Tri-Valley Corporation (NYSE Amex: TIV) today announced its
financial results for the second quarter ended June 30, 2011. Oil
and gas production revenues increased 2% to $474,000 in the second
quarter of 2011 compared with $465,000 in the second quarter of
2010, due to higher oil prices partially offset by a slight decline
in net oil production. Net production in the recent second quarter
totaled 6,454 barrels of oil compared with 6,488 barrels of oil in
the same quarter of 2010, as reported to the California Division of
Oil, Gas & Geothermal Resources (DOGGR). Net production costs
increased 86% in the 2011 second quarter compared with the same
quarter a year ago, reflecting increased drilling activity at the
Company’s Claflin oil project near Bakersfield.
“The slight increase in oil and gas revenues in the recent
quarter compared with the prior year was below our expectations and
was due to a temporary and unforeseen decrease in production at our
Pleasant Valley oil project,” said Maston Cunningham, President and
CEO of Tri-Valley. “Due to a mechanical failure, we lost steam
production capability during the middle of the quarter and were not
able to resume steam injection until late June after repairs were
completed. We expect net native oil production at Pleasant Valley
for the third quarter to approximate 5,299 barrels of oil per day
or slightly under the second quarter of the year as steam injection
and affected oil production resumes. Production at Claflin
increased 300% from the second quarter last year, and we expect it
to continue to grow as the new wells that were drilled during the
recent quarter come on line. There are currently twelve wells on
the site, including the eight that were recently drilled. Of the
new wells, three have been steamed, and production has begun from
all three. We anticipate that all eight new wells will be in
production by mid October.”
“Turning to our minerals business, we achieved an important
milestone on July 1st with the execution of a Definitive Agreement
between our Select Resources subsidiary and US Gold Corporation for
the exploration and development of the Richardson minerals project
in Alaska,” Mr. Cunningham continued. “Under the terms of the
agreement, US Gold acquired an exploration lease for Richardson,
along with an exclusive option to purchase a 60% interest in the
project and enter into a joint venture with Select for its
development. Work began on the project on July 5th. We received our
first $200,000 payment from US Gold specified under the agreement,
and it will be recognized in the third quarter results. In
addition, we anticipate $200,000 in annualized cost savings in
maintenance for the Richardson project. Those costs will be assumed
by US Gold. This was a significant step in our initiative to
monetize our mineral assets in Alaska. We are also pursuing a
similar arrangement with an experienced operational and financial
partner for our Shorty Creek property.”
“We ended the second quarter with $1.5 million in cash and
stockholders’ equity of $11.4 million, much improved from the
$581,000 in cash and $6.2 million in stockholders’ equity at the
end of December 2010. The substantial improvement in our cash
balance and capital position was the result of the successful raise
of capital through the sale of common stock under our at-the-market
(ATM) equity offering programs with C. K. Cooper & Company and
the private placement completed in April, 2011. These capital
raising activities provided us with the capital we needed to expand
the number of wells at Claflin as well as to fund our ongoing
operations.”
Operational highlights during the second quarter of 2011 through
today include:
- Executed a Definitive Agreement with US
Gold Corporation for a four-year Exploration Lease and Purchase
Option for the exploration and development of the Richardson gold
project in Alaska in July;
- Closed a private placement financing
with a select group of institutional and accredited investors,
issuing 10.1 million shares of common stock and raising net
proceeds of $4.7 million to provide funding for the completion of
the first drilling phase of the Claflin oil project in the Edison
oil field near Bakersfield in April;
- Completed the first drilling phase at
Claflin, drilling eight new vertical wells, up from the six wells
originally planned;
- Commenced the initial steam injection
cycle at Claflin in June 2011 and began first production from the
new wells starting in July 2011;
- Entered into a long-term lease for new
office space in Bakersfield to significantly reduce costs and
improve efficiency;
- Reviewed the business strategy and
recent corporate developments with analysts, investors and
potential investors at the Independent Petroleum Association of
America (IPAA) Oil and Gas Symposium in NYC in April and at the
Global Hunter Securities Conference in San Francisco in July;
and.
