Multiple Oil and Gas Discovery 29 August, 2012 RELEASE TO ASX AND CANADA
Update on Testing of Paloma Discovery
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES
Highlights
·
Preparing to test extended section of Fruitvale Formation in Paloma Deep-2
·
Paloma-3 shallow gas sand flowed at maximum rate of 2.2 million cubic feet per day
Solimar Energy Limited (ASX:SGY, TSXV: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
o 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
o 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.