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Press release from CNW Group

Calvalley Petroleum Inc. - Operation Update

Wednesday, December 21, 2011

Calvalley Petroleum Inc. - Operation Update19:02 EST Wednesday, December 21, 2011Calvalley Petroleum Inc., (TSX: CVI.A)CALGARY, Dec. 21, 2011 /CNW/ - Calvalley Petroleum Inc. ("Calvalley" or the "Company") provides the following update for shareholders.The Company continues to focus on optimization projects to increase production from existing fields which include initiating production from shut-in wells in the Al Roidhat field and installing a high capacity electrical submersible pump in the Ras Nowmah 2 well.These activities have resulted in average production volumes growing to approximately 6,400 barrels per day for the month of November 2011, up 7 per cent from the approximate 6,000 barrels per day achieved in October 2011. Production from the Ras Nowmah 2 well is being managed and monitored to optimize reservoir performance and production volumes have recently been increased to 3,500 barrels per day boosting average production volumes from Block 9 above 7,000 barrels per day in December to date. Based on the reservoir characteristics observed, indications are that this well can produce in excess of 5,000 barrels per day - consistent with test results from the well announced in previous press releases. Calvalley plans to gradually increase production volumes from this well consistent with good production practice to optimize the well performance. As announced in August 2010, the Ras Nowmah 2 well encountered 41 meters of gross oil pay with only the upper 15 meters of pay having been perforated for testing and production.Security concerns remain an obstacle to accessing qualified contractors in the oilfield service sector. The Company is continually monitoring the situation with the objective of accessing services to enable the execution of its plans to drill two development wells at Ras Nowmah and a drilling program for 2012 which comprises in excess of 25 wells including up to seven exploration targets.Calvalley's projects and production in Yemen remain contingent on the availability of supplies and services which continue to be affected by uncertainty in the political environment and local security related issues. On the basis that the supplies and services are available to execute the Company's plans, and local security issues are resolved, Calvalley is planning a 2012 capital expenditure budget for Block 9 in the range US$100 - $110 million (gross). Cash flow for 2012 from Block 9 (gross) is forecast in the range US$140 - $150 million.Calvalley is an international oil and gas company, with offices in Calgary, Alberta, Canada, that operates its 50% working interest in Block 9 of the Masila Basin, in The Republic of Yemen and its 100% working interest in the Gimbi and Metema Blocks of the Blue Nile Basin, in The Republic of Ethiopia.THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.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. 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.com or +1 (403) 297-0490 Edmund Shimoon, Chairman and CEO Gerry Elms, CFO