- Reached preliminary terms with the OPUS
Partners Special Committee on restructuring and resolution of
alleged claims that will support the continued development and
financing of the Pleasant Valley oil field project.
Second Quarter Financial Highlights
Total revenues for the second quarter of 2011 were $503,000
compared with $1.6 million in the second quarter of 2010. Included
in last year’s second quarter revenues was a $1.1 million gain on
the sale of non-strategic assets in California. Oil and gas
revenues increased 2% to $474,000 compared with $465,000 in the
same period last year.
Total costs and expenses were $3.1 million compared with $5.8
million in the second quarter last year, a decrease of 46%. The
decline was largely due to the elimination of warrant expense which
totaled $2.9 million in the second quarter last year. Mining
exploration expenses were down 25% to $64,000, reflecting cost
savings from the sale of the Admiral Calder calcium carbonate
quarry in December 2010. Oil production costs increased to $460,000
in the recent second quarter compared with $247,000 last year,
primarily due to the drilling of eight new wells at Claflin.
General and administrative expenses decreased 26%, as a result of
the staff reductions implemented by the Company over the past year.
The Company incurred an impairment loss in the recent second
quarter of $503,000, reflecting the write-down of expired
leases.
The net loss in the recent first quarter was $2.6 million, or
$0.04 per share, compared with a net loss of $4.2 million, or $0.11
per share, in the second quarter of 2010. Weighted average shares
outstanding in the recent second quarter totaled 65.7 million
compared with 36.9 million in the second quarter of 2010, primarily
reflecting the sale of common stock through the Company’s ATM
facility with C.K. Cooper & Company and the private placement
financing completed in April 2011 for 10.1 million shares.
Six Months’ Financial Highlights
Total revenues through the first six months of 2011 were $1.2
million compared with $2.6 million in the same period of 2010.
During the six-month period last year, the Company recognized gains
on the sale of assets of $1.7 million. Oil and gas revenues grew
23% in the first half of 2011 compared to the first half of
2010.
Total costs and expenses were $6.3 million in the recent first
half versus $9.0 million in the first half of last year. The
decrease was largely due to a substantial reduction in warrant
expense which totaled $4.0 million through the first six months of
2010. Mining exploration expenses declined 53% reflecting cost
savings from the sale of the Admiral Calder calcium carbonate
quarry in December 2010. Oil production costs were up 71% due to
the increased drilling activity at Claflin. The recent six-month
period also included $916,000 in impairment charges for the
write-down of expired leases.
The net loss of the first six months of 2011 was $5.1 million,
or $0.09 per share, compared with a net loss of $6.4 million, or
$0.18 per share for the first half of 2010.
Conference Call
The Company has scheduled a conference call to discuss its
second quarter 2011 results and current business developments
today, August 22, 2011, at 4:30 p.m. ET. To access the call, please
dial 877-941-9205. To access the live webcast of the call, visit
Tri-Valley’s website at www.tri-valleycorp.com.
An audio replay will be available for seven days following the
call at 800-406-7325. The password required to access the
replay is 4464851#. An archived webcast will also be available at
www.tri-valleycorp.com.
About Tri-Valley
Tri-Valley Corporation explores for and produces oil and natural
gas in California and has two exploration-stage gold properties in
Alaska. Tri-Valley is incorporated in Delaware and is publicly
traded on the NYSE Amex exchange under the symbol "TIV." Our
Company website, which includes all SEC filings, is
www.tri-valleycorp.com.
