** Book value of property, plant, equipment (after 2014 year end write-down / impairment charge of $88 million) $40M CDN or $0.

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Ambrose Barton
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1 MicroCap.com March 26, 2015 Calvalley Oil Flows as Saudi Arabia Goes to War in Yemen Surprisingly strong production as Gulf States launch Military Intervention Calvalley Petroleum (CVI.A 70 cents) Financials Ending December 31, 2014 Shares outstanding: 74 million / Market Cap $53 million Cash and GIC's $73M Receivables $8M Oil inventory $3M Total: $84 million or $107 Million CDN Current payables $9M or $11 Million CDN Long term payables - nil NET: $96 Million CDN or $1.30 per share EXCLUDES the Value of Any Assets in Yemen ** ** Book value of property, plant, equipment (after 2014 year end write-down / impairment charge of $88 million) $40M CDN or $0.54/share Calvalley issued a surprisingly strong operations update on Wednesday evening but before discussing that, it is important to understand the current situation in Yemen. I have put as much information and maps together as possible to properly assess the situation. In addition to the Calvalley operations update (they are still able to sell oil in Yemen), Saudi Arabia announced that it has launched military operations in Yemen, carrying out air strikes in coordination with a 10-country coalition (Saudi Arabia, United Arab Emirates, Kuwait, Jordan, Qatar, Bahrain, Pakistan, Morocco, Egypt and Sudan). This is a very important development for the people of Yemen and for Calvalley. (impact on oil and potential choke point for crude shipping). There is currently a Three-Way battle for Yemen: 1) Internationally recognized President Abd Rabboh Mansour Hadi and the military backing him (Hadi was forced out of the country Tuesday); 2) the al-houthi militant group, backed by troops loyal to former President Ali Abdullah Saleh (very strong influence and financing from Iran); and 3) Al-Qaeda who the U.S. military had previously been fighting (using drone strikes) to reduce the international terror threat from them. As the Hadi group fights the al-houthi militants, Al-Qaeda is trying to sneak in the back door.

2 Iran is trying to carry a big stick of influence in Yemen and this does not sit well with Saudi Arabia. The Houthi (about 1/3 of the population of Yemen), follow the Zaydi branch of Shiite Islam and align closely with Iran. Saudi Arabia and partners, along with 2/3 of Yemen, are Sunni Muslim. Late Wednesday at a news conference in Washington, Saudi Ambassador Adel al-jubeir said Gulf Arab allies and others had joined with the desert kingdom in the military campaign in a bid "to protect and defend the legitimate government" of Yemen President Abd-Rabbu Mansour Hadi. "We will do whatever it takes in order to protect the legitimate government of Yemen from falling," Jubeir said the United States was not participating in the military campaign but a U.S. official said Washington was providing some unspecified support. He said the mission would not be limited to a specific city or region of Yemen, suggesting that the coalition's warplanes could strike the Houthis anywhere they choose. Yemen's slide toward civil war has made the country a crucial front in mostly Sunni Saudi Arabia's rivalry with Shi'ite Iran, which Riyadh accuses of stirring up sectarian strife through its support for the Houthis. Sunni Arab monarchies around the region have condemned the Shi'ite Houthi takeover as a coup.

CALVALLEY CORPORATE UPDATE (late Wednesday afternoon) - note my comments in red + I inserted maps to help in the understanding The company has received formal notice from the operator of block 51 of

3 CALVALLEY CORPORATE UPDATE (late Wednesday afternoon) - note my comments in red + I inserted maps to help in the understanding The company has received formal notice from the operator of block 51 of its intention to suspend operations at block 51 and to shut down the facilities. This action is being taken by the operator due to the relinquishment of the entire contract area under the block 51 production-sharing agreement. In the map below, Block 51 was located near Block 18 and in the past few years has been a hot spot for them. It is not surprising this area is too high risk and likely formed part of the $88 million write-down Calvalley took at year end). As a result of the intended shutdown of the facilities at block 51, the company will be securing the facilities at the truck off-loading site located adjacent to the block 51 facilities. The company will continue to truck its crude oil production to block 18 for export. Average gross production volumes from Jan. 1, 2015, to the current date are estimated to be approximately 3,600 barrels per day with the Hiswah field contributing 2,600 bpd, the Ras Nowmah field 870 bpd and the Ras Nowmah South field 130 bpd. In the map above you can see Block 9 this is the strongest oil producing region for Calvalley and forms the core of their Yemen assets and oil/gas reserves. To date Block 9 has been unaffected (at least directly) by militant activity. Calvalley pays a lot of money to have significant military protection in this area. You will also see from the first map that this region is under the control of the ousted (but legitimate) Yemen President. There is al-qaeda influence in the area but this has existed for years. With the Gulf coalition now getting involved militarily, it helps protect the Calvalley assets in this area of which the stock market values at zero anyway. One export shipment of crude oil has occurred in the quarter to date with the next export shipment of crude oil expected in May. The company sold a total of 90,000 barrels of crude oil in February, 2015, at a price of $56.83 (U.S.) per barrel. This shipment was still worth $6.5 million Cdn not bad for being in a war zone and having your producing assets valued at zero by the market. Calvalley has a 50 percent working interest in Block 9.

The crude being produced at Block 9 will be going (by tanker) to the alternative crude oil transfer location at Block 18 which markets crude oil through the Ras Isa terminal on the west coast of

4 The crude being produced at Block 9 will be going (by tanker) to the alternative crude oil transfer location at Block 18 which markets crude oil through the Ras Isa terminal on the west coast of Yemen. This method was used in the past before they had truck offloading facilities at block 51 (commissioned in mid 2011). The Ras Isa oil pipeline (also known as Marib pipeline) is the main oil pipeline in Yemen. It runs from the Marib oil field to the Ras Isa floating export terminal on the Red Sea, offshore from Al-Ṣalīf. The pipeline transports between 70,000 and 110,000 barrels per day of the nation's average production of 125,000 barrels per day. I believe one of the primary risks to Calvalley revenue out of Yemen would be an attack by militants on the Marib pipeline. However, even the Houthi rebels would like to get access to the oil and the terminal / export revenue - as much as the previous government. So one has to question if it s a pipeline worth attacking. Al-Qaeda may believe it is, and in the middle of a war-zone, critical oil infrastructure is always at risk. The pipeline would have been built with choke points but any repair is always time consuming. Below is some background information on Calvalley s Block 9. It is in a remote region and for the time being, relatively safe. The value in Calvalley at this point is still in their giant bank account and the fact the Yemen assets are discounted to zero. If the Saudi Coalition can get Yemen under control this year, we should be able to make some decent money off Calvalley.

Introduction. Definition of Key Terms. Security Council. The Question of Yemen. Student Officer: Humna Shahzad

Introduction. Definition of Key Terms. Security Council. The Question of Yemen. Student Officer: Humna Shahzad Forum: Issue: Security Council The Question of Yemen Student Officer: Humna Shahzad Position: Deputy President Introduction Yemen being an Arab country in the middle east, wasn t always like the country