                           | 0                          | 1,033,000
|                            |             |            |           |                  |                   |                                  |                                                                             |                            |          
|Jack Hodgson                | 2007        | 20,000     | 0         | 0                | 0                 | 0                                | 0                                                                           |                            | 20,000   
|Ex-Interim CFO              | 2006        | 85,100     | 0         | 0                | 0                 | 0                                | 0                                                                           |                            | 85,100   
|                            | 2005        | n/a        | n/a       | n/a              | n/a               | n/a                              | n/a                                                                         | n/a                        | n/a      
|                            |             |            |           |                  |                   |                                  |                                                                             |                            |          
|Rasheed M. Rafidi           | 2007        | n/a        | n/a       | n/a              | n/a               | n/a                              | n/a                                                                         | n/a                        | n/a      
|Ex - CFO                    | 2006        | 166,667(2) |           | 586,499          |                   | 0                                | 0                                                                           | 112,000                    | 865,166  
|                            | 2005        | 208,334(1) | 0         | 232,000          | 765,000           | 0                                | 0                                                                           | 45,000                     | 1,250,334
|                            |             |            |           |                  |                   |                                  |                                                                             |                            |          
|Ala Amine Nuseibeh          | 2007        | n/a        | n/a       | n/a              | n/a               | n/a                              | n/a                                                                         | n/a                        | n/a      
|Ex - Vice-President         | 2006        | 218,750(2) | 0         | 612,000          | 0                 | 0                                | 0                                                                           | 47,250                     | 878,000  
|                            | 2005        | 208,334(1) | 0         | 232,000          | 765,000           | 0                                | 0                                                                           | 45,000                     | 1,250,334



|                    |      |            |     |         |          |     |     |     |          |  | 
|------------------- | ---- | ---------- | --- | ------- | -------- | --- | --- | --- | -------- |  | 
|                    |      |            |     |         |          |     |     |     |         
|David Mackertich    | 2007 | n/a        | n/a | n/a     | n/a      | n/a | n/a | n/a | n/a     
|Ex - Vice-President | 2006 | 158,363(2) | 0   | 383,581 |          | 0   | 0   | 0   | 542,2130
|                    | 2005 | 188,501(1) | 0   | 203,000 | 580,000, | 0   | 00  | 0   | 971,5010



(1) Salaries for 2005 were all accrued as debt

(2) Salaries up to and including July 2006 were paid thru converting 70 % of the balances owing from April 30, 2004 and to July 31, 2005 to stock at a price of $.55 per share. Salaries for August through December were paid by half cash and half converted to stock.  For January to April 2006, salaries plus 1/12 of the balance owing from July 2005 was paid in cash except for the CEO who took less cash and left his balance owing.



Mr. Rafidi, Mr. Nuseibeh, Mr. Mackertich and Mr. Hodgson have resigned their positions with the Company.



Stocks were valued at the date of grant.





GRANTS OF PLAN-BASED AWARDS



|     |            |                                                                 |                                                             |                                                                |                                                           |                                         |             |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|---- | ---------- | --------------------------------------------------------------- | ----------------------------------------------------------- | -------------------------------------------------------------- | --------------------------------------------------------- | --------------------------------------- | ----------- |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards:
Number of Shares of Stock
or units (#) | All Other Option Awards: Number of Underlying Options (#) | Exercise or Base Price of Option
($/Sh)
|     |            | Threshold ($)                                                   | Target ($)                                                  | Maximum ($)                                                    | Threshold ($)                                             | Target ($)                              | Maximum ($) |  |  | 
|     |            |                                                                 |                                                             |                                                                |                                                           |                                         |             |  |  | 
|N/A  |            |                                                                 |                                                             |                                                                |                                                           |                                         |             |  |  | 
|     |            |                                                                 |                                                             |                                                                |                                                           |                                         |             |  |  | 





OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END



|     |                                                                     |                                                                       |                                                                                                     |                           |                        |                                                             |                                                                   |                                                                                                         |                                                                                                                         |  |  |  |  |  |  |  |  |  | 
|---- | ------------------------------------------------------------------- | --------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------------- | ---------------------- | ----------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  |  |  | 
|     | Option Awards                                                       | Stock Awards                                                         
|Name | Number of Securities Underlying
Unexercised options
(#)
Exercisable | Number of Securities Underlying Unexercised options
(#)
Unexercisable | Equity Incentive Plan Awards:
Number of Securities Underlying Unexercised options
(#)
Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested
($) | Market Value of Shares or Units of Stock That Have Not Vested
($) | Equity
Incentive Plan Awards:
Number of Unearned Shares, Units or Other Rights that have not Vested
(#) | Equity
Incentive Plan Awards:
Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested
($)

|    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|--- |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|    |  |  |  |  |  |  |  |  | 
|N/A |  |  |  |  |  |  |  |  | 
|    |  |  |  |  |  |  |  |  | 



OPTION EXERCISES AND STOCK VESTED



|         |                                           |                                |                                          |                               |  |  |  | 
|-------- | ----------------------------------------- | ------------------------------ | ---------------------------------------- | ----------------------------- |  |  |  | 
|         | Option Awards                             | Stock Awards                  
|Name     | Number of Shares Acquired on Exercise
(#) | Value Realized on Exercise
($) | Number of Shares Acquired on Vesting
(#) | Value Realized on Vesting
($)
|         |                                           |                                |                                          |                              
|F. Smith |                                           |                                | 900,000                                  | 306,000                      



PENSION BENEFITS



|     |           |                                      |                                          |                                     
|---- | --------- | ------------------------------------ | ---------------------------------------- | ------------------------------------
|Name | Plan Name | Number of Years
Credited Service
(#) | Present Value of Accumulated Benefit
($) | Payments During Last Fiscal Year
($)
|     |           |                                      |                                          |                                     
|N/A  |           |                                      |                                          |                                     
|     |           |                                      |                                          |                                     



NONQUALIFIED DEFERRED COMPENSATION



|     |                                        |                                         |                                   |                                         |                                   |  |  |  |  | 
|---- | -------------------------------------- | --------------------------------------- | --------------------------------- | --------------------------------------- | --------------------------------- |  |  |  |  | 
|Name | Executive contributions in Last FY
($) | Registrant Contributions in Last FY
($) | Aggregate Earnings in Last FY
($) | Aggregate Withdrawals/Distributions
($) | Aggregate Balance at Last FYE
($)
|     |                                        |                                         |                                   |                                         |                                  
|N/A  |                                        |                                         |                                   |                                         |                                  
|     |                                        |                                         |                                   |                                         |                                  



DIRECTOR COMPENSATION



|            |                                 |                  |                   |                                            |                                                                         |                            |           |  |  |  |  |  |  | 
|----------- | ------------------------------- | ---------------- | ----------------- | ------------------------------------------ | ----------------------------------------------------------------------- | -------------------------- | --------- |  |  |  |  |  |  | 
|Name        | Fees Earned or Paid in cash
($) | Stock Awards
($) | Option Awards
($) | Non-Equity Incentive Plan Compensation
($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation
($) | Total
($)
|K. Awamleh  | 2,500                           | 56,065           |                   |                                            |                                                                         |                            | 58,565   
|B. Farrow   | 2,500                           | 31,808           |                   |                                            |                                                                         |                            | 34,308   
|R. King     | 2,500                           | 28,932           |                   |                                            |                                                                         |                            | 31,432   
|B. Raferty  | 2,500                           | 6,065            |                   |                                            |                                                                         |                            | 8,565    
|M. Varzi    | 2,500                           | 56,065           |                   |                                            |                                                                         |                            | 58,565   
|C. Waterman | 2,500                           | 56,065           |                   |                                            |                                                                         |                            | 58,565   
|            | 15,000                          | 235,000          |                   |                                            |                                                                         |                            | 250,000  
|            |                                 |                  |                   |                                            |                                                                         |                            |          





---







The Directors compensation as stated above was accrued in the books of the Company at the year end.  No cash payment or stock issuance took place until after the year end.





ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth the beneficial ownership of Common Stock of the Company as of the Record Date for the following: (i) each person or entity who is known to the Company to beneficially own more than 5% of the outstanding shares of the Company's Common Stock; (ii) each of the Company's Directors (and nominees for election as Directors); (iii) the Company's Chief Executive Officer and each of the officers ("Named Officers") named in the Summary Compensation Table herein; and (iv) all Directors and executive officers of the Company as a group.



The number and percentage of shares beneficially owned is determined under rules of the Securities and Exchange Commission ("SEC"), and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or dispositive power and also any shares that the individual has the right to acquire within sixty days of the Record Date through the exercise of any stock option or other right. Unless otherwise indicated in the footnotes, each person has sole voting and dispositive power (or shares such power) with respect to the shares shown as beneficially owned.





|               |                                           |                                           |                 
|-------------- | ----------------------------------------- | ----------------------------------------- | ----------------
|TITLE OF CLASS | NAME AND ADDRESS OF BENEFICIAL OWNER      | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | PERCENT OF CLASS
|Common Stock   | Peter Rosenthal                           | 2,794,528                                 | 2.16%           
|Common Stock   | Khaldoun Awamleh                          | 1,300,000                                 | 1.00%           
|Common Stock   | Brad Farrow                               | 932,222                                   | 0.72%           
|Common Stock   | Mehdi Varzi                               | 250,000                                   | 0.19%           
|Common Stock   | Charles Waterman                          | 250,000                                   | 0.19%           
|Common Stock   | Frank Smith  ex CFO                      | 530,999                                   | 0.41%           
|Common Stock   | Bill McFie-ex officer                     | 2,629,441                                 | 2.03%           
|Common Stock   | Rasheed Rafidi  ex dir                   | 2,972,733                                 | 2.29%           
|Common Stock   | Ala Nuseibeh  ex dir                     | 2,935,295                                 | 2.27%           
|Common Stock   | David Mackertich  ex officer             | 454,107                                   | 0.35%           
|Common Stock   | Current Directors and Officers as a Group | 5,526,750                                 | 4.27%           
|Common Stock   | CUBUS APS                                 | 40,000,000                                | 30.87%          
|               |                                           |                                           |                 
|               | Total                                     | 45,526,750                                | 35.14%          





---





ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



During the year ended April 30, 2007 Directors of the Company advanced funds to the Company in exchange for $295,000 in Convertible notes bearing interest at 10% on $270,000 and 12% on $25,000. The notes contain provisions for warrants at $0.55 per share and a convertible strike price of $0.23.



There were no transactions during the year ended April 30, 2006.



PART IV



ITEM 13 - EXHIBITS



(a) 1. FINANCIAL STATEMENTS



These documents are listed and included in Part II, Item 7 of this report:



Report of Independent Public Accountants

Consolidated Balance Sheet at April 30, 2007

Consolidated Statements of Operations for the periods ended April 30, 2007 and 2006.

Consolidated Statements of Shareholders' Equity for the periods ended April 30, 2007 and 2006.

Consolidated Statements of Cash Flows for the periods ended April 30, 2007 and 2006.

Notes to Consolidated Financial Statements.