Note Regarding Forward-Looking Statements
All statements contained in this press release that refer to
future events or other non-historical matters are forward-looking
statements. We have attempted to identify forward-looking
statements by terminology including “anticipates,” “believes,”
“can,” “continue,” “could,” “estimates,” “expects,” “hope,”
“intends,” “may,” “plans,” “potential,” or “predicts,” or the
negative of these terms or other comparable terminology. Although
we do not make forward-looking statements unless we believe we have
a reasonable basis for doing so, we cannot guarantee their
accuracy. These statements are only predictions based on
management’s expectations as of the date of this press release, and
involve known and unknown risks, uncertainties and other factors,
including: our ability to obtain additional funding; fluctuations
in oil and natural gas prices; imprecise estimates of oil reserves;
drilling hazards such as equipment failures, fires, explosions,
blow-outs, and pipe failure; shortages or delays in the delivery of
drilling rigs and other equipment; problems in delivery to market;
adverse weather conditions; compliance with governmental and
regulatory requirements; geographical concentration of oil and gas
reserves in the State of California; changes in, or inability to
enter into or maintain, strategic and joint venture partnerships;
pending and threatened lawsuits against us; potential rescission
rights stemming from our potential violation of Section 5 of the
Securities Act of 1933; our ability to consummate the OPUS
restructuring transaction; our ability to satisfy the OPUS
Preferred Return Amount; and such other risks and factors that are
discussed in our filings with the Securities and Exchange
Commission from time to time, including under “Part I, Item 1A.
Risk Factors” and “Part II, Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations,”
contained in Tri-Valley’s Annual Report on Form 10-K for the year
ended December 31, 2010, and under “Part I, Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and “Part II, Item 1A. Risk Factors,” contained in
Tri-Valley’s Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 2011, respectively. Except as required by
law, Tri-Valley undertakes no obligation to update or revise
publicly any of the forward-looking statements after the date of
this press release to conform such statements to actual results or
to reflect events or circumstances occurring after the date of this
press release.
TRI-VALLEY CORPORATION CONSOLIDATED BALANCE SHEET
ASSETS
June 30, 2011 December 31, 2010 (Unaudited)
(Audited) Current Assets Cash $ 1,523,512 $ 581,148
Accounts Receivable - Trade 364,410 202,482 Prepaid Expenses
694,073 615,778 Accounts Receivable from Joint Venture Partners
3,943,099 3,943,099 Accounts Receivable - Other 450,712 32,552
Total Current Assets $ 6,975,806 $
5,375,059
Property and Equipment - Net Proved
Properties, Successful Efforts Method 3,847,873 1,235,932 Unproved
Properties, Successful Efforts Method 712,831 1,781,069 Other
Property and Equipment 2,717,908 3,139,852
Total
Property and Equipment - Net $ 7,278,612 $ 6,156,853
Other Assets Deposits 403,752 526,749
Investments in Joint Venture Partnerships 23,285 23,285 Goodwill
212,414 212,414 Long-Term Receivable from Joint Venture Partners
3,060,417 2,392,817
Total Other Assets $
3,699,868 $ 3,155,265
Total
Assets $ 17,954,286 $ 14,687,177
TRI-VALLEY CORPORATION CONSOLIDATED BALANCE SHEET
LIABILITIES AND
STOCKHOLDERS' EQUITY
June 30, 2011 December 31, 2010 (Unaudited)
(Audited) Current Liabilities Notes Payable $ 70,212
$ 134,322 Accounts Payable - Trade and Accrued Expenses 5,922,663
7,738,073
Total Current Liabilities $
5,992,875 $ 7,872,395
Non-Current
Liabilities Asset Retirement Obligation 192,379 206,183
Long-Term Portion of Notes Payable 414,380 455,246
Total Non-Current Liabilities $ 606,759 $ 661,429
Total Liabilities $ 6,599,634 $
8,533,824
Stockholders' Equity
Series A Preferred Stock - 10.00%
Cumulative; $0.001 par, $10.00 liquidation value; 20,000,000 shares
authorized; 438,500 shares outstanding
439 439
Common Stock, $0.001 par value;
100,000,000 shares authorized; 67,615,407 and 44,729,117 at June
30, 2011, and December 31, 2010, respectively.
