Calvalley Petroleum - 2006 Annual Results and Filing of Reserves Data

    CALGARY, AB, March 30 /CNW Telbec/ - Calvalley Petroleum Inc.,
(TSX: CVI.A) - Calvalley Petroleum Inc. (the "Company" or "Calvalley"), an
international junior oil and gas company based in Calgary, Alberta, is pleased
to announce its financial and operating results for the year ended
December 31, 2006 and the filing of its updated reserves estimates and other
disclosure documents.

    2006 Highlights

    85% of capital spending funded by operations

    During 2006, Calvalley continued to build on its successful track record
in exploration and development on Block 9 in the Republic of Yemen. During the
third and fourth quarters, Calvalley realized the first oil sales from
Block 9, an important step into the international oil market. Proceeds from
these oil sales enabled Calvalley to generate sufficient cash flow from
operations to fund 85% of its 2006 capital expenditure program. In January
2007, the Company signed a long-term marketing agreement, with take-or-pay
provisions, at attractive selling prices indexed against the dated Brent crude
oil reference price.

    Exit rate of 7,017 bopd after first full year of production

    Since starting commercial oil production in December 2005, Calvalley has
made significant progress towards increasing production rates and reserves.
Calvalley focused its development activities on the Hiswah field, drilling
twelve horizontal wells into the Saar-Naifa zone. These twelve wells were
instrumental in increasing gross oil production rates from 1,649 bopd in
January 2006 to an exit rate of 7,017 bopd in December 2006.

    83% increase in proved and probable reserves

    Exploration and development activity during 2006 significantly increased
gross proved and probable reserves by 83% to almost 17.7 million bbls
(9.4 million net bbls).

    Significant progress on infrastructure projects

    During 2006, Calvalley continued with construction of the central
production facility situated in the heart of the Hiswah field. Currently,
Calvalley is connecting the production lines to the separator, treaters and
storage tanks, all of which are already in place. The main components of the
facility are cemented in place, the pipe racks are completed, and the total
capacity of the oil storage facilities has been expanded from 4,500 bbls to
60,000 bbls. In order to better support the rapidly expanding operations of
Block 9 and its work force, Calvalley also constructed camp, office and
catering facilities near the central production facility.

    Government approval for sales pipeline

    Currently, all crude oil production is trucked to the Safer receiving
facility on Block 18 for processing and shipment to the Ras Isa marine
terminal facility. The recent regulatory approval of the 245 kilometre main
transmission pipeline to Block 18 clears the way for Calvalley to produce at
full throttle once the pipeline is operational. Calvalley expects to award
tenders for construction of the pipeline shortly. Not only will the sales
pipeline remove the 10,000 bopd limitation on trucking oil production to
Block 18, it is anticipated that the significant costs associated with
long-distance trucking of crude oil production will be eliminated.

    Continued focus on exploration

    Calvalley's work program is designed to create long-term shareholder
value by maintaining a prudent balance between development and exploration
activities. With access to cash flow from oil sales, the Company is well
positioned to accelerate exploration of the remaining resource potential of
Block 9. During 2006, Calvalley continued its efforts to find new hydrocarbon
reserves through an active exploration and appraisal program. In addition to
drilling two exploration wells and two appraisal wells, one of which was
re-entered and completed as a horizontal development well in the Hiswah field.
The South Hiswah-1 exploration well proved the presence of oil across the
major Hiswah fault, allowing Calvalley to increase its original oil in place
estimates which were previously restricted to the current development area
located north of the Hiswah fault. Calvalley also acquired another
812 kilometres of seismic data which is currently being processed and

    Financial Highlights (US$)
    (in thousands, except per share amounts)                 2006       2005

    Revenues (excluding interest income)                  $30,725       $185
    EBITDA(1)                                             $23,471    ($1,165)
    Net income                                            $15,506      ($736)

    Cash flow from operations(1)                          $22,582      ($477)
    Capital expenditures                                  $26,449    $14,095

    Cash and cash equivalents                             $64,070    $24,288
    Working capital                                       $72,352    $26,650

    Shareholders' equity                                 $116,098    $50,701
    Outstanding shares at year end                        101,007     91,330
    Net earnings per share(2)                               $0.15      $0.00

    (1) Earnings before interest, taxes, depreciation and amortization (or
        "EBITDA") and cash flow from operations are non-GAAP measures.
        Reference should be made to the Company's MD&A for further
        description of these non-GAAP measures. EBITDA and cash flow from
        operations may not be comparable to similar measures used by other
    (2) Net earnings per share are calculated on a fully diluted basis.

    With strong cash flow from operations and US$72.4 million of working
capital on hand, the Company is well-positioned to unlock the full potential
of the existing oil fields and to aggressively explore the remaining resource
potential of Block 9.
    The financial markets continued to support Calvalley throughout the 2006
year. The Company completed a highly successful share offering in March 2006
that raised net proceeds of US$46.3 million at CDN$6.50 per share. Now listed
on the Toronto Stock Exchange, Calvalley's common shares closed at CDN$7.81 on
December 31, 2006, a 73% increase from the closing price of CDN$4.52 on
December 31, 2005. Calvalley's share price reached an all-time high of
CDN$9.00 per share in April 2006.


