Ethiopia PSC The Ethiopian Production Sharing Contract
In 2008, Calvalley entered into its first Production Sharing Contract with the Ethiopian
Government for the exploration, development
and production of petroleum substances in
the Gimbi and Metema blocks under a single contract covering a total area of over
46,470 km
2
(11.5 million acres). The Gimbi block, which covers an area of 20,457 km
2
,
has been relinquished.
10
Calvalley has a 100% operated working interest in the Metema block for an exploration
period of eight (8) years, consisting of an in
itial period of four (4) years followed by two
(2) subsequent option periods consisting of two (2) years each. The option periods will
be activated at the discretion of Calvalley. Furthermore, subject to hydrocarbon
discovery during the total eight year period, the PSC provides for an additional twenty
five (25) year development period with a ten (10) year optional extension. The PSC
gives Calvalley the rights to explore, dev
elop, and produce hydrocarbons including oil,
condensate, and natural gas and associated liquids.
Total work obligations under the PSC, during the initial 4 year exploration program
amount to approximately $8.5 million and consist of the acquisition and processing of
400 km of 2D seismic and the drilling of one exploration well. The Company has incurred
approximately $1.9 million in respect of this commitment.
While the Company continues to consider opport
unities in pursuing exploration activities
in Ethiopia, due to uncertainties relating to future prospects, an impairment charge of
$1.9 million in respect of Exploration and Evaluation Assets in Ethiopia has been
recorded in the Company’s financial statements for the quarter ended December 31,
2012.
For more information in relation to the production sharing contract in Ethiopia see
“Highlights and Outlook” in the Company’s Management Discussion and Analysis for the
year ended December 31, 2011 which is available on SEDAR at
and
which portion is incorporated by reference in this Annual Information Form