MELBOURNE, AUSTRALIA--(Marketwire - July 17, 2012) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Solimar Energy Limited (ASX:SGY)(TSX VENTURE:SXS) ("Solimar" or the "Company") advises that the Paloma Project operator Neon Energy (ASX:NEN) has released a progress report following the successful drilling and completion for production testing of the second deep appraisal well, the Paloma Deep-2 at the Company's Paloma oil and gas discovery in the San Joaquin basin, California.
The progress report highlights that hydrocarbons have been discovered in all three wells drilled so far by the Paloma joint venture (Solimar 15% in the current wells and 15% to 25% interests in the gross 2,847 acre project area, refer to attached map below) and that extended production testing operations are either already underway or soon to begin for multiple, indicated hydrocarbon pay zones in each well. The Neon report which contains management estimates of recoverable Contingent Resources can be accessed by interested readers on the Neon website: www.neonenergy.com under "Latest News".
In particular the Paloma Deep-2 reached total depth (TD) of 13,931 feet on 2 July, 2012. The well has been completed with a conventional 7 inch liner for production testing of several apparent pay zones, which includes each of the Monterey Formation zones identified in the Paloma Deep -1 discovery well. That is the Fruitvale Shale, Lower Stevens Sandstone and Antelope Shale, portions of which were all cored in the well. A new zone called the McDonald Sandstone was found at approximately 13,800 feet after deepening of the well beyond the planned TD of 13,300 feet due to continuing strong oil and gas shows being recorded while drilling. Excellent gas and oil shows (up to approximately 3,000 units of gas and free oil in the mud system) were recorded while drilling the McDonald Sandstone.
The forward production testing programs will include:
- A series of tests in the Paloma Deep-2 likely beginning with the McDonald Sandstone and scheduled to commence by the first week of August.
- At Paloma -3 the initial production test flowed up to 968 MCF of gas per day. This is to be followed by a more comprehensive test designed to confirm the size of the resource and potential for long term deliverability. That test is expected to be complete before the end of July.
- At Paloma Deep-1 testing of the Lower Antelope Shale is ongoing, with additional perforations added to a more sand-prone section resulting in a stabilised flow of 7 barrels of oil per day and 20 MCF of gas per day; from a total of 22 barrels of fluid per day. Both the rate and the 32% oil cut are encouraging given that the flow is coming from a vertical section that has not been subject to fracture stimulation. Horizontal well completions coupled with various stimulation techniques can be expected to significantly enhance the flow rate. Analysis of the test results and of reservoir core retrieved from Paloma Deep-2 will provide critical input to determining the potential for commercial development of the resource. Once testing of the Lower Antelope is finalised the joint venture will proceed with testing of a number of shallower zones of interest encountered in the well.
Commenting on the Paloma project progress report Solimar CEO John Begg said:
"It has been a significant achievement to now have 3 wells down and to be preparing for concurrent production testing operations. The results so far are very encouraging and it is hoped that the production testing program will prove the potential for commercial production from both the conventional (sandstone) and unconventional (fractured shale) hydrocarbon reservoirs identified at Paloma."
John Begg, Chief Executive Officer
Solimar Energy Limited
This press release contains certain forward-looking statements within the meaning of applicable securities law. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur, including without limitation statements relating to intended testing, work programs, financing and associated timelines. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Solimar Energy Limited cannot assure that actual results will be consistent with these forward-looking statements. They are made as of the date hereof and are subject to change and Solimar Energy Limited assumes no obligation to revise or update them to reflect new circumstances, except as required by law. Prospective investors should not place undue reliance on forward-looking statements. These factors include the inherent risks involved in the exploration for and development of crude oil and natural gas properties, the uncertainties involved in interpreting drilling results and other geological and geophysical data, fluctuating energy prices, the possibility of cost overruns or unanticipated costs or delays and other uncertainties associated with the oil and gas industry. There is no assurance that the Offering will be completed.
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ABN 42 112 256 649
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