Solimar Energy Limited has finalised the execution of a binding farmout agreement with Blast Energy Services Inc (Blast) for the drilling of the Guijarral Hills field extension well, in the northwestern San Joaquin Basin onshore California.

The Paul Graham Drilling Service Co Rig # 5 has been contracted for the program and is expected onsite by the third week of February. Site works have commenced for the well that has a programmed total depth of 10,400 feet and will take approximately 35 days to drill.

Highlights of the upcoming Guijarral Hills Project activity • Farmout with Blast Energy services is now unconditional • Blast to fund approximately 2/3rds of well cost • Rig contracted and site works commenced • Drilling to commence by third week of this month (February) • The Solimar 76-33 well will appraise the mapped extension of the Guijarral Hills oil field which has produced more than 50 million barrels • Targeting recoverable light oil resource of 5 million barrels with upside in the project of 25 million barrels • Four sandstone reservoir zones to be evaluated between 7,700 feet and 10,400 feet • Solimar is the Operator and will retain a 35% interest post well

John Begg, Executive Director's Comments 'We are pleased to be commencing the drill program at Guijarral Hills. It provides the Company with an opportunity to quickly commercialise any oil discovered and is one of a series of highly prospective targets the Company has matured for drilling this year.'

The Guijarral Hills Project The Guijarral Hills project is located in the northwestern San Joaquin Basin onshore California. It is situated between giant oil fields at Coalinga to the northwest and Kettleman Dome immediately to the southeast.

The joint venture will be drilling a step out or appraisal well on a mapped extension of the Guijarral Hills field that has historically produced over 50 million barrels of light oil. Mapping of the prospect is based mainly on control provided by numerous offset wells. There is limited available seismic coverage. Four individual sandstone reservoir targets are to be evaluated, each being the extension of reservoirs that were productive elsewhere on the Guijarral Hills structure. The reservoir zones are projected at depths between 7,700 feet and 10,400 feet. Solimar anticipates that if the drill program is successful the well could produce at pump assisted initial rates of up to 400 bopd and up to 10 additional drilling locations could be viable.

Under the farmout agreement Blast earns a 50% interest in the Guijarral Hills project by paying a US$200,000 share of past costs and funding 66.7% of the cost of the well which is budgeted at just over US$2.0 million dry hole and US$2.5 million completed and production tested.

Recoverable light oil resources of 5 million barrels are targeted with up to 25 million barrels potential within the Company's 2,560 acre holding.

Solimar's exposure to the dry hole cost of the well (net of past costs recovered) is approximately US$340,000 which will be funded from working capital.

ASX listed partners in the Guijarral Hills project, listed at post Farmout equities will be: Solimar Energy Limited (Operator) 35% Neon Energy Limited 15%

Solimar Energy Limited announce it has finalised the execution of a binding farmout agreement with Blast Energy Services Inc ('Blast') for the drilling of the Guijarral Hills field extension well, in the northwestern San Joaquin Basin onshore California.

The Paul Graham Drilling Service Co Rig # 5 has been contracted for the program and is expected onsite by the third week of February. Site works have commenced for the well that has a programmed total depth of 10,400 feet and will take approximately 35 days to drill.

Highlights of the upcoming Guijarral Hills Project activity • Farmout with Blast Energy services is now unconditional • Blast to fund approximately 2/3rds of well cost • Rig contracted and site works commenced • Drilling to commence by third week of this month (February) • The Solimar 76-33 well will appraise the mapped extension of the Guijarral Hills oil field which has produced more than 50 million barrels • Targeting recoverable light oil resource of 5 million barrels with upside in the project of 25 million barrels • Four sandstone reservoir zones to be evaluated between 7,700 feet and 10,400 feet • Solimar is the Operator and will retain a 35% interest post well

John Begg, Executive Director's Comments 'We are pleased to be commencing the drill program at Guijarral Hills. It provides the Company with an opportunity to quickly commercialise any oil discovered and is one of a series of highly prospective targets the Company has matured for drilling this year.'

The Guijarral Hills Project The Guijarral Hills project is located in the northwestern San Joaquin Basin onshore California. It is situated between giant oil fields at Coalinga to the northwest and Kettleman Dome immediately to the southeast.

The joint venture will be drilling a step out or appraisal well on a mapped extension of the Guijarral Hills field that has historically produced over 50 million barrels of light oil. Mapping of the prospect is based mainly on control provided by numerous offset wells. There is limited available seismic coverage. Four individual sandstone reservoir targets are to be evaluated, each being the extension of reservoirs that were productive elsewhere on the Guijarral Hills structure. The reservoir zones are projected at depths between 7,700 feet and 10,400 feet. Solimar anticipates that if the drill program is successful the well could produce at pump assisted initial rates of up to 400 bopd and up to 10 additional drilling locations could be viable.

Under the farmout agreement Blast earns a 50% interest in the Guijarral Hills project by paying a US$200,000 share of past costs and funding 66.7% of the cost of the well which is budgeted at just over US$2.0 million dry hole and US$2.5 million completed and production tested.

Recoverable light oil resources of 5 million barrels are targeted with up to 25 million barrels potential within the Company's 2,560 acre holding.

Solimar's exposure to the dry hole cost of the well (net of past costs recovered) is approximately US$340,000 which will be funded from working capital.

Tags: Solimar Energy Limited