MELBOURNE, AUSTRALIA--(Marketwire - Aug. 29, 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") is pleased to provide the following brief update on ongoing production testing operations at the Company's Paloma project. Testing of the shallow gas sand in Paloma-3 resulted in a maximum, unassisted flow of 2.2 MMCF (million cubic feet) of gas per day. The joint venture operated by Neon Energy expects to commercialise the gas in the well on the back of a greater Paloma development, and has signed a Gas Sales Agreement with a local purchaser. Two additional shallow gas sands in the well remain to be tested.
At Paloma Deep-2 the Company has completed testing of the McDonald Sandstone, the deepest objective in the well. Light oil (36° API) was recovered at surface along with a small flow of gas. Pressure data indicates the formation has high pressure, but relatively low matrix permeability. The zone will be investigated as a candidate for hydraulic fracture stimulated development as part of a full field development, contributing incremental resources to those estimated for the main reservoirs.
Preparations are now being made to test the primary objectives of the Paloma Deep-2 well, the Fruitvale Formation and the Lower Stevens B sandstone. Testing of these zones in Paloma Deep-1 achieved a maximum unassisted flow rate of 226 barrels per day of oil/condensate and 1.9 MMcf of gas per day.
At Paloma Deep-1, the extended production test of the Lower Antelope (Monterey) Shale section yielded sustained, on pump rates of 7 BOPD (30°API) and 20 MCF of gas per day with a 68% water cut before being shut in for a pressure build-up. Both the rate and the oil cut are encouraging given that the flow has been achieved from a vertical well without hydraulic fracture stimulation. The test will be resumed shortly with maximum drawdown to determine the full deliverability potential of the reservoir. This data will help determine the optimal drilling and completion strategy for this extensive unconventional reservoir.
The Company will provide further update announcements as and when new information and results become available.
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.
ABN 42 112 256 649
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