67,615 44,730 Less: Common Stock in Treasury, at cost; 161,847
shares (129,370 ) (38,370 ) Capital in Excess of Par Value
78,137,630 66,444,315 Additional Paid in Capital - Warrants
1,363,675 2,868,034 Additional Paid in Capital - Stock Options
2,999,983 2,806,945 Accumulated Deficit (71,085,320 ) (65,972,740 )
Total Stockholders' Equity $ 11,354,652
$ 6,153,353
Total Liabilities and
Stockholders' Equity $ 17,954,286 $ 14,687,177
TRI-VALLEY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended June
30,
For the Six Months Ended June
30,
2011 2010
2011 2010 Revenues Sale
of Oil and Gas $ 474,099 $ 465,216 $ 1,132,057 $ 920,989 Interest
Income 231 904 420 2,019 Gain on Sale of Asset 17,123 1,082,693
27,732 1,673,492 Other Income 11,232 7,810 63,381 15,965
Total Revenues $ 502,685 $
1,556,623 $ 1,223,590 $ 2,612,465
Costs and Expenses Mining Exploration Expenses 64,242 85,561
105,595 224,389 Production Costs 459,597 247,177 909,130 532,554
General & Administrative 1,727,129 2,347,956 3,835,055
3,803,308 Interest 102,387 33,250 116,691 55,860 Depreciation,
Depletion & Amortization 123,312 168,904 242,207 334,292 Stock
Option Expense 159,385 24,278 193,038 51,690 Warrant Expense -
2,855,454 13,000 4,017,703 Impairment Loss 502,974 - 915,995 - Bad
Debt - - 5,460 -
Total Costs and
Expenses $ 3,139,026 $ 5,762,580 $ 6,336,171
$ 9,019,796
Net Loss $ (2,636,341 ) $
(4,205,957 ) $ (5,112,581 ) $ (6,407,331 )
Basic Net Loss
Per Share: Loss from Operations $ (0.04 ) $ (0.11 ) $ (0.09 ) $
(0.18 ) Basic Loss Per Common Share: $ (0.04 ) $ (0.11 ) $ (0.09 )
$ (0.18 ) Weighted Average Number of Shares Outstanding
65,698,722 36,902,102 58,741,555
35,039,904 Weighted Potentially
Dilutive Shares Outstanding 67,617,719
40,851,924 60,660,552 36,550,615
TRI-VALLEY CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended June
30,
2011 2010 Cash Flows
from Operating Activities Net Loss $ (5,112,581 ) $ (6,407,331
)
Adjustments to Reconcile Net Loss to Net Cash Used by
Operating Activities Depreciation, Depletion & Amortization
242,207 334,292 Impairment, Dry Hole & Other Disposals of
Property 915,995 - Stock Option Expense 193,038 51,690 Warrant
Expense 13,000 4,017,703 (Gain) on Sale of Property (27,732 )
(1,673,492 ) Director Stock Compensation 90,312 95,400
Changes
in Operating Capital (Increase) in Accounts Receivable (580,088
) (926,923 ) (Increase) or Decrease in Deposits, Prepaids &
Other Assets 44,702 (641,659 ) (Increase) or Decrease in Accounts
Receivable from Joint Venture Partners (667,600 ) 786,471
(Decrease) in Accounts Payable, Deferred Revenue & Accrued
Expenses (1,815,410 ) (1,715,139 )
Net Cash Used in Operating Activities $ (6,704,157 )
$ (6,078,988 )
Cash Provided (Used) by Investing
Activities Proceeds from the Sale of Property 96,500 3,059,341
Capital Expenditures (2,453,531 ) (809,476 ) (Investment in)
Marketable Securities - -
Net Cash Used by
Investing Activities $ (2,357,031 ) $ 2,249,865
Cash Provided (Used) by Financing Activities Principal
Payments on Long-Term Debt (104,977 ) (161,920 ) (Purchase) of
Treasury Stock - (25,000 ) Net Proceeds from the Issuance of Stock
Options - 2,200 Net Proceeds from the Issuance of Common Stock
10,108,529 5,414,945
Net Cash Provided by Financing Activities $ 10,003,552
$ 5,230,225
Net Increase in Cash and Cash
Equivalents $ 942,364 $ 1,401,102
Cash
at the Beginning of Period $ 581,148 $ 290,926
Cash at the End of Period $ 1,523,512 $
1,692,028
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