With all of the attention that has been focused on the Bakken in North Dakota and the Marcellus shale in the Mid-Atlantic, it is easy to forget that California is one of the top oil producing states in America. However, Canadian brokerage Canaccord Genuity did not {forget}, as it initiated its coverage of Solimar Energy Ltd. (SXS:TSX VENTURE) with a Speculative Buy rating, in large part due to its position in California's San Joaquin Basin.

Solimar has about 21,000 acres in nine focused areas of the Basin. According to the United States Geological Survey, the San Joaquin Basin has the following amounts of undiscovered, technically recoverable hydrocarbon resources: 18.8 trillion cubic feet of gas, 393 million barrels of oil and 86 million barrels of natural gas liquids.

Canaccord – which gave Solimar a C$0.25 target price – said that the company has solid upside due to its positions in the Basin and may have an even higher upside if one of its properties is successful in the next 12 months.

In addition, the brokerage firm said that Solimar has reduced risk because of its diverse holdings. The nine focus areas – which cover both conventional and unconventional opportunities – allow the company to grow without relying on the success of a single site.

Solimar recently had an independent Resource Assessment Report on its Kreyenhagen Project conducted. Sproule Associates – a consulting firm – found that the property, which covers 11,647 gross acres, has 129,500 barrels of contingent resources from heavy oil in Temblor sandstone, based on best estimates.

Solimar closed on November 21 at C$0.09 per share. Its high, since it began to be traded on the TSX, is C$0.10.