SXS

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES


Solimar Energy (ASX:SGY)(TSX VENTURE:SXS) ("The Company" or "Solimar") is
pleased to announce that drilling operations are to commence this week at the
Company's Kreyenhagen Heavy Oil Project Area in the San Joaquin Basin,
California.




--  The Company is commencing drilling operations for three wells in the
    Kreyenhagen Heavy Oil Project Area under the Phase I program. 
    
--  The wells, the first of which is expected to spud on July 11, will
    gather data (logs, core and reservoir fluids) to optimize the design of
    a pilot steam test in the heavy oil Temblor sands.  
    
--  The planned three wells will be completed for future use for either oil
    production or steam injection. 
    
--  The pilot steam test is anticipated to begin following the three well
    program and positive data modelling, and is expected to be followed by a
    full field development. 
    
--  The key permit for the steam enhanced pilot project at the Kreyenhagen
    Field was previously submitted and is approved.  



Farmout Agreement

The Company has signed a definitive Farmout Agreement with a well financed
Canadian TSXV listed company for an appraisal and development joint venture over
a 1,720 acre area encompassing the Kreyenhagen Heavy Oil Project Area (see map
below). The Farminee provides funding for the appraisal and development of the
Kreyenhagen Heavy Oil Project Area. Solimar will retain majority ownership and
operatorship throughout the program. Solimar currently has about 13,800 gross
and net acres under lease, including approximately 10,000 gross and net acres in
the core 100% working interest owned Kreyenhagen Ranch lease, with an 86% to
100% Working Interest ownership position in the remaining leases.


Phase I consists of the Farminee funding up to a $2 million USD cap, for the
drilling and evaluation of three wells and the compilation of a reservoir model
over the shallow Temblor sandstone heavy oil reservoir, plus a recently received
$500,000 USD cash payment to earn a 15% working interest (WI) in the heavy oil
project area. Drilling permits have been secured and the first well is expected
to spud on July 11.


The Phase I drilling information from core and wire line logs will provide
empirical data to further delineate the lateral and vertical distribution of the
shallow Temblor sandstone reservoir properties. This data will be incorporated
with current field subsurface data to create static and dynamic reservoir models
to simulate primary and enhanced steam recovery mechanisms, well designs, well
completions and well placement. Phase I modeling will likely conclude in Q4
2013. The Farminee has an option to enter into Phase II, following completion
and review of the Phase I results.


Phase II will consist of the Farminee funding up to a $3 million USD cap for a
steam enhanced recovery pilot program and further thermal modeling in the
project area plus a $1 million USD cash payment to earn an additional 25%
working interest (WI) in the Kreyenhagen Heavy Oil Project Area lease and 12%
working interest (WI) interest in certain Kreyenhagen shale oil leases. 


Based on the Phase I well results and reservoir modeling, the Phase II steam
pilot will be designed to maximize oil recovery and test recovery mechanisms and
timing. It is anticipated that Phase II would commence in Q1 2014 and last
approximately six months. A key permit from the California Department of Oil,
Gas and Geothermal Resources (DOGGR) for a steam enhanced pilot project at the
Kreyenhagen Field was previously submitted and is approved. 


Resource Additions

With the drilling of the Phase 1 appraisal wells, the Company anticipates
delineating a portion of the additional undiscovered oil in place resources of
up to 24 mmbo (Best Estimate) and 50 mmbo (High Estimate) along trend in the
Company's acreage, as evaluated by Sproule Unconventional Limited in July 2012.


CORPORATE PRESENTATION

For further information on the Company's California activity and plans as well
as recent media reports on the California shale oil potential, readers are
encouraged to access a recent corporate presentation posted to the Solimar
website at www.solimarenergy.com.au which can be found under the Presentations
section in the Investor Centre drop down menu and media links which can be found
on the home page.


To view the figure accompanying this press release, please visit the following link:

http://media3.marketwire.com/docs/885895.pdf 

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.


Reader Advisory: Potential resource estimates and forward-looking statements 

This news release contains forward-looking information relating to adding to
reserves and resource estimates, planned development and exploration activities
on the properties in which the Company has interests, and other statements that
are not historical facts. Such forward-looking information is subject to
important risks, uncertainties and assumptions. The results or events predicated
in this forward-looking information may differ materially from actual results or
events. As a result, you are cautioned not to place undue reliance on this
forward-looking information. 