3. EXHIBITS

|            |                                                                                                                                                                                                   |                                     
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------
|Exhibit No. | Description                                                                                                                                                                                       | Incorporated by Reference To:       
|3.1         | Articles of Incorporation  Cerotex Holdings, Inc.                                                                                                                                                | Form 10-SB filed on January 14, 2000
|3.2         | Amendment to Articles of Incorporation  Name change to Showstar Entertainment Corporation                                                                                                        | Form 10-SB filed on January 14, 2000
|3.3         | Amendment to Articles of Incorporation  Name change to Showstar Online.com, Inc.                                                                                                                 | Form 10-SB filed on January 14, 2000
|3.4         | Bylaws of Showstar                                                                                                                                                                                | Form 10-SB filed on January 14, 2000
|3.5         | Amended Articles of Incorporation                                                                                                                                                                 | DEF14A filed on August 17, 2000     
|3.6         | Amended Bylaws                                                                                                                                                                                    | DEF14A filed on August 17, 2000     
|4.1         | Standby Equity Distribution Agreement, dated October 18, 2004, between Cornell Capital Partners, LP and Sonoran Energy, Inc.                                                                      | Form 8-K filed October 21, 2004     
|4.2         | Registration Rights Agreement, dated October 18, 2004, by and between Sonoran Energy, Inc. and Cornell Capital Partners, LP in connection with the Standby Equity Distribution Agreement          | Form 8-K filed October 21, 2004     
|4.3         | Escrow Agreement, dated October 18, 2004, by and between Sonoran Energy, Inc., Cornell Capital Partners, LP and Butler Gonzalez LLP, in connection with the Standby Equity Distribution Agreement | Form 8-K filed October 21, 2004     
|4.4         | Placement Agent Agreement, dated October 18, 2004, by and among Sonoran Energy, Inc., Newbridge Securities Corporation and Cornell Capital Partners, LP                                           | Form 8-K filed October 21, 2004     
|4.5         | $425,000 principal amount Compensation Debenture, due October 18, 2007, issued to Cornell Capital Partners, LP in connection with the Standby Equity Distribution Agreement                       | Form 8-K filed October 21, 2004     
|4.6         | Securities Purchase Agreement, dated October 18, 2004, by and between Sonoran Energy, Inc. and Cornell Capital Partners, LP                                                                       | Form 8-K filed October 21, 2004     



---



|     |                                                                                                                                                                                              |                                     
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------
|4.7  | Form of 5% Secured Convertible Debenture                                                                                                                                                     | Form 8-K filed October 21, 2004     
|4.8  | Security Agreement, dated October 18, 2004, between Sonoran Energy, Inc. and Cornell  Capital Partners, LP in connection with Security Purchase Agreement                                    | Form 8-K filed October 21, 2004     
|4.9  | Investor Registration Rights Agreement, dated October 18, 2004, by and between Sonoran Energy, Inc. and Cornell Capital Partners, LP, in connection with Security Purchase Agreement         | Form 8-K filed October 21, 2004     
|4.10 | Escrow Agreement, dated October 18, 2004, by and among Sonoran Energy, Inc., Cornell Capital Partners, LP and Butler Gonzalez LLP, in connection with Security Purchase Agreement            | Form 8-K filed October 21, 2004     
|4.11 | Form of Warrant to Purchase common stock, in connection with Securities Purchase Agreement                                                                                                   | Form 8-K filed October 21, 2004     
|4.12 | Standby Equity Distribution Agreement, dated August 31, 2005, between Cornell Capital Partners, LP and Sonoran Energy, Inc.                                                                  | Form 10-QSB filed December 15, 2005 
|4.13 | Registration Rights Agreement, dated August 31, 2005, by and between Sonoran Energy, Inc. and Cornell Capital Partners, LP in connection with the Standby Equity Distribution Agreement      | Form 10-QSB filed December 15, 2005 
|4.14 | Escrow Agreement, dated August 31, 2005, by and among Sonoran Energy, Inc., Cornell Capital Partners LP and Butler Gonzalez LLP in connection with the Standby Equity Distribution Agreement | Form 10-QSB filed December 15, 2005 
|4.15 | Placement Agent Agreement, dated August 31, 2005, by and among Sonoran Energy, Inc., Newbridge Securities Corporation and Cornell Capital Partners, LP                                       | Form 10-QSB filed December 15, 2005 
|4.16 | Investor Registration Rights Agreement, dated August 31, 2005, by and between Sonoran Energy, Inc. and Cornell Capital Partners, LP in connection with the Security Purchase Agreement       | Form 10-QSB filed December 15, 2005 
|4.17 | Irrevocable Transfer Agent Instruction, dated August 31, 2005                                                                                                                                | Form 10-QSB filed December 15, 2005 
|4.18 | Secured Promissory Note between Sonoran Energy, Inc. and NGP Capital Resources Company                                                                                                       | Form 8-K filed December 7, 2006     
|4.19 | Warrant to Purchase Shares of Common Stock of Sonoran Energy, Inc. issued to Cubus APS                                                                                                       | Form 8-K filed December 7, 2006     
|4.20 | Registration Rights Agreement between Sonoran Energy, Inc. and Cubus APS, dated December 4, 2006                                                                                             | Form 8-K filed December 7, 2006     
|4.21 | Warrant to Purchase Shares of Common Stock of Sonoran Energy, Inc. issued to NGP Capital Resources Company                                                                                   | Form 8-K filed December 7, 2006     
|4.22 | Investor Rights Agreement between Sonoran Energy, Inc. and NGP Capital Resources Company                                                                                                     | Form 8-K filed December 7, 2006     
|10.1 | Content Licensing Agreement with National Register Publishing, a division of Reed Elsevier, Inc.                                                                                             | Form 10-SB filed on January 14, 2000
|10.2 | Supplier Agreement - Leiberman's Gallery, LLP                                                                                                                                                | Form 10-SB filed on January 14, 2000
|10.3 | Agreement dated October 29, 2000 regarding Proposed China Joint Venture                                                                                                                      | Form 10-SB filed on January 14, 2000
|10.4 | John Punzo Employment Contract dated May 27, 1999                                                                                                                                            | Form 10-SB filed on January 14, 2000



