Solimar Energy provide the following update for the Company's 100% owned Kreyenhagen shallow oil field redevelopment project in the San Joaquin Basin, California. As a follow-up to the previous announcements of establishment of production testing, a 3,101% increase in Contingent Recoverable Resource (C2 - Best Estimate) and confirmation of a lighter oil pool, the Company has initiated long term primary production in the field and sold the first shipment of oil from the field.

The Company sold in late December 2012 the first shipment of 95 bbls of oil produced from the Temblor sandstone reservoir. After the transportation deduction, the oil was sold at USD $94 per bbl, a 4% premium to WTI crude oil prices, as a result of the local crude oil market in California that favors heavy oil producers. A second oil shipment is expected in early February of additional crude that has already been produced, but not yet shipped.

The Company has the 4-33 well on a long term production test, which is producing from the newly confirmed down-dip zone of lighter oil (17° API gravity) that has not previously been produced. Water cut in the well remains steady at 35-40%. The Company is actively investigating the potential for multiple additional locations along strike and for potential acceleration of production by small fracs and higher flow rate deviated or horizontal wells.

Tags: Solimar Energy Limited