Tri-Valley Corporation (NYSE Amex:TIV) today announced its
financial results for the third quarter ended September 30, 2011.
Oil and gas production revenues increased 15% to $516,000 in the
third quarter of 2011 compared with $447,000 in the third quarter
of 2010, reflecting an increase in production at both the Pleasant
Valley and Claflin oil fields, as well as slightly higher oil
prices. Net production in the recent third quarter totaled 8,676
barrels of oil compared with 6,638 barrels of oil in the same
quarter of 2010, an increase of 31%. Net production costs increased
47% in the recent third quarter compared with the same quarter a
year ago, largely the result of higher repairs and maintenance
costs.
The Company also announced that it recently signed two new crude
oil sales contracts. Plains Marketing, L.P., an affiliate of Plains
All American Pipeline, L.P., is the new customer for the crude oil
produced from Pleasant Valley. The Company also signed a new crude
oil sales contract with ConocoPhillips Company for the sale of
crude oil produced from Claflin. Under the new contracts, effective
November 1, 2011, pricing has been tied to a basket of California
oil price postings for Midway-Sunset rather than West Texas
Intermediate (WTI) under the previous contract. The posted prices
on the Midway Sunset crude have been averaging approximately $22
per barrel more than WTI in recent months.
“This has been an extremely busy and productive period for
Tri-Valley,” said Maston Cunningham, President and CEO. “We made
progress on both production and pricing of our oil operations.
Production at both our Pleasant Valley and Claflin oil fields
increased in the third quarter and we expect that to continue, as
we complete the steaming of the remaining five of eight new wells
at Claflin. The recent agreements with Plains and ConocoPhillips
will help us to maximize the revenues we receive from the sale of
our crude oil. While we cannot predict how long the price
differential between Midway Sunset and WTI may continue, we still
expect to realize higher oil prices over the next 12 months.”
“We are working with the OPUS Special Committee to finalize the
OPUS restructuring package and anticipate that it will be sent to
all the OPUS partners around mid-December for review and approval,”
Mr. Cunningham continued. Assuming ratification of the
restructuring package, we expect to close the restructuring in mid-
to late-January 2012.
“Turning to our minerals business, U.S. Gold Corporation, our
partner in the exploration and development of the Richardson
precious minerals property in Alaska, began its field work at
Richardson in July that included extensive soil sampling, an aerial
geophysics survey, and the drilling of three core holes on the
property. The soil samples and cores have been sent for laboratory
analysis to determine the mineralization and possible gold content.
Core drilling is expected to commence again in the spring.”
Since the second quarter, G. Thomas Gamble, Chairman of
Tri-Valley’s Board of Directors, and his related trust have made
three short-term demand loans to the Company for a total of
$3,150,000. Tri-Valley and Mr. Gamble are currently working on
definitive agreements for the related trust to issue a long-term
secured senior note, with accompanying warrant coverage, in the
principal amount of $3,150,000 (plus accrued interest on the three
short term loans) to replace the short term loans. The proceeds
will be used to expand the drilling program at Claflin, general
corporate purposes and working capital purposes.
“We believe we are on track to establishing the corporate
structure and capital base necessary to maximize our oil
operations. We demonstrated progress in the third quarter in the
production and pricing of our core oil operations and we remain
focused on our continued growth,” Mr. Cunningham concluded.
Additional highlights during the third quarter of 2011 through
today include:
- Execution of a term sheet with the OPUS
Special Committee (OSC) for restructuring of the TVC OPUS 1
Drilling Program, L.P. and resolution of alleged claims, as
announced in a press release dated August 19, 2011;
- Completion of initial steam injection
and production of first oil from two more of the eight new wells at
Claflin that were drilled last April, bringing the total number of
producing wells at Claflin to three with five more waiting to be
steamed once the rebuilt Claflin steam generators are installed and
permitted for operation;
- Continuation of work to rebuild steam
generation facilities at Claflin to comply with current California
Occupational Health and Safety standards and San Joaquin Valley Air
Pollution Control District regulations;
- Completion of a 1.8 square mile 3-D
seismic survey on the Claflin, Brea and surrounding oil and gas
leases to more accurately determine the optimum sites for future
development drilling locations and possible exploration
targets;
- Relocation of corporate headquarters to
smaller leased office space, resulting in annualized cost savings
of over $150,000; and
Third Quarter Financial Highlights
Total revenues for the third quarter of 2011 were $685,000
compared with $457,000 in the third quarter of 2010. Oil and gas
revenues increased 15% to $516,000 compared with $447,000 in the
same period last year.