---



|      |                                                                                                                                       |                                     
|----- | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------
|10.5  | Oil and Gas Purchase Agreement between Sonoran Energy, Inc. and Longbow, LLC for Emjayco Glide #33 Lease (dated October 5, 2002)      | Form 10-KSB/A filed Nov. 25, 2003   
|10.6  | Oil and Gas Purchase Agreement between Sonoran Energy, Inc. and Longbow, LLC for Keystone/Deer Creek Property (dated October 5, 2002) | Form 10-KSB/A filed Nov. 25, 2003   
|10.7  | Deer Creek Property Purchase Agreement (dated February 7, 2003)                                                                       | Form 10-KSB/A filed Nov. 25, 2003   
|10.8  | Denverton Creek/Malton Black Butte/Maine Prairie/Lambie Ranch Field Property Purchase Agreement (dated March 1, 2003)                 | Form 10-KSB/A filed Nov. 25, 2003   
|10.9  | Services Agreement between Sonoran and Paradigm (Punzo)                                                                               | Form 10-KSB/A filed Nov. 25, 2003   
|10.10 | Oil and Gas Lease Purchase Agreement between Sonoran Energy, Inc. and Zenith Finance Ltd., dated January 16, 2004                     | Form 10-QSB/A filed October 18, 2004
|10.11 | Oil and Gas Lease Purchase Agreement between Sonoran Energy, Inc. and Harvest Worldwide LLC, dated November 2, 2003                   | Form 10-QSB/A filed October 18, 2004
|10.12 | Oil and Gas Lease Purchase Agreement between Sonoran Energy, Inc. and Harvest Worldwide LLC, dated January 31, 2004                   | Form 10-QSB/A filed October 18, 2004
|10.13 | Oil and Gas Lease Purchase Agreement between Sonoran Energy, Inc. and BPR Energy, Inc., dated January 22, 2004                        | Form 10-QSB/A filed October 18, 2004
|10.14 | Oil and Gas Lease Purchase Agreement between Sonoran Energy, Inc. and Summitt Oil & Gas, Inc., dated January 20, 2004                 | Form 10-QSB/A filed October 18, 2004
|10.15 | Shares Purchase Agreement between Sonoran Energy, Inc. and Bond Energy, Inc. (with addenda), dated January 22, 2004                   | Form 10-QSB/A filed October 18, 2004
|10.16 | Purchase Sale Agreement between Sonoran Energy, Inc. and Rippy Oil Company, dated July 7, 2004                                        | Form 8-K filed November 12, 2004    
|10.17 | Termination Agreement, dated August 31, 2005, terminating October 18, 2004, Standby Equity Distribution Agreement                     | Form 10-QSB filed December 15, 2005 
|10.18 | Termination and Amendment Agreement, date August 31, 2005                                                                             | Form 10-QSB filed December 15, 2005 
|10.19 | Merger Agreement between Sonoran Energy, Inc. and Baron Oil, dated May 7, 2004                                                        | Form 8-K filed November 14, 2005    
|10.20 | Worldwide Master Agreement between Sonoran Energy, Inc., and Welltec A/S                                                              | Form 8-K filed December 19, 2005    
|10.21 | Agreement between Sonoran Energy, Inc. and AGR Holdings AS concerning cooperation of oil and gas projects                             | Form 10-QSB filed March 22, 2006    
|10.22 | Agreement for financing between Sonoran Energy, Inc. and Khaldoun Awamleh, dated October 2, 2005                                      | Form 8-K filed August 4, 2006       
|10.23 | Common Stock Subscription Agreement between Sonoran  Energy, Inc. and Cubus APS, dated December 4, 2006                               | Form 8-K filed December 7, 2006     
|10.24 | Credit Agreement between Sonoran Energy, Inc. NGPC Asset Holdings, LP                                                                 | Form 8-K filed December 7, 2006     
|10.25 | Assignment and Conveyance of Overriding Royalty Interest from Sonoran Energy, Inc. to NGP Capital Resources Company                   | Form 8-K filed December 7, 2006     



