Calvalley Petroleum Inc. has successfully finalized an agreement with the Ministry of Oil and Mineral Resources of the Republic of Yemen and the third party operator of Block 18 and the export facilities.

The agreement will allow Calvalley to produce all oil from Block 9 and transport a blended crude having a specification equal to or better than 26 degree API. This agreement will enable Calvalley to commence production from the Roidhat field, which will be blended with the lighter oil produced from other fields in the Block. The Roidhat field, with estimated production capability of 10,000 bbls/d once fully developed, was shut in pending the conclusion of this agreement.

As previously announced, Calvalley solicited tenders from qualified Engineering firms to carry out the Engineering, Procurement and Construction Management of the pipeline project from Block 9 to connect to a third party pipeline system for the export of crude oil production. Calvalley is pleased to announce that the tender has been awarded to Veco Engineering from UAE to work together with Calvalley's technical team to expedite the process of design, procurement and construction.

Calvalley expects to commence the construction of a 16 inch pipeline, having a capacity of approximately 87,000 barrels per day, prior to the year end 2008. Commissioning of the pipeline is expected by mid-2009.

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