Calvalley Signs First Production Sharing Contract in Ethiopia



    Calvalley Petroleum Inc., (TSX: CVI.A)

    CALGARY, Oct. 20 /CNW/ - Calvalley Petroleum Inc. (the "Company" or
"Calvalley") is pleased to announce that it has entered into its first
Production Sharing Contract ("PSC") with the Ethiopian Government for the
exploration, development and production of petroleum resources in the Gimbi
and Metema blocks under a single contract covering a total area of over
46,470 square kilometers (11.5 million acres). Both blocks are located in the
western part of the country, adjacent to the Sudan border.
    The Gimbi block, covering an area of 20,457 square kilometers
(5.1 million acres), is located on the northeastern flank of the Gambela
Basin, which borders Sudan on the west. The Gambela Basin is contiguous with
the Melut Basin which is very prolific in Sudan. The Gambela Basin is part of
the Central African rift system and is still in the early stages of
exploration. The Central African rift system is a series of Cretaceous to
Tertiary-aged failed rifts that trend across Central Africa from the Benue
Trough in Nigeria, through Chad, into Sudan. These fault-bounded basins,
generally trending northwest-southeast, contain marine sediments reaching
thicknesses of six to ten kilometers.
    The Metema block, covering an area of 26,013 square kilometers
(6.4 million acres), is situated in northwestern Ethiopia, bordering Eritrea
to the north and Sudan to the northwest. The block is located in the center of
the Mekele Basin, which is also part of the Central African rift system. The
Mekele Basin is also in the early stages of exploration.
    Calvalley has a 100% operated working interest, in both blocks for an
exploration period of eight (8) years , consisting of an initial period of
four (4) years followed by two (2) subsequent Option periods consisting of two
(2) years each. The Option periods will be activated at the discretion of
Calvalley. Furthermore, subject to hydrocarbon discovery during the total
eight year period, the PSC provides for an additional twenty five (25) year
development period with a ten (10) year optional extension. The PSC gives
Calvalley the rights to explore, develop, and produce all kinds of
hydrocarbons including oil, condensate, natural gas and associated liquids.
    Total work obligations under the PSC, during the initial 4 year
exploration program consist of acquisition and processing of 400 km of 2D
seismic and drilling of one exploration well.
    Mr. Edmund Shimoon, Chairman and CEO, was in Ethiopia last week for the
signing ceremony which concluded several months of negotiations with the
Government of Ethiopia and the ratification of the PSC by the Ethiopian
government. The combination of these newly acquired Ethiopian exploration
opportunities and those being actively pursued in Yemen's Block 9
significantly enhance Calvalley's petroleum resources development potential in
the relatively unexplored Arabian Peninsula and East African regions adjacent
to the southern Red Sea.

    Calvalley Petroleum is an international oil and gas company based in
Calgary, Alberta. The Company also operates its 50% working interest in Block
9 in the Masila Basin of the Republic of Yemen.

    
    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. 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. These forward-looking statements are
made as of the date hereof.
    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.

    %SEDAR: 00001745E




For further information:

For further information: investorrelations@calvalleypetroleum.com;
Edmund Shimoon, CEO; Memet Kont, COO; Bill Cummins, CFO; (403) 297-0490

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