Oil Shale Activity Escalating Around Solimar's Kreyenhagen Project

MELBOURNE, AUSTRALIA--(Marketwire - March 7, 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") provides the following update of oil and gas industry activity relevant in particular to the Company's 84% to 100% owned and operated Kreyenhagen project in the northwest San Joaquin Basin, California where a potentially significant oil shale resource has been independently assessed in the project area near to available well control*. Extrapolating from this study, using the Company's own well data and that published by the USGS** Solimar believes that thick oil shales of equivalent richness are likely to be present over more than half the Company's approximate 14,000 gross acre land position.

Solimar's acreage position

• The US Office of Energy Administration (a division of the US Government Office of Energy) estimates that almost 2/3rds (64%) of all the oil shale resources in the contiguous United States are located in California***. Those same published statistics show that the San Joaquin Basin, Solimar's area of focus, is in turn the volumetrically richest of the California oil shale basins. The two main oil shales are the Monterey Shale, the subject of ongoing production testing at Solimar's Paloma project and the Kreyenhagen Shale, which is thick and extensive throughout much of the Company's Kreyenhagen Project acreage.
  
• Over the past two years Solimar has built a strategic acreage position targeting the oil shales in the northern part of the San Joaquin Basin with particular emphasis on the Kreyenhagen Shale on the flank of the Basin where it is not too deeply buried and should not be expensive to exploit. The shale formation outcrops to the west in the project area and plunges down to approximately 11,000 feet in the east. Most of the Solimar acreage occupies a position where the shale has very rich oil source rock characteristics as published by the USGS. Total Organic Carbon or TOC's averaging 5.4% and Hydrogen Index (HI) up to 726 have been measured from an approximately 150 feet thick zone (for which there is available core data) near the top of the shale in wells in the project area. The shale formation is pervasive over most of the project thickening to more than 1,000 feet thick on the east side of the acreage.
  
• A recent, scoping level independent assessment for a nominal 640 acre section (1 square mile) near well control in the Company's acreage by Sproule Unconventional Limited* resulted in estimates of undiscovered light oil resources or Petroleum initially in Place ("PIIP" refer Appendix A) ranging 21.7MMBBLs (Low Case), 35.9MMBBLs (Best Case) to 59.4 MMBBLs (High Case) for that section of land. Using these unrisked estimates as a basis, combined with the thick, pervasive nature of the oil shale within the area there is potential for a large, as yet untapped light oil resource in the Company's acreage. Solimar believes that more than half of its approximate 14,000 gross acres (10,000 acres of which is held under a 100% owned, single, long term lease) is prospective for the oil shale. Sproule further considered that the Kreyenhagen Shale is a viable exploration target with potential for development with horizontal well technologies. These technologies, now standard for oil shale reservoirs elsewhere, are yet to be tried in the project area or, as far as the Company is aware, in the adjacent fields that are producing light oil from vertical wells. The principal geological risks were deemed by Sproule to be reservoir quality and pervasiveness of fracturing.
  

Major Oil companies have been aggressively expanding their portfolios within the Kreyenhagen oil shale play fairway

• Hess Corporation (Mkt Cap: US$22 billion), a new entrant into the California oil shale plays has permitted for the drilling of up to 6 test wells updip to the east from Zodiac Exploration's acreage in which a deep horizontal well was recently tested flowing between 60 and 126 BOPD of 29 degree API gravity oil. Solimar understands that Hess will be targeting the Kreyenhagen Shale.
  
• Oil major Occidental Petroleum Corporation (Mkt Cap: US$84 billion) has stated ambitious plans for the expansion of its oil shale production in California and are the largest acreage holder adjacent to Solimar. OXY have been competitively leasing in the immediate area of Solimar's Kreyenhagen Project.
  
• New Gulf Resources, a private company from Tulsa, Oklahoma and another new entrant to California oil shale activity are advanced in the drilling of an initial three well program on acreage on the flanks of the Kettleman Domes with targets in both the Monterey and Kreyenhagen Shales. Solimar has a right to back in for a 10% interest in the acreage that is being drilled.

