The Silverthread Project (20% interest), Ventura Basin, California
Solimar Energy announced to the ASX on 5 May 2008 the acquisition of a 40% working interest in an exciting new exploration project, Silverthread, which is located in the prolific Ojai oil and gas producing area located in the Ventura Basin, about 100 kilometres northeast of Los Angeles, California (refer to the attached map, Figure 1, below).
Solimar Energy has been actively pursuing projects in the Ventura Basin where the Silverthread Project is located. A new agreement has been entered into with the project’s operator, Mirada Petroleum Inc., a California corporation which has an active position in the general Silverthread area.
The acquisition involves Solimar Energy paying 50% of the initial well costs for a 40% working interest in the Silverthread Project. Solimar Energy will earn a working interest in approximately 600 acres. The net revenue interest is high with less than 20% royalties over the area.
Solimar Energy also announced on 5 May 2008 that it had entered into an agreement with Sunset Energy Limited (“Sunset Energy”) (ASX Code: SEY) covering the Silverthread Project. The new agreement has Sunset Energy taking a 20% working interest in the project and paying 25% of the initial well costs, which leaves Solimar Energy with a 20% working interest in the Project. Sunset Energy has also paid a proportionate share of up front costs associated with the development of the project. Sunset Energy is Solimar Energy’s partner in the recently announced Maricopa Project where a recent discovery and successful production test has been completed.
The Silverthread Project has estimated potential P50 recoverable resources of approximately 7 million barrels of oil and over 15 billion cubic feet of gas on the 600 acre position acquired. At today’s oil and gas prices, Solimar Energy’s estimated net revenue interest is valued at around A$125 million in the success case.
The Silverthread Project is primarily targeting a deeper Monterey sand reservoir adjacent to the Silverthread oil field and the shallow Saugus sand reservoirs near large oil seaps. In 1971, a discovery was made in the nearby deeper Monterey sand reservoir. These wells had initial production rates of over 200 barrels a day of 33 gravity oil and associated gas from a high porosity formation.
The geology of the Ojai Area involves: sandstone and conglomerate reservoirs within the Pleistocene Saugus Formation at depths of under 1,000 feet (no target in our area); sandstone and fractured shale reservoirs within the Upper Miocene Monterey Formation at depths averaging 5,000 feet; and siliceous, phosphatic and calcareous shale locally encase fine grained turbidite sands, all within the Monterey Formation at depths averaging 6,500 feet in the prospect area.
Drilling of the first well, Nesbitt #5, at the Silverthread Project commenced on 5 May 2008.
