The Canadian Calvalley Petroleum signed a participation agreement for the financing of oil producing Block 9 in the Republic of Yemen. Calvalley has received a funding commitment of $10 million in exchange for a 40 percent interest in Block 9. The funds will cover 100 percent of the cost of operations in the Block related to the completion of a four-well drilling program, a press released confirmed.
Under the terms of the Agreement, Calvalley will remain the operator of Block 9 and will retain a 60 percent majority interest. This Participation Agreement is subject to the standard approval of the Yemen Ministry of Oil and Mineral Resources. Final approval is expected within the next 30 days, at which time Calvalley's partner will post an irrevocable Letter of Guarantee in the amount of $ 10 million from a major European financial institution.
The funds will allow Calvalley to fulfill all of its financial requirements to the Republic of Yemen in order to satisfy the drilling commitments of both the first and second exploration phases, which expire in April of 2005. The company anticipates initiating drilling prior to the end of the first quarter of next year.
In order to finalize its drilling plans the company has recently increased its Yemen project staff. The Trobec Geology Group did an evaluation of Block 9 and identified a number of drilling targets with potential oil in place in excess of three billion barrels. Both the exploitation of the existing discoveries on the Block and exploration of new pools are being reviewed at the present time.
In 1997 Calvalley entered into a Production Sharing Agreement with the Ministry of Oil and Mineral Resources of the Republic of Yemen which provided the company with the right to explore for and produce, oil and natural gas on Block 9, a 4,728 square kilometer parcel in the Shabwah/Hadramaut region of central Yemen. Calvalley's concession is 75 miles from the currently producing blocks of Nexen and TotalFinaElf that on a combined basis are producing approximately 250,000 barrels of oil per day. — (menareport.com)
© 2001 Mena Report (www.menareport.com)