The activity highlighted above and illustrated in the accompanying schematic has all been occurring within the past 6 months, providing an indication of escalating industry activity directed at proving the potential of the oil shale reservoirs in the area. In particular the Kreyenhagen Shale. This activity is reminiscent of industry performance in other oil shale basins in the USA and Canada that have taken in some cases less than two years from identification of the potential oil resource to proof of commercially productive concept. It is also the case in those other oil shale basins that as the industry database has been increased by drilling investment and well completion technologies have evolved to meet the specific challenges of producing from individual shale reservoirs, that commercial production has been achieved from a wide variety of geological settings, reservoir depths and pressures.

Solimar is therefore hopeful that the same will apply to unlocking the potentially large oil shale resource in the Kreyenhagen project.

The Company, although focussed short term on its planned redevelopment of the Temblor Sandstone oil accumulation is actively preparing for a pre cursor core hole program that will gather data on the Kreyenhagen Shale leading in due course to dedicated test wells that will likely include horizontal drilling.

Commenting on the Company's strategy in the area, Solimar CEO John Begg said:

"Currently the Company's focus is on its planned re development of the already discovered oil accumulation in the overlying Temblor Sandstone which has independently assessed, unrisked potential for up to 79.1 MMBBLS* net to the Company's working interest. This shallow oil field has been penetrated by and produced oil from some 22 old wells and, as with other productive heavy oil fields in the general area, is proven geochemically to have originated as plus 30 degree API gravity light oil generated from the Kreyenhagen Shale. Over time the oil has then been reduced to 13-18 degrees API gravity by near surface biodegradation. Given the potential size of the opportunity presented by the oil shale however the Company will inevitably also turn its attention to work programs specifically designed to evaluate whether commercial flows of light oil can be extracted from the shale. In the meantime industry activity directed at the oil shale is escalating with new entrant Hess planning up to 6 wells commencing in the first half of this year."

Sincerely

John Begg, Chief Executive Officer

Solimar Energy Limited

References:

* Resource Assessment of Certain P&NG Holdings in the Kreyenhagen Area for Solimar Energy Limited (as of 31 October, 2011) - By Sproule Unconventional Limited. This report was highlighted in a release to the ASX and Canada on 18 November, 2011 and published in full on 22 November, 2011.
* Audit of Solimar Energy TSX-V listing compliance Technical report, California oil and Gas Projects, as of 30 June, 2011 - by Sproule Unconventional Limited. This report was released to the ASX and Canada on 22 November, 2011.

Copies of these reports are on Solimar Energy's website under "Investor Centre" and "Resource Reports".

** USGS Professional Paper 1713 (published 2007), Chapter 11: Petroleum Systems and Geologic Assessment of Oil and Gas in the San Joaquin Basin, California.
*** Website of the US Office of Energy Information Administration, www.eia.gov.

To view Schematic Map Showing Industry Activity in the Kreyenhagen Oil Shale Fairway, please visit the following link:

http://media3.marketwire.com/docs/SXSFIG10307.pdf

To view Schematic Cross-Section across Solimar's Kreyenhagen Project, please visit the following link:

http://media3.marketwire.com/docs/SXSFIG20307.pdf

Appendix A

PIIP

Total Petroleum Initially-In-Place (PIIP) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered (equivalent to "total resources").

Assessment procedures and risks

In the assessment of this unproved property, Solimar considered all available pertinent factors, including where applicable, geological structures, prospective zones, historical drilling and production results, and risks related to exploration development and production. The analysis was conducted without consideration of economics, royalties or other encumbrances. The resource classification methodology used complies with the Canadian Oil and Gas Evaluation Handbook definitions and guidelines, in accordance with the requirements of National Instrument 51-101, and the estimate has an effective date of 30^th October 2011.

There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Reader Advisory: PIIP estimates and forward-looking statements

The estimates of petroleum volumes described in this news release are for resources only. These estimates constitute forward-looking statements. Readers are cautioned not to place undue reliance on forward looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific that contributes to the possibility that the predictions, forecasts, projections in the forward-looking statements will not occur, and that the actual performance or results expressed or implied by such forward looking statements.

PIIP estimates are subject to certain assumptions, risks and uncertainties, including those associated with exploration for oil and gas, 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 resources will be recovered or produced. Actual resources may be greater than or less than the estimates provided in this presentation. There is no certainty that any portion of the PIIP described above will be discovered. There is also no certainty that it will be commercially viable to produce any portion of such PIIP, if discovered.

The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by applicable securities laws, Solimar, disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Solimar undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

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.

Source: Marketwire International (March 7, 2012 - 8:30 AM EST)

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