Calvalley Petroleum to Begin Operations on Block 9 in Yemen

Calvalley Petroleum has received approval from its Joint Venture partners and the Ministry of Oil and Minerals of the Republic of Yemen to commence with its first quarter exploration and development activities on Block 9.

The production testing of the Al Roidhat, Hiswah and Auqban oil discoveries will commence on February 15, 2004. Pumping equipment shipped from Canada in December 2003, has arrived in Yemen and all necessary materials and services to carry out comprehensive production testing have been secured. The tests will be conducted by an independent firm and the results submitted to a well recognized third party engineering firm for reserve determination.

The company has proposed an eleven well exploration and development program for the year 2004. The first of two appraisal wells in the Qishn oil structure at Al Roidhat, utilizing 9 5/8 inch production casing is scheduled to be spuded on February 28th. These two wells will be drilled to the basement in order to assess potential production opportunities below the Qishn formation. The wells are also expected to be put on production test immediately after drilling in order to better establish reserve parameters in this particular pool.

In early March the Company will initiate the acquisition of approximately 200 kilometers of new seismic data. The seismic will be shot over several new features identified for drilling later this year, as well as, over four of the existing discoveries in order to better delineate reserve boundaries in the different pools.

In order to accelerate the above program, the company has been granted an exemption from the normal tendering process which would have delayed the above program by approximately two months. This exemption, by the Ministry of Oil and Minerals, has been granted as a result of the very efficient and low cost manner in which Calvalley conducted its operations previously. The various first quarter activities will be carried out generally utilizing the same contractors employed previously by the Company.