Calvalley Petroleum Turns On the Taps at Block 9 in Yemen

Hiswah-7 Well, Yemen
(Click to Enlarge)
Calvalley Petroleum Operator of Block 9 and 50% working interest owner, has commenced production of oil from the Hiswah oil pool.

The Hiswah-6 well began flowing clean oil on December 10, 2005. Initial production is being constrained to 2,000 bbls per day by the receipt capacity of the delivery terminal to which the oil is being trucked. This bottleneck is expected to be relieved within the next two months, as the off loading capacity of the terminal is increased, at which time the Company anticipates increasing production to 10,000 bbls per day (Calvalley share 5,000 bbls per day). A third party engineering firm has estimated the productive capacity of the Hiswah-6 well, at a 50% draw down, to be 15,000 bbls per day; the installed pump has a maximum capacity of 9,000 bbls per day.

Calvalley and its partners have received approval from the government of Yemen to truck up to 10,000 bbls per day before the completion of a pipeline, for which the Company expects to finalize design by March 31, 2006. The Company anticipates that the pipeline will be operational early in the fourth quarter of 2006.

The Company has initiated production at Hiswah-6, utilizing temporary tankage and truck loading facilities and is constructing an Early Production Facility ("EPF") which is expected to be operational before March 31, 2006. The initiation of oil production is a particularly noteworthy accomplishment in light of the fact that the Company only recently received approval for Commerciality, in August 2005. The Hiswah crude oil is currently being trucked to a facility on Block 18, located approximately 225 km west of the Hiswah field, which is operated by the Safer Exploration and Production Operations Company. That facility is connected to an export pipeline which delivers approximately 125,000 bbls per day to the Red Sea port of Salif. There the oil is sold at a price approximately equivalent to the price of Brent crude, which is currently about $US57.00 per barrel.

Production capability from the current Hiswah wells will gradually increase over the next few months, as production from the other four horizontal wells already drilled in the field, are tied into the EPF. The Company estimates full productive capacity from the existing wells on Block 9 to be in excess of 20,000 bbls per day (Calvalley share 10,000 bbls per day). The Company is presently drilling its sixth horizontal well in the Hiswah field, which it expects to complete in the next week.


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