    Calvalley has committed to an aggressive work program for 2007 which will
focus on developing the Al Roidhat and Hiswah fields. Calvalley has contracted
a second drilling rig, which recently spudded its first well, a multilateral
leg at Hiswah-9. With capacity to drill to a depth of 5,000 metres, it is
anticipated that this rig will drill the Qarn Qaymah 2 appraisal well and the
South Qarn Qaymah and Malik exploration prospects in 2007. Calvalley has
contracted two service rigs for completions, tie ins and workovers of existing
and planned wells to coincide with expanded capacity which the Company
anticipates will become available when the central production facility is
fully commissioned. To improve efficiency and conserve resources, Calvalley
plans to add gas compression and related facilities at the central production
facility. Further, the Company anticipates that associated gas may be utilized
for power generation on the Block. Planning is also underway to tie in
production at Al Roidhat, which will initially be trucked to the nearby Hiswah
central production facility.
    Calvalley's most ambitious undertaking for 2007 will be the commencement
of construction of the 245 kilometre pipeline spanning from Block 9 to
Block 18. Now that regulatory approval has been received and preliminary
engineering studies are complete, the Company will shortly award tenders for
the construction and engineering management contracts, as well as for the
purchase of line pipe and other equipment with critical lead times for
    In order to execute these ambitious growth initiatives, Calvalley is
continuing to recruit and hire experienced and competent personnel at all
levels within the organization. Calvalley is committed to maintaining an
appropriate balance in its work force by hiring top-notch expatriates and
third country nationals in key positions and honoring its commitment to the
Government of Yemen to recruit and train Yemeni nationals in all aspects of
the Block 9 operations.

    Filing of 2006 Reserves Estimates

    Further, Calvalley is pleased to announce that it has complied with its
obligations under National Instrument 51-101 by filing the following required
Forms: Form 51-101F1, Statement of Reserves Data and Other Oil and Gas
Information; Form 51-101F2, Reports of Reserve Data by Independent Qualified
Reserves Evaluators; and Form 51-101F3, Report of Management and Directors on
Oil and Gas Disclosure. These Forms have been included in Calvalley's Annual
Information Form, dated March 30, 2007, for the year ended December 31, 2006.
The reserves report was prepared by the independent engineering evaluation
firm McDaniel & Associates Consultants Ltd. (the "McDaniel Report") for the
year ending December 31, 2006.
    As a direct result of Calvalley's successful development and appraisal
drilling programs, the Company was able to increase its gross proved and
probable reserves by 83% over the previous year's proved and probable reserve
numbers, reaching 17.7 million bbls. After deducting the Government of Yemen's
share, Calvalley estimates its net reserves to be 9.4 million bbls.
    The following table summarizes the Company's share of crude oil reserves
as at December 31, 2006 based on forecast prices and costs.

                         Crude Oil Reserves  Net Present Value of Future Net
                              (thousands of      Revenues After Income Taxes
                                    barrels)        (thousands of US dollars)
                         Gross(1)     Net(2)         0%        10%        20%
                         --------   --------   --------   --------   --------
      Developed producing  2,660      1,637     44,676     38,194     33,477
      Non-producing          913        572     10,288      8,595      7,358
      Undeveloped          5,360      2,983     47,211     34,930     27,378
                         --------   --------   --------   --------   --------
    Total proved           8,933      5,222    102,175     81,719     68,213
    Probable               8,801      4,180     87,741     48,039     26,905
                         --------   --------   --------   --------   --------
    Proved and probable   17,734      9,402    189,916    129,758     95,118
    Possible               7,060      3,096     76,905     41,602     25,443
                         --------   --------   --------   --------   --------
    Proved, probable
     and possible         24,794     12,498    266,821    171,360    120,561
                         --------   --------   --------   --------   --------
                         --------   --------   --------   --------   --------

    (1) Company's 50% working interest
    (2) Gross reserves less Government of Yemen share

    Filing of Reports on SEDAR

    Calvalley's Annual Information Form, Management's Discussion and
Analysis, and Audited Financial Statements for the year ended December 31,
2006 can be found for viewing by electronic means on The System for Electronic
Document Analysis and Retrieval at

    Calvalley is listed on the Toronto Stock Exchange, trading under the
symbol "CVI.A".


    This press release may contain forward-looking statements, including
expectations of future production, cash flow and earnings. These statements
are based on current expectations that involve a number of risks and
uncertainties, which could cause actual results to differ materially from
those anticipated or implied in the forward-looking statements. These risks
include but are not limited to: the risks associated with the oil and gas
industry (e.g. operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or development projects
or capital expenditures; the uncertainties of reserve estimates; the
uncertainty of estimates and projections related to production, costs and
expenses, and health, safety and environmental risks), commodity price, price
and exchange rates fluctuations and uncertainties resulting from potential
delays or changes in plans with respect to exploration or development projects
or capital expenditures. Additional information on these and other factors
that could affect Calvalley's operations or financial results are included in
Calvalley's reports on file with Canadian securities regulatory authorities.

For further information:

For further information: please contact: Renmark Financial
Communications: Tina Cameron,; Neil Murray-Lyon,; (514) 939-3989, Fax: (514) 939-3717,; Source: Edmund M. Shimoon, CEO, Calvalley Petroleum
Inc., (403) 297-0491, Fax: (403) 297-0499

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