Business

Calvalley Petroleum Runs Away From Yemen

National Yemen

Calvalley Petroleum Yemen

Calvalley, announced recently that its operation in Yemen is no longer a successful investment. The company has a 50 percent stake in a Yemeni state owned oil and gas block, block 18, as well as a small interest in a property in Saskatchewan, said its efforts to diversify its operations beyond Yemen has failed.

Shares of Calvalley Petroleum (TSE:CVla) were trading 34.78 percent higher at C$0.93 in Toronto today, after announcing that it would liquidate its assets due to increasing security and political risk in Yemen.

Calvalley, which has most of its operations in Yemen, said that it would liquidate and restructure the Company as part of an arrangement with Calvalley Energy Limited, a wholly-owned subsidiary of Calvalley (based in Cyprus), under the Canada Business Corporations Act.

Under the arrangement, Calvalley shareholders will choose between receiving US$80.7 per share or shares of the company’s unlisted Calvalley Energy Ltd., or a combination of both.

“In recent years, Yemen’s energy sector has been, and continues to be, in a state of flux, and the exploration, production and transportation of energy resources within the country has become increasingly complicated by its difficult security environment,” said Calvalley in a statement.

“The company has already started shutting down production for security reasons. In an effort to allow official Yemeni government regain control of the country, Saudi Arabia has been bombarding Yemen, targeting  Houthi rebels who ousted President Mansour Hadi and took over control of much of the country earlier this year” said the report.

In such circumstances, there was little choice for Calvalley and investors have clearly appreciated the liquidation from what may be the next major war scenario in the Middle East.