Calvalley Petroleum Cites Increases in 2009 Reserves

Calvalley Petroleum announced that its Board of Directors has accepted a reserves report prepared by McDaniel and Associates, independent oil and natural gas reservoir engineers, that has evaluated all of Calvalley's crude oil reserves. As at December 31, 2009, McDaniel estimates Calvalley's gross working interest Proved plus Probable reserves to be 26.5 MMbbl, representing an increase of 8% (11% including produced reserves in 2009) over the quantities estimated by McDaniel at December 31, 2008, and a reserves replacement ratio of 343%. Calvalley's capital efficiency for new reserves remains very attractive. Average Finding and Development ("F&D") costs over the past three years was $14.01 per barrel on a Proved basis and $4.68 per barrel on a Proved plus Probable basis.

Management is pleased with the reserves additions considering only three wells were drilled during 2009 (one exploration well at Ras Nowmah and two development wells at the Hiswah field). Reserves additions were largely attributable to better than expected well performance from Hiswah producers and a new discovery at Ras Nowmah. The improved well performance at Hiswah during 2009 has significantly de-risked those reserves and has also increased the potential for further positive reserve revisions should the well performance continue.

More importantly, the confidence level in Calvalley's reserves potential near the Qarn Qaymah-2 well has increased substantially. For the first time, reserves have been assigned to an oil leg in the Qarn Qaymah fractured basement discovery in Block 9. The Company expects that significant contingent resources will be converted to reserves once a full field development plan is implemented. Qarn Qaymah is Calvalley's first oil discovery in the fractured basement in Yemen.

The Company's working interest share of high case contingent recoverable liquid resources (oil and condensate) has increased from 3.3 MMbbls to 11.2 MMbbls at December 31, 2009. Similarly the Company's working interest contingent recoverable natural gas resources has increased to 95 Bcf from 8.2 Bcf. These increases primarily result from the test results of the QQ-2 well and new mapping of the Qarn Qaymah structure. Calvalley's 2010 drilling campaign is targeted to move some of the contingent oil resources into the reserves category.

RESERVES ADDITIONS 

  • 8% increase (11% increase including produced reserves in 2009) in Proved plus Probable oil reserves to 26.5 MMbbl
  • 11% increase (14% increase including produced reserves in 2009) in Proved plus Probable plus Possible oil reserves to 39.5 MMbbl

CAPITAL EFFICIENCY

  • Three year average, F&D cost per barrel for was $14.01 (1P), $4.68 (2P)
  • 343% Reserve Replacement Ratio and 34 year reserve life Index (2P)
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