Calvalley Provides Operations Update

Calvalley Petroleum provides the following update regarding its operations on Block 9 in the Republic of Yemen. Calvalley owns a 50% gross working interest and is the operator of Block 9 under a production sharing agreement with the Government of Yemen. Calvalley holds 2,234 km(2) of land area in the prolific Sayun-Masila basin, of which only a relatively small area has been explored to date.

Exploration Activities

A number of prospects have been identified by Calvalley for exploration drilling during the third and fourth quarters of 2007. Each prospect has attractive and unique characteristics with multiple potential pay horizons and it is anticipated that the prospects will be drilled to basement in order to fully evaluate the entire stratigraphic succession of each. The Malik prospect, for example, is a large anticlinal feature located sixteen (16) kilometers east of Hiswah and eleven (11) kilometers south of Qarn Qaymah. This is a new play fairway with serious potential closures along the trend. The well was spud on July 27 and Calvalley anticipates completion of the well by mid-September. Calvalley anticipates the well reaching a total depth of approximately 3,600 meters.

Further, Calvalley plans to drill two (2) additional exploration wells prior to the 2007 year end.

Well Testing

At the beginning of 2007, a comprehensive evaluation of Hiswah field was initiated to better understand the reservoir characteristics. Five of the least productive wells within the Hiswah field were selected as candidates for a Productivity Enhancement Pilot Program ("PEPP"). The initial PEPP program consisted of selecting three wells for multilateral drilling and two wells for acid stimulation. Following the implementation of the PEPP program, the production test results for those particular wells were very positive.

The table below summarizes the latest production tests on the participating Hiswah wells and the post-stimulation or optimization test results of those wells.

	    Initial Production Test                  Post Treatment Production Test
	    Well      Oil        GOR                  Treatment      Oil        GOR
	           (Bbl/d)  (scf/Bbl)                             (Bbl/d)  (scf/Bbl)
	    H-9       288        512         Two extra laterals      503        435
	    H-13      234        528          One extra lateral      328        447
	    H-14      100        120           Acid stimulation      370        678
	    H-17       96        944         Two extra laterals      506        413
	    H-18      198        549           Acid stimulation      270        687

Based on the test results, both methodologies of production stimulation were successful. In light of these successes, the Company engaged a third party engineering firm to assist in a reservoir simulation program and the implementation of the PEPP program on all the remaining wells within the Hiswah field.


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