Total costs and expenses were $3.4 million compared with $2.1
million in the third quarter last year. Oil and gas production
costs increased 47%, largely due to the increased production and
steaming activity at the Claflin oil field near Bakersfield. The
Company also took a $619,000 charge in the recent third quarter for
the write off and impairment of expired leases on unproved oil and
gas properties, equipment and other assets, and goodwill. General
and administrative expenses increased 6%, largely the result of
higher legal expenses incurred in connection with the restructuring
of the OPUS partnership and other related legal matters.
The net loss in the third quarter of 2011 was $2.7 million, or
$0.04 per share, compared with a net loss of $1.6 million, or $0.04
per share, in the third quarter of 2010. Weighted average shares
outstanding in the recent third quarter totaled 67.6 million
compared with 38.1 million in the third quarter of 2010, 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 a total of 22.3 million shares.
Nine Months Financial Highlights
Total revenues through the first nine months of 2011 were $1.9
million compared with $1.4 million in the same period of 2010. Oil
and gas revenues grew 20% in the first nine months of 2011 compared
to the comparable period of 2010.
Total costs and expenses were $9.0 million in the recent
nine-month period compared with $7.4 million in the first nine
months of last year. Oil production costs increased 61% compared
with the prior year period. In addition, the Company took a $1.5
million charge for the write-off and impairment losses in the first
nine months of 2011.
The net loss of the first nine months of 2011 was $7.2 million,
or $0.12 per share, compared with a net loss of $6.0 million, or
$0.17 per share for the first nine months of 2010.
Board of Directors Transition
The Company also announced today that G. Thomas Gamble, the
Chairman of the Board, resigned from the Board of Directors,
effective today, in light of the fact that he has become the
largest secured creditor of the Company and the potential conflicts
of interest this could possibly create in the future. There was no
disagreement between Mr. Gamble and the Company on any matter
relating to the Company’s operations, policies or practices. The
Company and Mr. Gamble expect that Mr. Gamble will remain an active
and positive influence on the Company, both as a long-time
significant investor in, and as an advisor to, Tri-Valley.
Following Mr. Gamble’s departure, Paul W. Bateman was elected as
Tri-Valley’s new Chairman of the Board, which will consist of four
members, all of whom qualify as independent directors. There are no
immediate plans to replace Mr. Gamble on the Board or any of the
committees of the Board of Directors.
“The rebuild of Tri-Valley, which began in March 2010, continues
to progress,” said Mr. Gamble. “Tri-Valley has, and will continue
to, overcome challenges and obstacles during this rebuilding
process, all while striving to create a strong foundation for
future growth.. I believe that I can assist the Company more as an
investor than as a board member. I look forward to supporting the
next key steps: the Opus Partnership transition, and accelerating
development of Claflin and its related leases."
“On behalf of the Board of Directors, I would like to thank Tom
for his extraordinary commitment to Tri-Valley and his strong
leadership of its Board of Directors,” said Mr. Bateman,
Tri-Valley’s new Chairman of the Board. “I look forward to working
with the Company’s management team as we focus on the rebuilding
effort underway, and to creating greater value for our
shareholders.”
Conference Call
The Company has scheduled a conference call to discuss its third
quarter 2011 results and current business developments today,
November 22, 2011, at 4:30 p.m. ET. To access the call, please dial
877-941-8609. 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 4489340#. 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. 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.
Notice to OPUS Partners and Additional Information about the
Restructuring Transaction
This press release is neither an offer to purchase nor a
solicitation of an offer to sell any securities. The equity
interests of the new joint venture company to be issued in
connection with the OPUS restructuring transaction will not be
registered under the Securities Act of 1933, as amended, and may
not be offered or sold in the United States absent registration or
an applicable exemption from registration requirements. No
securities of the new joint venture company will be issued or sold
in any state in which such offer, solicitation or sale would be
unlawful absent registration or qualification under the securities
laws of such state.
In connection with the potential restructuring transaction,
Tri-Valley Corporation, as the managing partner of OPUS, will
prepare and distribute an Information Statement and Consent
Solicitation to all OPUS partners. OPUS partners are urged to read
carefully the Information Statement and Consent Solicitation, and
the other relevant materials, when they become available before
making any voting or investment decision with respect to the
proposed restructuring transaction, because they will contain
important information about the transaction and the parties to the
transaction. Tri-Valley Corporation and its respective directors,
executive officers, and employees are expected to participate in
the solicitation of consents to the proposed restructuring
transaction from OPUS partners. OPUS partners may obtain more
detailed information regarding the names, affiliations and
interests of certain of Tri-Valley’s executive officers, directors
and/or other employees in the solicitation by reading the
Information Statement and Consent Solicitation, and other relevant
materials, when they become available and are distributed to the
OPUS partners.
