1996:
Calvalley was incorporated.

1997:
Calvalley signed a Production Sharing Agreement for Block 9 in the Republic of Yemen.

2001:
Class A Common Shares (CVI.A) listed on TSX Venture Exchange on October 1.

2005:
Calvalley announced its intention to declare commerciality on Block 9 on June 19.

Calvalley received approval in August for the conversion of Block 9 from an "exploration block" to a "development area", which gave the Company the rights to produce and sell oil, natural gas liquids and natural gas from Block 9 for a twenty-year period, with a possible five-year extension beyond 2025.

Calvalley's common shares were approved for listing and started trading on The Toronto Stock Exchange on November 4.

2006:
In January and February of 2006, the Company issued 407,143 Common Shares for cash consideration of $1,378,000 upon the exercise of warrants, such warrants expiring on March 14, 2006 and originally issued as part of the March 2005 Private Placement. In addition, 270,000 stock options were exercised for proceeds of $187,000 pursuant to the Company's Stock Option Plan.

On February 21, 2006, the Company completed a bought deal private placement of 9,000,000 Common Shares at a price of C$6.50 per share for total gross proceeds of $50,895,000 and net proceeds of $47,749,000.

The Company significantly increased its crude oil production volumes and, in the ordinary course of business, exported its share of crude oil pursuant to three spot sales contracts.

2007:
Calvalley produced oil predominantly from the Hiswah field at an average daily rate of 5,278 bopd. In 2007, the Company entered into a long-term marketing arrangement for the sale of its crude oil with Reliance Industries (Middle East) dmcc ("RIME").

423,333 stock options were exercised for proceeds of $663,000 pursuant to the Company's Stock Option Plan.

2008:
Production continued primarily from the Hiswah field at an average daily rate of 4,635 bopd. A key reservoir simulation study was conducted which will be utilized to determine optimal development and injection well placement in order to optimize production from the Hiswah field. A deep exploratory well was drilled into the fractured basement at Qarn Qaymah (the "QQ-2") which discovered hydrocarbons in the fractured basement and hydrocarbon potential in the Kohlan sands. Some formation damage occurred during the drilling of the well. Simulation, testing and evaluation are still in progress and the Company has identified other basement targets. The Company commenced operation of its central processing facility.

440,000 stock options were exercised for proceeds of $514,000. Additionally, the Company repurchased 1,604,896 shares on the open market under a normal course issuer bid for a total cost of $4.8 million.

The Company diversified its exploration portfolio by signing a Production Sharing Contract with the Ethiopian Government on the Metema and Gimbi blocks covering a total area of 11.5 million acres.

2009:
Uncertainty in the global economic climate and the absence of an adequate arrangement to move all crude discovered on Block 9 caused delays in capital spending and, as a result, the drilling program for Block 9 was slower than originally planned. Management was reluctant to risk capital until signs of recovery began to emerge and the new transportation agreements were concluded. This slowdown in drilling activity expedited the resolution of the transportation of all qualities of crude oil discovered within Block 9. These negotiations took a great deal of time and effort to finalize due to the complexity of the negotiations and the number of parties involved. The slowdown also allowed the Company to continue to high-grade its inventory of drilling locations. In 2009, Calvalley drilled three wells, including the Ras Nowmah exploration well and tested Qarn Qaymah.

Despite drilling only three wells (two development wells at Hiswah and one exploration well at Ras Nowmah) in 2009, Calvalley's proved plus probable reserves increased to 26.5 million bbls at December 31, 2009, representing an increase of nearly 8% (11% including reserves produced in 2009) over the 24.6 million bbls estimated by McDaniel and Associates at December 31, 2008. This represents a reserves replacement ratio of 343% on 2009 production. Cavalley's finding and development costs are $4.68 per barrel on a three year average basis.

In response to the significant drop in average oil prices from 2008 to 2009, Calvalley exercised tight cost controls throughout the year and was thereby able to maintain a very healthy balance sheet, including Cash and GIC's of $70.4 million and zero long-term debt entering 2010.

563,300 stock options were exercised for proceeds of $776,000. Additionally, the Company repurchased 2,610,918 shares on the open market under a normal course issuer bid for a total cost of $3.3 million.

Recent Developments:

