TVC 10Q 09/30/05
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
AND EXCHANGE ACT OF 1934
For
the quarterly period ended September 30, 2005
|
Commission
File No. 001-31852
|
Tri-Valley
Corporation
(Exact
name of registrant as specified in its charter)
Delaware
|
84-0617433
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
Incorporation
or organization)
|
|
5555
Business Park South, Suite 200, Bakersfield, California
93309
(Address
of principal executive offices)
(661)
864-0500
(Registrant's
telephone number, including area code)
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes x
No
o
Indicate
by check mark whether the Registrant is an accelerated filer (as defined in
Rule
12b-2 of the Exchange Act).
Yes
x
No
o
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
o
No
x
The
number of shares of Registrant's common stock outstanding at September 30,
2005
was 22,584,969.
TRI-VALLEY
CORPORATION
INDEX
|
|
Page
|
PART
I -
|
FINANCIAL
INFORMATION
|
3
|
|
|
|
Item
1.
|
Consolidated
Financial Statements
|
3
|
|
|
|
|
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial
|
|
|
Condition
and Results of Operations
|
10
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
13
|
|
|
|
Item
4.
|
Controls
and Procedures
|
13
|
|
|
|
|
|
|
PART
II -
|
OTHER
INFORMATION
|
15
|
|
|
|
Item
6.
|
Unregistered
Sales of Equity Securities
|
|
|
|
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
15
|
|
|
|
SIGNATURES
|
|
16
|
PART
I -
|
FINANCIAL
INFORMATION
|
Item
1.
|
Unaudited
Consolidated Financial
Statements
|
TRI-VALLEY
CORPORATION
CONSOLIDATED
BALANCE SHEETS
ASSETS
|
|
September
30 2005
|
|
December
31 2004
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash
|
|
$
|
10,388,469
|
|
$
|
11,812,920
|
|
Accounts
receivable, trade
|
|
|
326,356
|
|
|
192,008
|
|
Accounts
receivable, related parties
|
|
|
146,155
|
|
|
0
|
|
Advance
receivable
|
|
|
171,448
|
|
|
150,000
|
|
Prepaid
expenses
|
|
|
98,529
|
|
|
96,056
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
11,130,957
|
|
|
12,250,984
|
|
|
|
|
|
|
|
|
|
Property
and Equipment, Net
|
|
|
11,220,281
|
|
|
1,778,208
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
|
Deposits
|
|
|
422,177
|
|
|
200,407
|
|
Investments
in partnerships
|
|
|
17,400
|
|
|
17,400
|
|
Other
|
|
|
13,913
|
|
|
13,913
|
|
Goodwill
(net of accumulated amortization of $221,439 at December 31,
2003)
|
|
|
212,414
|
|
|
212,414
|
|
|
|
|
|
|
|
|
|
Total
Other Assets
|
|
|
665,904
|
|
|
444,134
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
23,017,142
|
|
$
|
14,473,326
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
September
30
2005
|
|
December
31 2004
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Current
portion notes and contracts payable
|
|
$
|
187,116
|
|
$
|
9,985
|
|
Trade
accounts payable & accrued expenses
|
|
|
950,725
|
|
|
1,237,848
|
|
Accounts
payable to joint venture participants
|
|
|
202,422
|
|
|
100,115
|
|
Advances
from joint venture participants
|
|
|
7,429,388
|
|
|
6,321,676
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
8,769,651
|
|
|
7,669,624
|
|
|
|
|
|
|
|
|
|
Long-term
Portion of Notes and Contracts Payable
|
|
|
4,934,198
|
|
|
6,799
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
13,703,849
|
|
|
7,676,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
Common
stock, $.001 par value: 100,000,000 shares authorized; 22,584,969
and
21,836,052 issued and outstanding at Sept 30, 2005 and Dec. 31, 2004,
respectively
|
|
|
22,585
|
|
|
21,836
|
|
Less:
Common stock in treasury, at cost, 100,025 shares
|
|
|
(13,370
|
)
|
|
(13,370
|
)
|
Subscription
receivable
|
|
|
-
|
|
|
(750
|
)
|
Capital
in excess of par value
|
|
|
22,079,222
|
|
|
15,125,607
|
|
Accumulated
deficit
|
|
|
(12,775,144
|
)
|
|
(8,336,420
|
)
|
|
|
|
|
|
|
|
|
Total
Shareholders' Equity
|
|
|
9,313,293
|
|
|
6,796,903
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity
|
|
$
|
23,017,142
|
|
$
|
14,473,326
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
TRI-VALLEY
CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For
the Three Months
|
|
For
the Nine Months
|
|
|
|
Ended
September 30
|
|
Ended
September 30
|
|
|
