CALGARY, Feb. 14, 2012 /CNW/ - Calvalley Petroleum Inc. ("Calvalley" or the "Company") provides the following operations update for shareholders.
At least 1,000 workers employed by Yemen PetroMasila at Block 14 have initiated a work stoppage which will impact production from all crude oil producers in the Hadramout province including Calvalley at Block 9.
The Government of Yemen established PetroMasila in November to operate Block 14 in the Masila area, Hadramout province to replace Nexen Inc.
Production operations at Block 9 will be shut down shortly when crude oil storage tanks are full.
In December 2011 gross production from Block 9 averaged approximately 7,000 bopd and included production from the Hiswah, Ras Nowmah and Al Roidhat fields. Production from the Al Roidhat field (which has the capability of producing over 1,500 bopd) and the Ras Nowmah field have been curtailed due to heightened security risks posed by locals in the area - Ras Nowmah was producing 2,600 bopd when it was shut-in. Production has been maintained at the Hiswah field (approximately 3,000 bopd).
Recently, certain groups within the region have organized blockades on major roads within the Masila basin including the trucking route from Block 9 to Block 51 curtailing the movement of crude oil for export and the movement of fuel and supplies. The Company anticipates production from the Hiswah field will be curtailed within the next few days as a result of both the local blockades and the work stoppage at the export facilities.
Calvalley management and staff are working closely with the government of Yemen and local officials to resolve the concerns of locals in the region of Block 9. The Company believes these concerns can be resolved in a timely manner.
The current work stoppage at Block 14, which is impacting the operation of the export pipeline and terminal and restricts the deliveries of crude oil for export from Block 9, is being monitored closely to ensure production from Block 9 will be reinstated in a timely manner.
Management is cautiously optimistic that the current political environment in Yemen will improve after the February 21, 2012 election and that operations will return to normal, however, the timing is uncertain at this point.
The Company is planning to conserve its working capital (current fair value estimate - US$82mm) and restrict capital project expenditures until the operations in Block 9 can be resumed safely and effectively.
The Company is planning to release information in respect of its 2011 independent reserve evaluation shortly and is expecting to release its 2011 financial results by March 9, 2012. The information in these releases will provide details of the Company's reserves of crude oil, including original oil in place and reserve values, and information on revenues, royalties, expenses, taxes, profitability and netbacks in 2011 of the Block 9 asset which indicate the benefits to both the Government of Yemen and the Calvalley shareholder.
Calvalley is an international oil and gas company, with offices in Calgary, Alberta, Canada, that operates its 50% working interest in Block 9 of the Masila Basin, in The Republic of Yemen and its 100% working interest in the Gimbi and Metema Blocks of the Blue Nile Basin, in The Republic of Ethiopia.
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.
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.
For further information:
[email protected] or +1 (403) 297-0490
Edmund Shimoon, Chairman and CEO
Gerry Elms, CFO