• Calvalley successfully completed the drilling of the Hiswah 34 producer and the well has been placed on production. Drilling operations on the Hiswah 35 producer are scheduled to commence during the fourth quarter of 2010. The Company is also continuing its pressure maintenance and production optimization program for the Hiswah field.
• Appraisal of the Qarn Qaymah structure was started by mobilizing the rig to the Qarn Qaymah-3 ("QQ-3") well site in mid-September. The drilling of the well commenced on October 2, 2010. QQ-3 is targeted to have a total depth of 4,460 meters including an openhole section of approximately 1,000 meters in the oil bearing Fractured Granitic Basement ("FGB"). The openhole section is expected to encounter seven (7) major fracture zones in the FGB. Calvalley expects to keep this rig in the Qarn Qaymah area due to its capability to drill additional deep exploration/appraisal wells.
• The drilling of QQ-3 is progressing well and on budget with the current depth of approximately 2,000 meters. We expect to complete the drilling by mid-December. The testing of the well will commence immediately thereafter.
• The Company commenced the testing of the Ras Nowmah-2 discovery well on September 13, 2010. A number of tests were conducted with two different size pumps. The final test data were obtained utilizing a larger capacity downhole pump ("ESP") which was installed by the Company for this latest phase of testing operations. The well flowed at a stabilized rate of approximately 3,000 bbl/d of sweet crude (approximately 30 degree API) and no formation water with only 9.5% pressure drawdown to the maximum operational capability of the ESP. Based on the pressure drawdown and build-up data, this 2nd phase of testing clearly indicates that the Ras Nowmah-2 well is potentially capable of producing at much higher flow rates. The test data were analyzed by an independent reservoir engineering firm in Calgary. The independent reservoir engineers calculated a flow rate in excess of 5,000bbl/d at a 20% pressure drawdown.
• Given the success of the Ras Nowmah discovery, we have commenced the acquisition of 350 km of 2D seismic data which is expected to be completed by mid-December 2010. The seismic data will enable Calvalley to further define Ras Nowmah field boundaries and high-grade the nearby prospects which are part of the 2011 drilling campaign.
• Calvalley has commenced preparation for an appraisal well in the discovery area (Ras Nowmah-3). The site preparation is 90% complete. We expect to start the drilling of Ras Nowmah-3 immediately following the completion of the seismic data acquisition program.
• With respect to drilling operations, the Company continues to drill development wells at its Hiswah and Al Roidhat fields to increase its production capacity.
• Calvalley has started the process of bringing in a third drilling rig to Block 9, which will be dedicated to the drilling of shallow development wells. We expect the rig to be available and on location at Block 9 in January 2011.
• With respect to the Company's activities in Ethiopia, surface geological work in the Metema and Gimbi Blocks has been completed and fully evaluated. Based on the surface geological work, Calvalley has selected a key prospective region covering an area of approximately 26,000 square km for the acquisition of an aeromagnetic survey. The contractor for the acquisition of the aeromagnetic survey has been selected and the services have been mobilized to the region. The data acquisition is expected to commence in November and to be completed by the end of 2010. Interpretation of the data and selection of potential drilling site will follow in the first half of 2011.
• As the Company nears completion of the Truck Offloading Facilities ("TOF") at Block 51, we are in position to realize the benefits of our development and appraisal drilling program at Block 9 in Yemen and to unlock the production and reserves potential of the asset. We expect that the completion of the TOF (presently scheduled for year-end 2010) will allow us to achieve significant production ramp up entering 2011.
• Having established a market for all of the crude oil commercially available within Block 9, the TOF will enable Calvalley to market a blend of 26 API or better crude from Block 9 to the Masila Export Pipeline via Block 51 with pricing at an attractive price equivalent to the Masila Blend price. We have made a significant progress toward the completion of TOF. Civil work at the TOF is essentially complete. Fabrication of all key equipment including tanks, pumps, and metering systems is largely complete and the majority of the equipment is either in transit or has already arrived in Yemen. The mechanical and electrical work for the TOF is expected to commence prior to November 15, 2010. The facility is on schedule and on budget.
• The first delivery of blended crude from Block 9 to Block 51 is expected to commence immediately after the TOF is completed. Initially, Block 9 crude will be trucked to the TOF with a maximum limit of 10,000bbl/d (5,000bbl/d net). In due course, trucking will be replaced by a pipeline connecting Block 9 to the export line. Upon completion of the export line, the 10,000 limit will be eliminated. The initial planning for the construction of a pipeline to deliver blended oil from the Company's Central Processing Facility ("CPF") at Block 9 to the Masila system has commenced.
• Calvalley has also commenced technical work associated to an inter-field pipeline connecting the Al-Roidhat and Ras Nowmah fields to the CPF located at the Hiswah field. Construction is expected to commence in the first half of 2011 and to be completed in the third quarter of the same year. This pipeline will reduce inter-field transportation and operating costs.

Major milestones are subject to risks noted under "Risk Factors" in the Management Discussion and Analysis, dated April 26, 2010. Milestones planned for 2010 include the following:

• Complete construction of truck offloading facility (TOF) to commence trucking of blended crude to Block 51 by the end of the third quarter of 2010;
• Complete appraisal of Ras Nowmah structure;
• Conduct operations to provide further appraisal of the Qarn Qaymah structure;
• Upon completion of the truck offloading facility, commence production from the shut-in wells at Al Roidhat;
• Drill up to nine development wells and commence water and gas injection to maintain reservoir pressure and increase recoverability at Hiswah;
• Acidize Auqban 1 to attempt to increase production from the tight formation; and
• Complete geological mapping and conduct an airborne gravity survey in Ethiopia during the second half of 2010, and
• Utilize Calvalley's strong balance sheet and international operating experience by continuing to evaluate potential acquisitions of additional assets in the Middle East and Africa.

Figure 1 - Old architecture near Block 9