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Sale
of oil and gas
|
|
$
|
207,855
|
|
$
|
193,537
|
|
$
|
569,045
|
|
$
|
615,805
|
|
Other
income
|
|
|
11,985
|
|
|
14,863
|
|
|
34,817
|
|
|
52,674
|
|
Drilling
and development
|
|
|
6,527,500
|
|
|
0
|
|
|
8,132,500
|
|
|
2,054,500
|
|
Interest
income
|
|
|
34,234
|
|
|
14,606
|
|
|
93,950
|
|
|
21,218
|
|
Total
Revenues
|
|
|
6,781,574
|
|
|
223,006
|
|
|
8,830,312
|
|
|
2,744,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas lease expense
|
|
|
27,586
|
|
|
25,712
|
|
|
65,278
|
|
|
101,880
|
|
Mining
lease expense
|
|
|
660,763
|
|
|
-0-
|
|
|
1,022,616
|
|
|
-0-
|
|
Mining
exploration expenses
|
|
|
416,042
|
|
|
46,411
|
|
|
2,660,252
|
|
|
850,588
|
|
Drilling
and development
|
|
|
4,805,801
|
|
|
197,900
|
|
|
6,025,294
|
|
|
1,437,979
|
|
Depletion,
depreciation and amortization
|
|
|
86,452
|
|
|
7,233
|
|
|
136,054
|
|
|
21,699
|
|
Interest
|
|
|
43,865
|
|
|
421
|
|
|
55,061
|
|
|
32,961
|
|
General
administrative
|
|
|
1,086,997
|
|
|
424,433
|
|
|
3,304,480
|
|
|
1,463,345
|
|
Total
Cost and Expenses
|
|
|
7,127,506
|
|
|
702,110
|
|
|
13,269,035
|
|
|
3,908,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
$
|
(345,932
|
)
|
$
|
(479,104
|
)
|
$
|
(4,438,723
|
)
|
$
|
(1,164,255)
|
)
|
Basic
& Diluted Earnings per Share
|
|
$
|
(.02
|
)
|
$
|
(.02
|
)
|
$
|
(.20
|
)
|
$
|
(.06)
|
)
|
Weighted
Average Number of Shares
|
|
|
22,563,969
|
|
|
20,703,935
|
|
|
22,427,713
|
|
|
20,430,239
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
TRI-VALLEY
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For
the Nine Months
|
|
|
|
Ended
September 30
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
Net
profit/(loss)
|
|
$
|
(4,438,723
|
)
|
$
|
(1,164,255
|
)
|
Adjustments
to reconcile net income to net cash used from operating
activities:
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
136,054
|
|
|
21,699
|
|
Non-cash
mining exploration expense
|
|
|
2,309,700
|
|
|
712,000
|
|
Changes
in operating capital:
|
|
|
|
|
|
|
|
Prepaids-(increase)
decrease
|
|
|
(2,473
|
)
|
|
(56,000
|
)
|
Deposits-(increase)
decrease
|
|
|
(221,770
|
)
|
|
|
|
Accounts
receivable-(increase)decrease
|
|
|
(301,951
|
)
|
|
21,545
|
|
Trade
accounts payable-increase(decrease)
|
|
|
(287,123
|
)
|
|
(330,675
|
)
|
Accounts
payable to joint venture
|
|
|
|
|
|
|
|
participants
and related parties-increase(decrease)
|
|
|
102,307
|
|
|
(4,257
|
)
|
Advances
from joint venture
|
|
|
|
|
|
|
|
Participants-increase(decrease)
|
|
|
1,107,712
|
|
|
1,462,664
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided/(Used) by Operating Activities
|
|
|
(1,596,267
|
)
|
|
662,721
|
|
|
|
|
|
|
|
|
|
Cash
Flows Provided/(Used) by Investing Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(7,114,128
|
)
|
|
(220,903
|
)
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
Principal
payments on long-term debt
|
|
|
(52,600
|
)
|
|
(9,852
|
)
|
Issuance
of long-term debt
|
|
|
5,157,130
|
|
|
|
|
Proceeds
from issuance of common stock
|
|
|
2,181,414
|
|
|
2,044,625
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided/(Used) by Financing Activities
|
|
|
7,285,944
|
|
|
2,034,773
|
|
|
|
|
|
|
|
|
|
Net
Increase in Cash and Cash Equivalents
|
|
|
(1,424,451
|
)
|
|
2,476,591
|
|
Cash
and Cash Equivalents at Beginning of Period
|
|
|
11,812,920
|
|
|
6,006,975
|
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents at End of Period
|
|
$
|
10,388,469
|
|
$
|
8,483,566
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
55,061
|
|
$
|
32,961
|
|
Cash
paid for taxes
|
|
$
|
17,865
|
|
$
|
8,718
|
|
Non-cash
investing activity:
|
|
|
|
|
|
|
|
Common
stock in exchange for prospect acquisition
|
|
$
|
2,464,000
|
|
|
-0-
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
TRI-VALLEY
CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED
September
30, 2005 AND 2004
(Unaudited)
NOTE
1 - BASIS OF PRESENTATION
Description
of Business
Tri-Valley
Corporation (“Tri-Valley”), a Delaware corporation formed in 1971, is in the
business of exploring, acquiring and developing petroleum and precious metals
properties and interests. Tri-Valley has five wholly owned subsidiaries.
