Calvalley Updates Yemen Project

Calvalley drilled two successful exploration wells in Yemen during June and July. The first well Q-6, was drilled to a total depth of 1460 meters and has been cased with seven inch production casing, based on the encouraging results. At this time the company is assessing the initial production test results and mapping the reservoir.

A second discovery of hydrocarbons was made at the "Auqban-1" exploration well. This well has also been cased and completed with seven inch production casing. Four zones, approximately 10 meters in total, were perforated and tested, with very encouraging results from the initial drill stem test. Oil flowed at a rate of 750 barrels per day through a half inch choke and tested at 35.9 degrees API, with less than 0.5% sulphur and zero water content. Calvalley, is the Operator and 60 percent interest holder in Block 9.

The company plans to commence drilling of the next two exploration wells in the fourth quarter of this year. This will allow the company sufficient time in which to fully assess the production test results, as well as, the logs from the first two discoveries and to integrate this information with the existing seismic data.

The commercial development of Block 9 is the company's most important project. It is anticipated that this project will eventually provide funds necessary for participation in other energy development projects in the Middle East. Without loosing our Block 9 focus, management is reviewing participation in other upstream and downstream energy projects as a means of further enhancing shareholder value.