Solimar Snags Control of Shallow Oil Field, Fractured Shale Proj.

Solimar has completed negotiations to increase the Company's equity to 100% in the core 10,000 acre Kreyenhagen Ranch lease of the Kreyenhagen Project located on the NW flank of the San Joaquin Basin, California. The terms of the acquisition remain confidential but have involved assumption of certain monetary commitments relating to the Lease and future success based payments payable at reserves certification milestones.

To fund this acquisition and provide working capital for the initial Kreyenhagen work program at the higher ownership level the Company is making a placement of 23 million shares (representing 7.4% of issued capital) to raise A$1.84 million before costs. The raising is being managed by BGF Equities.

The acquisition consolidates Solimar's ownership of potentially very large oil resources at a commercially opportune time. The Kreyenhagen project acreage contains both thick, locally productive fractured oil shales and a shallow oil accumulation with as much as 300 million barrels of oil in place that has been penetrated by numerous historic wells in the acreage.

The Solimar Board believes that world events including high oil prices and increasing industry activity have validated the Company's focus on a prolific oil producing basin that is being subject to what is effectively a revolution in shale oil production technologies.

By virtue of its long standing commitment on the ground in California, Solimar is in the advantageous position of having very competitively secured accessible acreage containing large oil resources. It will be first to have the opportunity to apply modern technologies to convert these oil resources into producing reserves.

The Kreyenhagen project is set in rolling hills on the east side of ranges uplifted along the San Andreas Fault and falling further to the east into the valley floor of the San Joaquin Basin. It is serviced by good access roads, has power connected and there are 4 suspended wells drilled in 2007 that are available for re entry and testing of key targets. A central, approximately 800 acre area is a gazetted oil field area which provides logistical and permitting advantages for commencing the Company's planned appraisal and testing programs. The project area is characterized by prominent oil seeps associated with the outcrop of the sandstone and shale reservoirs.

Solimar now has 100% interest in the core, 10,000 acre Kreyenhagen Ranch Lease that was leased for 5 years in December, 2010 and 33.33% to 50% interests in the rest of the project acreage totaling over 15,000 acres. Solimar is the Operator of the entire project area.

Fractured oil shales (unconventional reservoir targets)

Geological data from within and around the Kreyenhagen Project area provides strong evidence of the brittle (siliceous) and fractured rock types needed for the shales to be an effective reservoir. Sidewall core data from relatively shallow intersections of the Kreyenhagen shale in wells in and on trend with Solimar's acreage contain oil saturations of up to 32% and porosities of 20% to 30% over a 150 foot thick shale interval at the top of the sequence. This is part of a proven, rich oil source rock sequence that increases to over 1,000 feet thick in the Company's acreage with most of the shale sequence within the active oil generation window between approximately 4,000 feet and 12,000 feet depth. The nearest adjacent oil fields have fractured oil shale production from the Kreyenhagen Shale in the giant Kettleman North Dome (produced 400 million barrels and 3 TCF gas) and both the younger Monterey Shale (which has various names locally) and Kreyenhagen Shale in the Kettleman Middle Dome field.

Overall oil shale production has historically been more advanced in the Monterey Shale and its equivalents in the south of the Basin where the Kreyenhagen Shale is generally too deep to be commercially attractive. However to the northwest in the Basin where Solimar has much of its acreage the Kreyenhagen Shale is believed to have sourced most of the plus 3 billion barrels of proved conventional oil reserves in fields in the area and is at targetable depths. Solimar is now one of the main acreage holders in this oil prone fairway surrounded mainly by super - major oil companies. The biggest adjacent acreage holder Occidental Petroleum (OXY) has been the most aggressive expanding its oil shale production business in California and currently produces 45,000 bopd from fractured oil shales mostly in the San Joaquin Basin.

The recent Zodiac 4-9 discovery in which Solimar has a 1.13% carried interest in that well and some 101,000 gross acres of  surrounding acreage has extended the limits of the oil prone fairways in the general area. Zodiac Exploration announced on March 21 potential hydrocarbon pay of 1,000 feet in both sandstone and fractured shale reservoirs in the Zodiac 4-9 vertical well that was drilled to a depth of approximately 15,000 feet. Solimar also owns a small royalty over approximately 26,000 gross acres associated with the Zodiac

As Operator of the Kreyenhagen Project Solimar is preparing a work plan to verify the oil productive potential of the oil shales which is expected to commence in the second half of 2011. This may initially include re-entering and testing one of the suspended wells and or sidetracking and coring right through the shale sequence. Following this it is planned to drill a dedicated well or wells, likely horizontal and conduct a Fracc stimulated production testing program.

Based on per well oil recoveries from oil shales elsewhere in the Basin, if Solimar is able to prove commercial oil flow potential from the fractured shales in the Kreyenhagen Project there is the potential for recoverable oil resources in the hundreds of millions of barrels.

Shallow oil field (sandstone oil reservoir)

Based on intersections in over 20 old wells, the most recent drilled in 2007, there is a large oil resource accumulated in shallow sandstones of the Temblor Formation within the Kreyenhagen Project area. The oil has a relatively low gravity (15 to 18 degrees API) and has been produced from different wells at various times historically at rates between 1 to 10 bopd. The Sandstone reservoir outcrops in the acreage and the oil appears to be trapped by a low permeability or impermeable tar mat at the near surface interface.

Four wells drilled in 2007 confirm oil intersections of 150 to 325 feet in steeply dipping rocks (approximately 40 degrees) at the top of the Temblor Sandstone and an intra formational shale unit may form a base seal to this oil. The wells were drilled down through the underlying Kreyenhagen Shale and in two cases deeper again into the Avenal Sandstone from which light oil and gas was tested. No testing was done of either the Temblor oil accumulation or the oil shales.

A total oil column within the Temblor Sandstone of approximately 1200 feet is indicated from the well control. Porosities measured from sidewall cores in the 20 % to 30% range when combined with the above statistics support oil in place (OIP) estimates of up to 300 million barrels within the Company's acreage.

The principal technical risks to the project relate to how highly saturated with oil the reservoir is and whether it can be stimulated to produce at economic rates without excessive water cut. The commercial environment for exploiting the Temblor oil resource however is very favorable particularly given the high oil price and differential to the cost of gas. The California fiscal regime is competitive with other states and many oil refineries in California take and process heavier crudes.

The Company expects to commence the well re entry and testing program in July.

John Begg, Chief Executive Officer, commented, "This is a very positive development for the Company that has only been achievable due to Solimar's long standing commitment on the ground in California. The Company has been able to secure control of an acreage position in which very large volumes of oil have been generated and we hope can be assessed and recovered commercially through what will be the first application of modern technologies. We have 2 main targets, a known oil accumulation in a shallow sandstone reservoir and a thick oil shale for which our preliminary data is all positive. Both these reservoirs are productive in adjacent giant fields."