Tri-Valley Oil & Gas Company ("TVOG") operates the oil & gas activities,
and derives the majority of its revenue from sale of oil and gas properties.
Select Resources Corporation, Inc. (“Select Resources”), was formed in 2004 to
operate Tri-Valley’s mining operations. In December 2004, Select Resources
entered an agreement to form Alpha Minerals & Chemicals, LLC, which has been
renamed Tri-Western Resources, LLC (“Tri-Western”), a limited liability company
in which Select Resources holds a 50% interest. Neither Select Resources nor
Tri-Western engaged in material transactions during 2004. Starting in 2005,
Select Resources, through Tri-Western, started engaging in mining and
exploration activities which have been consolidated in the accompanying
financial statements. In May 2005, Tri-Valley acquired Pleasant Valley Energy
Corporation, which owns undeveloped oil and gas properties. The fourth
subsidiary, Tri-Valley Power Corporation, is not an operating entity. Select
International Resources, Inc., a B.C. Corporation, was recently formed for
potential activities outside of the United States.
Basis
of Presentation
The
financial information included herein is unaudited; however, such information
reflects all adjustments (consisting solely of normal recurring adjustments),
which are, in the opinion of management, necessary for a fair statement of
results for the interim periods. The results of operations for the nine-month
period ended September 30, 2005, are not necessarily indicative of the results
to be expected for the full year.
The
accompanying consolidated financial statements do not include footnotes and
certain financial presentations normally required under generally accepted
accounting principles in the United States of America; and, therefore, should
be
read in conjunction with Tri-Valley’s Annual Report on Form 10-K/A, filed with
the Securities and Exchange Commission on September 20, 2005, for the year
ended
December 31, 2004.
Principles
of Consolidation
The
accompanying financial statements are consolidated and include the financial
statements of the Tri-Valley’s and its majority-owned subsidiaries, and those of
Tri-Western’s. Tri-Valley applied
FASB Interpretation (FIN) No. 46, “Consolidation of Variable Interest
Entities, an interpretation of ARB No. 51,” in assessing consolidation.
All
significant intercompany balances and transactions have been eliminated in
consolidation.
NOTE
2 - RESTATEMENTS OF PRIOR FINANCIAL INFORMATION
2004
Restatement
Amendment
No. 2 on Form 10-K/A of Tri-Valley’s annual report on Form 10-K for the year
ended December 31, 2004 includes restated financial information for the years
ended December 31, 2004 and 2003. The original Form 10-K was filed with the
Securities and Exchange Commission on March 31, 2005. The purpose of the
Amendment is to restate Tri-Valley’s previously reported general and
administrative expense to adjust downward compensation expenses due to use
of an
incorrect stock price in calculating the cost of issuing stock to directors
as
compensation.
The
following sets forth the significant effects of the aforementioned restatements
to Tri-Valley’s consolidated financial statements for the fiscal year ended
December 31, 2004:
|
|
As
Previously
|
|
|
|
As
|
|
|
|
Reported
|
|
Adjustment
|
|
Restated
|
|
General
and administrative
|
|
|
2,208,457
|
|
|
(105,000
|
)
|
|
2,103,457
|
|
Total
cost and expenses
|
|
|
5,774,675
|
|
|
(105,000
|
)
|
|
5,669,675
|
|
Net
income (loss)
|
|
|
(1,276,005
|
)
|
|
105,000
|
|
|
(1,171,005
|
)
|
Capital
in excess of par value
|
|
|
15,230,607
|
|
|
(105,000
|
)
|
|
15,125,607
|
|
Accumulated
deficit
|
|
|
(8,441,420
|
)
|
|
105,000
|
|
|
(8,336,420
|
)
|
NOTE
3 - PER SHARE COMPUTATIONS
Per
share
computations are based upon the weighted-average number of common shares
outstanding during each year. Common stock equivalents are not included in
the
computations since their effect would be anti-dilutive.