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|      |                                                                                                                                                                                                                                                |                                
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------
|10.26 | Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement and Fixture Filing from Sonoran Energy, Inc. to John H. Homier, TTEE and Daniel S. Schockling, TTEE for the Benefit of NGPC Asset Holdings, LP (Texas Properties) | Form 8-K filed December 7, 2006
|10.27 | Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement and Fixture Filing from Sonoran Energy, Inc. to NGPC Asset Holdings, LP (Louisiana Properties)                                                                    | Form 8-K filed December 7, 2006
|14.1  | Code of Ethics                                                                                                                                                                                                                                 |                                
|31.1  | Rule 13a-14a/15d-14(a) Certification by Chief Executive Officer                                                                                                                                                                                |                                
|31.2  | Rule 13a-14a/15d-14(a) Certification by Chief Financial Officer                                                                                                                                                                                |                                
|32.1  | Section 1350 Certification by Chief Executive Officer                                                                                                                                                                                          |                                
|32.2  | Section 1350 Certification by Chief Financial Officer                                                                                                                                                                                          |                                





(b) Other Information



The Company filed Form 8-K reports during the 4th quarter:





ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit Fees



The aggregate fees billed for professional services rendered by our principal accountants (Hein & Assoc. LLP as of February 2, 2007) for the audit of our financial statements, for the reviews of the quarterly financial reports on Form 10-QSB and for other services normally provided in connection with statutory filings were $39,790 and $0 for the years ended April 30, 2007 and April 30, 2006, respectively.



The aggregate fees billed for professional services rendered by our principal accountants (Epstein, Webber and Canover to January 22, 2007) for the audit of our financial statements, for the reviews of the quarterly financial reports on Form 10-QSB and financial statements included in our annual report on Form 10-KSB and for other services normally provided in connection with statutory filings were $74,770 and $57,384 for the years ended April 30, 2007 and April 30, 2006, respectively.



All Other Fees

We did not incur any fees for other professional services rendered by our principal accountants during the years ended April 30, 2007 and April 30, 2006.





SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





SONORAN ENERGY, INC.

