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Solimar Update on California Kreyenhagen Shale Oil Play

 
Solimar Update on California Kreyenhagen Shale Oil Play

MELBOURNE, AUSTRALIA--(Marketwire - Dec. 6, 2012) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Solimar Energy (TSX VENTURE:SXS)(ASX:SGY) ("The Company") provides the following update for the Company's 100% owned Kreyenhagen shale oil project in the San Joaquin Basin, California. The Kreyenhagen shale is a world class oil source rock that has been typed to approximately 3 bboe oil and gas from the surrounding fields, notably Kettleman North and Middle Dome and Coalinga. Solimar holds 9,146 net acres within this prospective unconventional shale fairway that has recently attracted significant attention from major international oil companies on offsetting acreage in the San Joaquin Basin. The naturally fractured Kreyenhagen shale has historically produced from work overs of vertical wells at both Kettleman North and Middle Dome fields.

  • Zodiac Exploration Inc., who led the recent surge in the Kreyenhagen shale oil play, reported on October 23, 2012 that it signed a 4 well farm-out agreement with Aera Energy LLC (Shell-Exxon JV) covering 19,600 acres. The first drilling under the agreement is expected to occur by June 2013. In 2011 Zodiac established the proof of concept of the Kreyenhagen shale oil play in the area by drilling and testing oil and gas from a stimulated horizontal well in an unstructured basin setting. Solimar holds 1.1% WI in an approximate 100,000 acre AMI area which includes the Zodiac well. Zodiac's press release can be accessed via their website at http://www.zodiacexploration.ca/.


  • Hess Corporation, a prominent international and domestic USA oil and gas company entered the San Joaquin Basin in 2012 and has been active in the North Central section of the basin. Hess drilled an exploration well in Q3 2012 to the SE of Zodiac's acreage. Although the well information is confidential, it is surmised from its location that the well was a Kreyenhagen shale test located along the basin margin extent of the play. Hess has permitted at least one additional well along the Kreyenhagen trend.


  • Vintage Petroleum (Oxy) has permitted three exploration wells in the Kreyenhagen play area with two of the wells in the Avenal Embayment area adjacent to Solimar's Kreyenhagen Ranch acreage. One of the permitted wells is located within 4 miles of Solimar's acreage.


  • Solimar continues an internal geologic evaluation of its Kreyenhagen shale acreage as well as closely monitoring industry activity in the play as it evolves. Solimar is actively discussing joint venture opportunities with companies as it moves to utilize its sizeable acreage position and high working interest in the Kreyenhagen Ranch area.

     

Will Satterfield, CEO of Solimar, commented, "We are very pleased that following Zodiac's initial foray last year into the Kreyenhagen shale oil play which provided proof of concept, major companies are now entering the play. We anticipate that with further drilling activity and learnings over the course of 2013 in the Kreyenhagen shale, the commerciality of the large oil play will significantly improve."