NOTE
4 - RECENT ACCOUNTING PRONOUNCEMENTS
On
December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 123 (revised 2004), “Share-Based Payment” (Statement 123R), which
is a revision of FASB Statement No. 123, “Accounting for Stock-Based
Compensation.” Statement 123R supersedes APB Opinion No. 25, “Accounting for
Stock Issued to Employees,” and amends FASB Statement No. 95, “Statement of Cash
Flows.” Statement 123R requires a public company to measure the cost of employee
services received in exchange for an award of equity instruments, including
stock options, based on the grant-date fair value of the award, with limited
exceptions. That cost will be recognized over the period during which the
employee is required to provide service in exchange for the award, which is
typically the vesting period. Statement 123R eliminates the alternative to
use
Opinion 25’s intrinsic value method of accounting that was provided in Statement
123 as originally issued.
We
expect
to adopt Statement 123R for the first quarter of 2006. Statement 123R permits
public companies to adopt its requirements using a “modified prospective” method
in which compensation cost is recognized beginning with the effective date
(a)
based on the requirements of Statement 123R for all share-based payments granted
after the effective date and (b) based on the requirements of Statement 123
for
all awards granted to employees prior to the effective date of Statement 123R
that remain unvested on the effective date. We plan to adopt Statement 123R
using the modified-prospective method.
As
permitted by Statement 123, Tri-Valley currently accounts for share-based
payments to employees using Opinion 25’s intrinsic value method and, as such,
generally recognizes no compensation cost for employee stock options. The
adoption of Statement 123R’s fair-value method will impact Tri-Valley’s results
of operations, although the impact of adoption of Statement 123R cannot be
predicted at this time because it will depend on levels of share-based payments
granted in the future.
In
April
2005, the Securities and Exchange Commission announced the adoption of a new
rule that amends the effective date of FAS 123R. The effective date
of the
new standard under these new rules for Tri-Valley’s consolidated financial
statements is January 1, 2006. Adoption of this statement will have
a
significant impact on our consolidated financial statements as we will be
required to expense the fair value of our stock option grants and stock
purchases under our employee stock option plan rather than disclose the impact
on our consolidated net income within our footnotes, as is our current practice.
In
December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary
Assets — An Amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions” (SFAS 153). SFAS 153 eliminates the
exception from fair value measurement for nonmonetary exchanges of similar
productive assets in paragraph 21(b) of APB Opinion No. 29,
“Accounting for Nonmonetary Transactions,” and replaces it with an exception for
exchanges that do not have commercial substance. SFAS 153 specifies
that a
nonmonetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. This
standard is effective for fiscal periods beginning after June 15, 2005.
We
believe that the adoption of SFAS 153 will not have a material impact
on
our consolidated statement of income or financial condition.
The
FASB
issued an Exposure Draft, “Qualifying Special-Purpose Entities and Isolation of
Transferred Assets—an amendment of FASB Statement No. 140.” This proposal
would, among other things, change the requirements that an entity must meet
to
be considered a QSPE. The FASB has announced that it expects to issue in the
third calendar quarter of 2005 a revised exposure draft that would include
all
of the proposed amendments to FASB
Statement
No. 140. The Company is monitoring the status of this exposure draft
to
assess its impact on its consolidated financial statements.
NOTE
4 - RECENT ACCOUNTING PRONOUNCEMENTS (continued)
SFAS
No. 154, “Accounting Changes and Error Corrections Replaces
APB Opinion No. 20, “Accounting Changes” and FASB Statement No. 3, “Reporting
Accounting Changes in Interim Financial Statements”, and changes the
requirements for the accounting for and reporting of a change in accounting
principle. This Statement applies to all voluntary changes in accounting
principle. It also applies to changes required by an accounting pronouncement
in
the unusual instance that the pronouncement does not include specific transition
provisions. When a pronouncement includes specific transition provision, those
provisions should be followed.