(Registrant)



August 13, 2007



By: /s/Peter Rosenthal

Peter Rosenthal

Director/President/CEO



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KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints Peter Rosenthal and Andrew Williams, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each said attorneys-in-fact and agents or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.



In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of registrant in the capacities and on the dates indicated.



|                                     |                        |                 | 
|------------------------------------ | ---------------------- | --------------- | 
|                                     |                        |                
|Signature                            | Title                  | Date           
|/s/Peter Rosenthal
Peter Rosenthal   | President/CEO/Director | August 13, 2007
|/s/Brad Farrow
Brad Farrow           | Director               | August 13, 2007
|/s/Mehdi Varzi
Mehdi Varzi           | Director               | August 13, 2007
|/s/Charles Waterman
Charles Waterman | Director               | August 13, 2007
|/s/Brian Rafferty
Brian Rafferty     | Director               | August 13, 2007
|/s/Khaldoun Awamleh
Khaldoun Awamleh | Director               | August 13, 2007
|/s/Robert King
Robert King           | Director               | August 13, 2007





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Exhibit 31.1



Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, provides the following certification.



I, Peter Rosenthal ,
 certify that:



1. I have reviewed this annual report on Form 10-KSB of Sonoran Energy, Inc.;



2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to  make the statements made, in light of the circumstances under which such  statements were made, not misleading with respect to the period covered by this annual report;



3. Based on my knowledge, the financial statements, and other financial  information included in this  report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this annual report;



4. The other certifying directors and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))  and internal control over financial  reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the small business issuer and have:



a.  Designed such disclosure controls and procedures, or caused such  disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the small business issuer,  including its consolidated subsidiaries, is made known to us by other within those entities, particularly during the period in which this report  is being prepared;



b. Designed such internal control over financial reporting, or caused  such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of  financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting  principles.



c.  Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about   the effectiveness of the disclosure controls and procedures, as of the end  of the period covered by this report on such evaluation; and



d.  Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during small business issuer's fourth fiscal quarter that has materially affected, or is reasonably likely to  materially affect, the small business issuer's internal control over financial reporting; and



5. The other certifying directors and I have disclosed, based on our most  recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of our board of directors (or  persons performing the equivalent functions):



a. All significant deficiencies and material weaknesses  in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial data; and



b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting; and



Date: August 13, 2007



/s/Peter Rosenthal

Peter Rosenthal





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Exhibit 31.2



Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, provides the following certification.



I, Andrew Williams certify that:



1.  I have reviewed this annual report on Form 10-KSB of Sonoran Energy, Inc.;



2. Based on my knowledge, this report does not contain any untrue  statement of a material fact or omit to state a material fact necessary to  make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;



3.  Based on my knowledge, the financial statements, and other financial  information included in this  report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this annual report;



4. The other certifying directors and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))  and internal control over financial  reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the small business issuer and have:



a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by other within those entities, particularly during the period in which this report is being prepared;



b. Designed such internal control over financial reporting, or caused  such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of  financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting  principles.



c.  Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end  of the period covered by this report on such evaluation; and



d.  Disclosed in this report any change in the small business issuer's internal  control over financial reporting that occurred during the small business issuer's fourth fiscal quarter that has materially affected, or is reasonably likely to  materially affect, the small business issuer's internal control over financial reporting; and



5. The other certifying directors and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the  Company's auditors and the audit committee of our board of directors (or persons performing the equivalent functions):



a. All significant deficiencies and material weaknesses  in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record,  process, summarize and report financial data; and



b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting; and



Date:  August 13, 2007



/s/Andrew Williams

Andrew Williams



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Exhibit 32.1



CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of Sonoran Energy, Inc. on Form 10-KSB for the year ending April 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter Rosenthal, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/s/Peter Rosenthal

Peter Rosenthal

President

August 13, 2007



---



Exhibit 32.2



CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of Sonoran Energy, Inc. on Form 10-KSB for the year ending April 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Andrew Williams, CFO of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/s/Andrew Williams

Andrew Williams

Chief Financial Officer

August 13, 2007