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Press release from CNW Group

Calvalley Petroleum - Operational Update

Friday, February 04, 2011

Calvalley Petroleum - Operational Update12:57 EST Friday, February 04, 2011CALGARY, Feb. 4 /CNW/ - Calvalley Petroleum Inc. (TSX: CVI.A) is pleased to provide an operational update.The Company is closely monitoring political developments in Yemen and surrounding areas and does not anticipate any interruption to its operation in the Masila Basin where Company Assets are located.Truck Offloading Facility ("TOF") at Block 51 - Calvalley has completed construction of approximately 90% of the TOF. Commissioning of the facility is expected in late February with full operational capabilities in March.  We expect to gradually increase production to 10,000 barrels per day (5,000 net CVI working interests).Pressure maintenance program at Hiswah Field - Calvalley has commenced Hiswah water injection at a rate of 6,000 barrels a day with a single horizontal well. The first water injection well (H-26) has been performing better than expected. We expect to commission the second water injector (H-25) during the first half of 2011. The Company plans to drill up to five additional water injectors in 2011. We expect a total water injection volume of more than 25,000 barrels per day by the end of 2011.We are currently injecting more than 2 MM cf/d of produced gas into the reservoir. Beginning in March 2011, we expect to inject an additional 3 MM cf/d of gas bringing total gas injection to approximately 5MMcf/d. The pressure maintenance program will enhance recoverable reserves and minimize decline of reservoir pressure.2D Seismic Acquisition at Ras Nowmah Discovery and nearby prospects: Calvalley has successfully completed a 340 km2D seismic program over the Plateau area which covers the Ras Nowmah discovery and nearby structures such as Sueda, East Ras Nowmah, North Ras Nowmah, South Ras Nowmah, Al Hedba, Al Gadafir, and Malik. Initial processing of the 2D seismic indicates that good quality data have been acquired.  The first phase interpretation suggests better than expected prospectivity over the coverage area. To date, two additional prospects have been identified in the Qishn Formation. These prospects are similar to the Ras Nowmah Discovery. The program is designed to high-grade these new structures prior to the selection of drilling locations.Drilling ActivitiesQarn Qaymah-3 ("QQ-3"):  Calvalley continues to make progress in drilling the Qarn Qaymah-3 well. We are currently drilling through the main section of the primary reservoir of the Fractured Granitic Basement ("FGB"), which was encountered approximately 40 meters higher than expected. We expect to complete and test the well in March. The well is designed to drill to a Total Depth ("TD") of approximately 4,500 meters, of which approximately 1,000 meters will be an open-hole section over the oil leg of the FGB. The open-hole section is expected to encounter seven (7) major fracture zones. Contingent on the success of QQ-3, Calvalley expects to keep the rig in the Qarn Qaymah area to drill additional deep exploration/appraisal wells.Al Roidhat 9 Development:  Calvalley has successfully drilled a development well at the Al Roidhat Field encountering 22 meters (72 feet) of net oil pay with average porosity of 23.5%. This well adds to Calvalley's productivity capacity.Ras Nowmah-3 - Calvalley has completed the drilling of the Ras Nowmah-3 appraisal well.  The Company experienced downhole technical problems and as a result, the well was abandoned. The well encountered approximately 18 meters of oil and gas show similar to or better than that of Ras Nowmah-2 well, which tested approximately 3,000 bbl/d of light oil with only 9.5% drawdown. The result indicates that the previously assumed Oil / Water contact at the Qishn S1 and S2 reservoirs could be significantly lower than our initial estimates. This could result in significantly higher oil-in-place. However, we caution that these geological findings must be verified with future production testing and additional appraisal drilling.The rig at Ras Nowmah-3 is expected to be mobilized to drill the Ras Nowmah East-1 exploration well. Site preparation is underway and we expect to spud the well in March 2011.  With completion of the 2D seismic program discussed above, we believe that there are a number of exploration targets at the Plateau which will be drilled. Thus, we expect to keep the rig over the Plateau for the balance of 2011.Ethiopia - Calvalley has completed the acquisition of an aeromagnetic survey data covering the majority of the entire Metema Block (26,000 square kilometres). The survey coverage area is concentrated over the key area of the Mekele Sedimentary Basin highlighted by relatively thicker sedimentary rock sections based on our recently completed regional geological mapping.  Based on interpretation of the gravity survey, we expect to acquire regional 2D seismic in 2011. The first exploration well is expected to be drilled in early 2012.Calvalley Petroleum is an international oil and gas company based in Calgary, Alberta. The Company operates its 50% working interest in Block 9 in the Masila Basin of the Republic of Yemen and 100% working interest in the Gimbi and Metema Blocks in Ethiopia.Forward-Looking Statements This press release may contain forward-looking statements including, without limitation, financial and business prospects and financial outlooks, and such statements may be forward-looking statements which reflect management's expectations regarding future plans and intentions, growth, results of operations, performance and business prospects and opportunities. Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue", and similar expressions have been used to identify these forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to management. Forward-looking statements involve significant risk and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including, but not limited to, changes in general economic and market conditions and other risk factors. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, management cannot assure that actual results will be consistent with these forward-looking statements. Investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof. Forward-looking statements and other information contained herein concerning the oil and gas industry and Calvalley's general expectations concerning this industry are based on estimates prepared by management using data from publicly available industry sources as well as from reserve reports, market research and industry analysis and on assumptions based on data and knowledge of this industry which Calvalley believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While Calvalley is not aware of any misstatements regarding any industry data presented herein, the industry involves risks and uncertainties and is subject to change based on various factors.For further information: investorrelations@calvalleypetroleum.comEdmund Shimoon, Chairman and CEO Memet Kont, President and COO Zacharie Magnan, Acting CFO +1 (403) 297-0490