CALGARY, July 6, 2012 /CNW/ - Calvalley Petroleum Inc. ("Calvalley" or the "Company") has received from one of its partners a Notice of Material Terms and
Conditions (the "Notice") that sets forth the provisions under which such partner intends to
dispose of its 25% working interest in Block 9, Republic of Yemen ("Block 9") to a third party.
Pursuant to the provisions of the Production Sharing Agreement, any
party has the right, subject to the approval of the Minister of Oil and
Minerals, to assign its working interest to another party. Under the
Joint Operating Agreement (the "JOA"), the existing partners have the
option to match the offer and acquire either all or their proportionate
share of the working interest to be assigned.
The significant details included in the Notice (the "Terms") comprise the following:
Effective Date: January 1, 2012
Purchase Price: US$90 million plus US$5 million payable on achieving
10,000 bpd gross production.
Calvalley has a 50% working interest in Block 9 (the "Calvalley Interest") which comprises substantially all of the Company's assets with the
exception of working capital. The current estimated fair value of
working capital (including inventory of crude oil at current prices) is
approximately US$88 million (the "Working Capital').
In the result, the Terms imply a value of between US$180 million and
US$190 million for the Calvalley Interest which when combined with the
Working Capital equals Cdn$2.87 and Cdn$2.98 per share respectively
(based on 94,264,000 shares outstanding and an exchange rate of US$1.00
equals Cdn$1.01). This value per share does not take into account any
other assets or liabilities of the Company, nor the value of Calvalley
being the operator, and is intended to be only indicative of the value
implied by the Terms.
McDaniels & Associates Consultants Ltd. reported 2011 year-end net
present value of future net revenues, prior to provision for interest,
debt service charges and general and administrative expenses for proved
and probable reserves (after income taxes, 10% discount rate) of
US$395,626,000 for the Calvalley Interest (the "McDaniel Report"). For further information, see the Annual Information Form dated March
26, 2012 filed on SEDAR at www.sedar.com. It should not be assumed that the net present value of future net
revenues set out in the McDaniel Report represents the fair market
value of the reserves.
The Calvalley Board of Directors will meet immediately to consider the
Calvalley is an international oil and gas company, with offices in
Calgary, Alberta, Canada, and is Operator and fifty percent working
interest holder of Block 9, Masila Basin, Republic of Yemen and 100%
working interest holder, Metema Block, Blue Nile Basin, Republic of
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
This press release may contain forward-looking statements including,
without limitation, financial and business prospects and financial
outlooks, and such statements may be forward-looking statements which
reflect management's expectations regarding future plans and
intentions, growth, results of operations, performance and business
prospects and opportunities. Words such as "may", "will", "should",
"could", "anticipate", "believe", "expect", "intend", "plan",
"potential", "continue", and similar expressions have been used to
identify these forward-looking statements. In addition, Calvalley has
set out certain values implied by the Terms for its Calvalley Interest,
and Calvalley's value per share based on certain assumptions. These
estimates are not intended to forecast future trading prices nor to
constitute investment advice. Furthermore there are numerous risks
associated with Calvalley's operations and the Calvalley Interest; the
principal risks are set out in the Annual Information Form which is
filed on SEDAR at www.sedar.com. These statements reflect management's current beliefs and are based
on information currently available to management. Forward-looking
statements involve significant risk and uncertainties. A number of
factors could cause actual results to differ materially from the
results discussed in the forward-looking statements including, but not
limited to, changes in general economic and market conditions and other
risk factors. Although the forward-looking statements contained herein
are based upon what management believes to be reasonable assumptions,
management cannot assure that actual results will be consistent with
these forward-looking statements. Investors should not place undue
reliance on forward-looking statements.
Forward-looking statements and other information contained herein
concerning the oil and gas industry and Calvalley's general
expectations concerning this industry are based on estimates prepared
by management using data from publicly available industry sources as
well as from reserve reports, market research and industry analysis and
on assumptions based on data and knowledge of this industry which
Calvalley believes to be reasonable. However, this data is inherently
imprecise, although generally indicative of relative market positions,
market shares and performance characteristics. While Calvalley is not
aware of any misstatements regarding any industry data presented
herein, the industry involves risks and uncertainties and is subject to
change based on various factors.
SOURCE Calvalley Petroleum Inc.
For further information:
email@example.com or +1 (403) 297-0490
Edmund Shimoon, Chairman and CEO
Gerry Elms, CFO