Calvalley Petroleum Inc. Releases Second Quarter Results



    CALGARY, Aug. 14 /CNW Telbec/ - Calvalley Petroleum Inc., (TSX: CVI.A)

    Calvalley Petroleum Inc. (the "Company" or "Calvalley"), an international
oil and gas exploration and production company based in Calgary, Alberta, is
pleased to announce the release of its operating results and interim
consolidated financial statements for the second quarter of 2007. All
financial information is stated in United States dollars.
    The Company has filed its quarterly report, including the interim
consolidated financial statements and management's discussion and analysis, on
SEDAR (www.sedar.com). This quarterly report can also be found on Calvalley's
website at www.calvalleypetroleum.com.

    
    Financial Highlights
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                             June 30                 June 30
                                     ----------------------------------------
    (in thousands of dollars)       2007        2006        2007        2006
    -------------------------------------------------------------------------

    Revenue from crude oil sales   1,028           -      11,542          47
    EBITDA (1)                      (440)        (79)      8,326        (943)
    Operating income (1)            (620)        (87)      5,676        (958)
    Net income (loss)              2,320       1,160       8,493         (75)
    Capital expenditures          (9,780)     (7,697)    (16,894)    (13,572)
    Cash flow from operations (1)  3,709        (108)     12,521      (1,336)
    Cash flow from operating
     activities                    1,565        (273)     (1,661)     (1,539)
    -------------------------------------------------------------------------
    (1) See "Non-GAAP Measures"

    - Calvalley's revenue from crude oil sales was $1.0 million in the
      second quarter and a total of $11.5 million for the six months ended
      June 30, 2007

    - In addition, Calvalley and its joint venture invoiced its buyer for
      200,000 barrels under the take or pay feature of its crude oil sales
      agreement during the second quarter (as discussed in the Management's
      Discussion and Analysis). Calvalley's share of this amount of
      $7,026 million, recorded as deferred revenue on the balance sheet, was
      received by cash payments during July 2007. This amount, together with
      an additional 130,878 barrels lifted in July and priced at US$78.06 per
      barrel, will be included in crude oil export sales revenue of $12.1 for
      the month of July, 2007. Payment of this amount was received in July
      and August

    - Net income was $2.3 million and $8.5 million for the three and
      six months ended June 30, 2007 respectively as compared to net income
      of $1.2 million and a loss of $75,000 for the comparable period in 2006

    - Cash flows from operations were $3.7 million and $12.5 million for the
      three and six months ended June 30, 2007, respectively

    - Calvalley continues to be well-financed and capitalized, with no
      outstanding debt and working capital of $76.1 million, including
      $53 million of cash on hand

    Operating Highlights
    -------------------------------------------------------------------------
                                                            Six months ended
                                                        ---------------------
                                                     June 30,    December 31,
    (barrels of oil per day)                            2007            2006
    -------------------------------------------------------------------------

    Total Block 9 production                           5,269           4,234

    Calvalley working interest (50.0%)                 2,636           2,117

    Calvalley net entitlement (31.3%)                  1,650           1,327
    -------------------------------------------------------------------------


    - Average gross daily crude oil production from Block 9 for the
      second quarter was 5,135 bopd, slightly lower than the preceding
      quarter because of temporary well shut downs for testing and bottom
      hole pressure build-ups continued into the second quarter

    - After drilling the vertical Al Roidhat wells AR-5 and AR-6 in the first
      quarter, two additional vertical appraisal/development wells were
      successfully drilled in the field during the second quarter
     (Al Roidhat-7 and Al Roidhat-8)

    - During the quarter, there were fourteen wells producing at Hiswah.
      Production from each horizontal producer varied considerably with some
      wells providing greater oil rate due to the presence of natural
      fractures. The production strategy included employing horizontal
      drilling technology in order to take advantage of the ability of
      natural fractures to provide higher productivity

    - Calvalley initiated a 560+ kilometer 2D seismic acquisition program on
      June 15th, 2007

    - The Company has completed seismic processing of the 2D data acquired
      during 2006. In addition, it has completed 75% of the reprocessing of
      older seismic data, most of which had been acquired before 1993, prior
      to Calvalley's presence on Block 9

    - Endeavors continue to complete and commission the central processing
      facility despite drawbacks caused by delayed incoming material

    Quarterly Report

    The second quarter of 2007 provided Calvalley with more information and
knowledge about Block 9 and its potential, with the testing and analysis of
wells as well as the acquisition of further seismic data in respect of the
Block. Although production in the quarter resulted mostly from the
Hiswah field, Calvalley was pleased to begin the Block's first production from
the Auqban field.
    Calvalley also enjoyed another successful drilling campaign in the second
quarter. During that time, two rigs were utilized in an effort to drill both
multilateral and appraisal wells on the Block. Exciting new prospects have
also been identified and the Company intends to continue its exploration
efforts by drilling a number of important locations in the upcoming months.
    Although no lifts occurred in the second quarter, pursuant to the take or
pay provisions in Calvalley's long term marketing agreement with a subsidiary
of its joint venture partner Reliance Industries Limited, the Joint Venture
invoiced 100,000 barrels of oil for each of the months of May and June.
Payment was received in July of which Calvalley's share was $7 million.
    With respect to the ongoing construction at the central processing
facility (the "CPF"), commencement of the gathering system and separator
portion of the first train should be commissioned during the end of the third
quarter due to delays in customs release of some critical construction
materials. Immediately upon completion and commissioning of the CPF, the
production from the Hiswah wells will be routed through the CPF. This is
expected to increase production gradually from Hiswah field and Roidhat and
will also reduce processing fees presently paid to the operator of the Safer
facilities located on Block 18.
    During the remainder of 2007, the Company plans to drill exploration wells
and continue the successful stimulation programs in the wells of the Hiswah
field to enhance the production performance and understanding of the
reservoir. Some of the Hiswah production wells will undergo workovers to
install re-designed electric submersible pumps for better production
performance. The commencement of production from four wells in the Al Roidhat
field is expected for the third quarter, and further wells will be completed
with progressive cavity pumps once the equipment has arrived on site. The
produced Al Roidhat crude oil will be shipped to the CPF by road tankers and
blended with the Hiswah oil.
    Additionally, reservoir simulation models for both the Hiswah and the
Al Roidhat field are being commissioned and will support decisions for
reserves recovery enhancements, including selection of reservoir pressure
support options, future placement of production wells (including
multi-laterals, if applicable), and optimized well completions. Production
performance prediction scenarios and recommendations resulting therefrom are
expected by fourth quarter of 2007.

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

    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: Edmund M. Shimoon, CEO, Calvalley Petroleum
Inc., (403) 297-0491, Fax: (403) 297-0499; Renmark Financial Communications:
Neil Murray-Lyon, nmurraylyon@renmarkfinancial.com; Tina Cameron:
tcameron@renmarkfinancial.com; (514) 939-3989, Fax: (514) 939-3717,
www.renmarkfinancial.com

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