June 30, 2011 / 12:51 PM / in 6 years

UPDATE 2-Yemen unrest continues to hurt Calvalley Petroleum

* Says Q2 production operations hurt by unrest, disrupted pipeline

* Sees smooth oil lifting operations to begin in Q3

* Expects to expand production base through acquisitions

* To install new facilities in Yemen (Adds details on acquisitions, new facilities, background)

June 30 (Reuters) - Calvalley Petroleum CVIa.TO said its second-quarter production operations continued to suffer from the recent political unrest in Yemen, where the Canadian oil and gas company has a 50 percent working interest in an oil block on the Masila basin.

The Calgary-based company, which was hit by a delay in equipment supply and transportation issues in March due to the turmoil in the Middle East, said production operations for the quarter were at restricted levels, worsened by a disrupted pipeline.

It expects a regular pattern of future oil liftings to begin in the third quarter, after it finalizes a deal to sell crude oil produced at its Malik Blend facility.

Calvalley also started delivering crude oil from the Hiswah and Ras Nowmah oilfields into the Nexen-operated Masila export pipeline system.

Calvalley, which also has a 100 percent working interest in the Gimbi and Metema oil blocks in the Blue Nile basin of Ethiopia, plans to install new facilities in Yemen to boost the output of its current wells.

“The company is focusing on both organic growth in Yemen and growth through potential acquisitions in order to expand and diversify its production base,” it said in a statement.

Class A shares of the company closed at C$2.40 on Wednesday on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Saumyadeb Chakrabarty and Viraj Nair)

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