Solimar Energy Limited

Solimar Energy Limited

October 29, 2012 05:00 ET

Solimar Reports Major Increase in Contingent Recoverable Oil Resource

MELBOURNE, AUSTRALIA--(Marketwire - Oct. 29, 2012) -


Solimar Energy (TSX VENTURE:SXS)(ASX:SGY) ("The Company" or "Solimar") is pleased to announce the release of the Contingent Resource Assessment for the Company's 100% owned Kreyenhagen shallow oil field redevelopment project in the San Joaquin Basin, California. The Independent Resource Assessment was conducted by Sproule Unconventional Limited (Sproule) and is an update to the Company's 2011 Resource Assessment. The July 31, 2012 Assessment is focused on the shallow Temblor Sandstone heavy oil resource within a portion (225 acres) of the Kreyenhagen Field Administrative Boundary. The report was prepared in accordance with National Instrument 51-101 and can be viewed on the Company's website:

  • Contingent Recoverable Resource (C2 - Best Estimate) attributable to the Temblor Sandstone in the Kreyenhagen Field has increased 3,101% to 4.15 million barrels ("mmbo") from 0.13 mmbo.

  • The large increase in Contingent Recoverable Resource is a result of the Company's efforts and commitment to current and future primary and thermal development activity in the Temblor Sandstone at the Kreyenhagen Field.

  • The Company anticipates realizing future Proven Reserves in the Kreyenhagen Field through continued primary production. The drilling of infill wells and initiation of the cyclic steam pilot in Q1 2013 is planned to develop the Contingent Resource Sproule has assigned to the area. Further Contingent Recoverable Resource additions are expected within the Company's field area lease holdings through a planned appraisal well program and future expansion of the cyclic steam program and conversion to a steam flood. Additionally the Company continues to mature the Kreyenhagen Shale oil play present in its acreage as industry activity increases in the surrounding areas.

Temblor FormationLow EstimateBest EstimateHigh Estimate
Resource Classification(C1)(C2)(C3)
2012 Contingent Resource (Mbbl)2,4164,1466,153
2011 Contingent Resource (Mbbl)78130184
Percentage Increase3,013%3,101%3,249%
1.These estimates reflect the Company's 100% working interest in the contingent and discovered resources without consideration of economics, royalties or other encumbrances.
2.These resources have been classified in accordance with Canadian Oil and Gas Evaluation Handbook definitions that are specified in National Instrument 51-101 and have not been risked for the chance of development; as such, there is no certainty that any of the resources will be developed, or that it will be commercially viable to develop any portion of these resources.

Will Satterfield, CEO of Solimar, commented "In 2012 the Company significantly grew its contingent recoverable oil resource in the shallow Temblor sandstone at the Kreyenhagen Field. This, in conjunction with our better than expected initial results from the Temblor oil production testing, illustrates the potential of both primary and thermal enhanced production and resource growth at the Kreyenhagen Field. We also look forward to the continued maturation of the large regional Kreyenhagen shale oil play within and surrounding our extensive Kreyenhagen area lease position."

Reader Advisory: Potential resource estimates and forward-looking statements

This news release contains forward-looking information relating to adding to reserves and resource estimates, planned development and exploration activities on the properties in which the Company has interests, and other statements that are not historical facts. Such forward-looking information is subject to important risks, uncertainties and assumptions. The results or events predicated in this forward-looking information may differ materially from actual results or events. As a result, you are cautioned not to place undue reliance on this forward-looking information.

Forward-looking information is based on certain factors and assumptions regarding, among other things, the impact of increasing competition; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its oil and natural gas products, and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward looking-information is subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what is currently expected. These factors include risks associated with instability of the economic environments in which the Company operates or owns interests, oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, reliance on key personnel, regulatory risks and delays, including risks relating to the acquisition of necessary licenses and permits, environmental risks and insurance risks.

The estimates of resources in this news release constitute forward-looking information which is subject to certain risks and uncertainties, including those associated with the drilling and completion of future wells, limited available geological data and uncertainties regarding the actual production characteristics of, and recovery efficiencies associated with, the reservoirs, all of which are being assumed. As estimates, there is no guarantee that the estimated reserves or resources will be recovered or produced. Actual reserves and resources may be greater than or less than the estimates provided in this presentation.

You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company is under no obligation and does not undertake to update this information at any particular time, except as required by law.

Resource Definitions

This discussion has been excerpted from Sections 5.2 and 5.3 of the Canadian Oil and Gas Evaluation Handbook, Second Edition, September 1, 2007. The following definitions relate to the subdivisions in the SPE-PRMS resources classification framework and use the primary nomenclature and concepts contained in the 2007 SPE-PRMS, with direct excerpts shown in italics.

Production is the cumulative quantity of petroleum that has been recovered at a given date.

Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical, and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are further classified according to the level of certainty associated with the estimates and may be subclassified based on development and production status.

Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status.

Classification of Resources

When evaluating resources, in particular, contingent and prospective resources, the following mutually exclusive categories are recommended:

  • Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term reflects a P90 confidence level.

  • Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term is a measure of central tendency of the uncertainty distribution (most likely/mode, P50/median, or arithmetic average/mean).

  • High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term reflects a P10 confidence level.

Company Gross Contingent Resources are the Company's working interest share of the contingent resources, before deduction of any royalties.

Company Net Contingent Resources are the gross contingent resources of the properties in which the Company has an interest, less all Crown, freehold, and overriding royalties and interests owned by others.

ABN 42 112 256 649

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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