Forward-looking information is based on certain factors and assumptions
regarding, among other things, the impact of increasing competition; the timely
receipt of any required regulatory approvals; the ability of the Company to
obtain qualified staff, equipment and services in a timely and cost efficient
manner; drilling results; the ability of the operator of the projects which the
Company has an interest in to operate the field in a safe, efficient and
effective manner; the ability of the Company to obtain financing on acceptable
terms; field production rates and decline rates; the ability to replace and
expand oil and natural gas reserves through acquisition, development of
exploration; the timing and costs of pipeline, storage and facility construction
and expansion and the ability of the Company to secure adequate product
transportation; future oil and natural gas prices; currency, exchange and
interest rates; the regulatory framework regarding royalties, taxes and
environmental matters in the jurisdictions in which the Company operates; and
the ability of the Company to successfully market its oil and natural gas
products, and other similar matters. While the Company considers these
assumptions to be reasonable based on information currently available to it,
they may prove to be incorrect. 


Forward looking-information is subject to certain factors, including risks and
uncertainties that could cause actual results to differ materially from what is
currently expected. These factors include risks associated with instability of
the economic environments in which the Company operates or owns interests, oil
and gas exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks, competition
from other producers, inability to retain drilling rigs and other services,
incorrect assessment of the value of acquisitions, failure to realize the
anticipated benefits of acquisitions, delays resulting from or inability to
obtain required regulatory approvals and ability to access sufficient capital
from internal and external sources, reliance on key personnel, regulatory risks
and delays, including risks relating to the acquisition of necessary licenses
and permits, environmental risks and insurance risks. 


The estimates of resources in this news release constitute forward-looking
information which is subject to certain risks and uncertainties, including those
associated with 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 reserves or resources will be recovered or produced. Actual reserves
and resources may be greater than or less than the estimates provided in this
presentation. 


You should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. While the Company may elect
to, the Company is under no obligation and does not undertake to update this
information at any particular time, except as required by law. 


Resource Definitions 

This discussion has been excerpted from Sections 5.2 and 5.3 of the Canadian Oil
and Gas Evaluation Handbook, Second Edition, September 1, 2007. The following
definitions relate to the subdivisions in the SPE-PRMS resources classification
framework and use the primary nomenclature and concepts contained in the 2007
SPE-PRMS, with direct excerpts shown in italics. 


Production is the cumulative quantity of petroleum that has been recovered at a
given date. 


Reserves are estimated remaining quantities of oil and natural gas and related
substances anticipated to be recoverable from known accumulations, as of a given
date, based on the analysis of drilling, geological, geophysical, and
engineering data; the use of established technology; and specified economic
conditions, which are generally accepted as being reasonable. Reserves are
further classified according to the level of certainty associated with the
estimates and may be subclassified based on development and production status.


Contingent Resources are those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations using established
technology or technology under development, but which are not currently
considered to be commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal, environmental,
political, and regulatory matters, or a lack of markets. It is also appropriate
to classify as contingent resources the estimated discovered recoverable
quantities associated with a project in the early evaluation stage. Contingent
Resources are further classified in accordance with the level of certainty
associated with the estimates and may be subclassified based on project maturity
and/or characterized by their economic status.


Undiscovered Petroleum Initially-In-Place (equivalent to undiscovered resources)
is that quantity of petroleum that is estimated, on a given date, to be
contained in accumulations yet to be discovered. The recoverable portion of
undiscovered petroleum initially in place is referred to as "prospective
resources", the remainder as "unrecoverable". 


Prospective Resources are those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective resources have both an
associated chance of discovery and a chance of development. Prospective
Resources are further subdivided in accordance with the level of certainty
associated with recoverable estimates assuming their discovery and development
and may be subclassified based on project maturity.


Classification of Resources 

When evaluating resources, in particular, contingent and prospective resources,
the following mutually exclusive categories are recommended:




--  Low Estimate: This is considered to be a conservative estimate of the
    quantity that will actually be recovered from the accumulation. If
    probabilistic methods are used, this term reflects a P90 confidence
    level. 
    
--  Best Estimate: This is considered to be the best estimate of the
    quantity that will actually be recovered from the accumulation. If
    probabilistic methods are used, this term is a measure of central
    tendency of the uncertainty distribution (most likely/mode, P50/median,
    or arithmetic average/mean). 
    
--  High Estimate: This is considered to be an optimistic estimate of the
    quantity that will actually be recovered from the accumulation. If
    probabilistic methods are used, this term reflects a P10 confidence
    level. 



Company Gross Contingent Resources are the Company's working interest share of
the contingent resources, before deduction of any royalties.


Company Net Contingent Resources are the gross contingent resources of the
properties in which the Company has an interest, less all Crown, freehold, and
overriding royalties and interests owned by others.


ABN 42 112 256 649

FOR FURTHER INFORMATION PLEASE CONTACT: 
Solimar Energy Limited
Jason Bednar
Director
1-403-607-4607
www.solimarenergy.com.au

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