Calvalley Petroleum Inc. provides the following update for shareholders.

The Company continues to focus on optimization projects to increase production from existing fields which include initiating production from shut-in wells in the Al Roidhat field and installing a high capacity electrical submersible pump in the Ras Nowmah 2 well.

These activities have resulted in average production volumes growing to approximately 6,400 barrels per day for the month of November 2011, up 7 per cent from the approximate 6,000 barrels per day achieved in October 2011. Production from the Ras Nowmah 2 well is being managed and monitored to optimize reservoir performance and production volumes have recently been increased to 3,500 barrels per day boosting average production volumes from Block 9 above 7,000 barrels per day in December to date. Based on the reservoir characteristics observed, indications are that this well can produce in excess of 5,000 barrels per day - consistent with test results from the well announced in previous press releases. Calvalley plans to gradually increase production volumes from this well consistent with good production practice to optimize the well performance. As announced in August 2010, the Ras Nowmah 2 well encountered 41 meters of gross oil pay with only the upper 15 meters of pay having been perforated for testing and production.

Security concerns remain an obstacle to accessing qualified contractors in the oilfield service sector. The Company is continually monitoring the situation with the objective of accessing services to enable the execution of its plans to drill two development wells at Ras Nowmah and a drilling program for 2012 which comprises in excess of 25 wells including up to seven exploration targets.

Calvalley's projects and production in Yemen remain contingent on the availability of supplies and services which continue to be affected by uncertainty in the political environment and local security related issues. On the basis that the supplies and services are available to execute the Company's plans, and local security issues are resolved, Calvalley is planning a 2012 capital expenditure budget for Block 9 in the range US$100 - $110 million. Cash flow for 2012 from Block 9 is forecast in the range US$140 - $150 million.

Tags: Calvalley Petroleum Inc.