When available, Tri-Valley Corporation will distribute the
Information Statement and Consent Solicitation, and other relevant
materials, to all OPUS partners of record. OPUS partners may obtain
free copies of the Information Statement and Consent Solicitation,
when available, by contacting Tri-Valley Corporation at 4927
Calloway Drive, Bakersfield, California 93312, or at (661)
864-0500.
TRI-VALLEY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, 2011 December 31, 2010 ASSETS
Current Assets Cash $ 60,058 $ 581,148 Accounts receivable
5,102,324 4,178,133 Prepaid and other 536,972
615,778 5,699,354 5,375,059 Oil and gas properties
(successful efforts basis), other property and equipment, net
9,729,709 6,719,353 Long-term receivables 1,573,125 1,830,317 Other
long term assets 335,827 762,448 $
17,338,015 $ 14,687,177
LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and
accrued expenses $ 7,725,599 $ 7,738,073 Debt 220,212
134,322 7,945,811 7,872,395 Asset retirement
obligations 345,842 206,183 Long-term debt 396,655
455,246 8,688,308 8,533,824
Commitments and Contingencies - -
Stockholders' Equity Series A preferred stock - 10.00%
cumulative; $0.001 par value; $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; 67,777,254 and
44,729,117 shares issued at September 30, 2011, and December 31,
2010, respectively. 67,777 44,730 Less: common stock in treasury,
at cost; 161,847 shares (38,370 ) (38,370 ) Capital in excess of
par value 72,495,935 63,112,393 Warrants 1,397,425 1,350,678
Additional paid-in capital - stock options 3,004,806 2,806,945
Accumulated deficit (68,278,305 ) (61,123,462 )
8,649,707 6,153,353 $ 17,338,015
$ 14,687,177
TRI-VALLEY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2011 2010
2011 2010 Revenues Oil
and gas $ 515,745 $ 447,473 $ 1,647,802 $ 1,368,462 Interest income
and other 169,230 9,214 233,031
27,198 684,975 456,687
1,880,833 1,395,660
Costs and Expenses Oil and gas production 562,789 381,674
1,471,919 914,228 Mining exploration 91,357 118,259 196,952 342,648
General and administrative 1,895,195 1,783,521 5,007,281 5,117,930
Depreciation, depletion and amortization 108,363 180,171 350,570
514,463 Write off and impairment loss 619,022 - 1,535,017 -
Stock-based compensation 53,570 198,756 349,920 1,508,095 Interest
29,598 85,995 146,289 141,855 (Gain) loss on sale of assets -
85,760 (27,732 ) (1,587,732 ) Bad debt - 44,391 5,460 44,391 (Gain)
loss on derivative instruments - (774,681 )
- 438,886 3,359,894
2,103,846 9,035,676 7,434,764
Net loss $ (2,674,919 ) $ (1,647,159 ) $
(7,154,843 ) $ (6,039,104 )
Basic and diluted loss per
common share: $ (0.04 ) $ (0.04 ) $ (0.12 ) $ (0.17 )
Weighted average number of common shares outstanding
67,615,407 38,088,543 61,624,705
36,082,981
TRI-VALLEY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
Nine Months Ended September 30, 2011
2010 Operating Activities Net
loss $ (7,154,843 ) $ (6,039,104 ) Depreciation, depletion and
amortization 350,570 514,463 Write off and impairment loss
1,535,017 - Stock-based compensation 349,920 1,508,095 Unrealized
loss on derivative instruments - 438,886 Gain on sale of assets
(27,732 ) (1,587,732 ) Bad debt 5,460 44,391 Other 18,882 -
Changes in non-cash working capital items: Increase in
accounts receivable (929,651 ) (58,894 ) (Increase) decrease in
prepaid and other 78,806 (764,629 ) Increase (decrease) in accounts
payable and accrued expenses 134,770 (835,266
)
Net cash used in operating activities (5,638,801 )
(6,779,790 )
Investing Activities Proceeds
from sale of assets 96,500 3,059,341 Capital expenditures
(4,384,819 ) (1,594,881 ) Long-term receivables (97,140 )
562,500
Net cash provided by (used in) investing
activities (4,385,459 ) 2,026,960
Financing Activities Net proceeds from the issuance of
common stock 9,475,872 5,042,380 Principal payments on debt
(122,702 ) (322,125 ) Proceeds from issuance of debt 150,000 -
Purchase of treasury stock - (25,000 ) Proceeds from exercise of
stock options - 2,200
Net cash
provided by financing activities 9,503,170
4,697,455
Net decrease in cash (521,090 )
(55,375 )
Cash at the beginning of period 581,148
290,926
Cash at the end of period $
60,058 $ 235,551
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