Opinion
20 previously required that most voluntary changes in accounting principle
be
recognized by including in net income of the period of the change the cumulative
effect of changing to the new accounting principle. This Statement requires
retrospective application to prior periods’ financial statements of changes in
accounting principle, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. When it is
impracticable to determine the period-specific effects of an accounting change
on one or more individual prior periods presented, this Statement requires
that
the new accounting principle be applied to the balances of assets and
liabilities as of the beginning of the earliest period for which retrospective
application is practicable and that a corresponding adjustment be made to the
opening balance of retained earnings (or other appropriate components of equity
or net assets in the statement of financial position) for that period rather
than being reported in an income statement. When it is impracticable to
determine the cumulative effect of applying a change in accounting principle
to
all prior periods, this Statement requires that the new accounting principle
be
applied as if it were adopted prospectively from the earliest date
practicable.
The
correction of an error in previously issued financial statements is not an
accounting change. However, the reporting of an error correction involves
adjustments to previously issued financial statements similar to those generally
applicable to reporting an accounting change retrospectively. Therefore, the
reporting of a correction of an error by restating previously issued financial
statements is also addressed by this Statement.
In
March
2005, the FASB issued Interpretation No. 47, "Accounting for Conditional Asset
Retirement Obligations - an interpretation of FASB Statement No. 143," (FIN
47)
which clarifies the term "conditional asset retirement obligation" used in
SFAS
No. 143, "Accounting for Asset Retirement Obligations," and specifically when
an
entity would have sufficient information to reasonably estimate the fair value
of an asset retirement obligation. Tri-Valley is required to adopt FIN 47 no
later than December 31, 2005. Tri-Valley does not expect the adoption of FIN
47
to have a material impact on its consolidated results of operations and
financial condition.
NOTE
5 - NOTE PAYABLE
Note
on
purchase of Admiral mine is $2 million to mature on July 15, 2015, with no
interest.
NOTE
6 - SHAREHOLDERS’ EQUITY
In
September 2005, the Company issued 30,000 shares of common stock to an
individual for his royalty interest in the Richardson Alaska project for
$299,700. During the quarter ended September 30, 2005, an employee exercised
options to purchase 3,000 shares of common stock for a total purchase price
$1,500.
Item
2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Notice
Regarding Forward-Looking Statements
This
report contains forward-looking statements. The words, "anticipate," "believe,"
"expect," "plan," "intend," "estimate," "project," "could," "may," "foresee,"
and similar expressions are intended to identify forward-looking statements.
These statements include information regarding expected development of
Tri-Valley’s business, lending activities, relationship with customers, and
development in the oil and gas industry. Should one or more of these risks
or
uncertainties occur, or should underlying assumptions prove incorrect, actual
results may vary materially and adversely from those anticipated, believed,
estimated or otherwise indicated.
Overview
As
noted
in our January 4, 2005, letter to shareholders, we expect to experience
substantial losses as we “invested forward on several substantial projects in
advance of revenue”. Some of those projects are nearing production stage which
should begin to build increasing revenue for the Company.
Petroleum
Activities
In
July
2005, TVOG drilled the Midland Trail Prospect in Nevada to total depth. We
discovered six intervals with production potential. To date we have tested
the
bottom interval, which was watered out. We expect to test the next interval
in
early November.
We
are
making location to rework three gas wells at our Moffat Ranch East property
in
November 2005.
We
are
making development plans for the oil and gas leases owned by Pleasant Valley
Energy Corporation, which we acquired in May 2005. We expect to begin
development operations on these properties in December, depending on equipment
availability.
On
the
EKHO well, we are waiting on a drilling rig to test the Santos shale just above
the Vedder formation. We expect that this work will be done in the fourth
quarter of 2005 and first quarter of 2006. We also continue evaluating the
Sunridge Oil Prospect, drilled in the second quarter to determine whether it
should be redrilled in another zone. In addition, we are continuing attempts
to
improve production on the Sunrise-Mayel well, which was redrilled in early
2005,
but we have not yet achieved production from it in commercial
quantities.
Mining
Activities
Precious
Metals
Exploration
programs consisting largely of field sampling activities were conducted on
three
precious metals properties during the third quarter. The three properties are
Shorty Creek in Alaska, Richardson in Alaska, and Typhoon in Yukon Territory,
Canada.
The
Shorty Creek program consisted of reprocessing of existing public and private
data, field visits to investigate geologic features and geochemical anomalies
identified in the data reprocessing, and collection of soil geochemical samples
on a grid encompassing an area deemed most prospective for gold mineralization
by the Select technical team. The soil sampling program covered an area of
approximately 4 square kilometers; a total of 566 soil samples were collected
on
a 50 meter by 100 meter grid. Preliminary interpretation of the soil sampling
results indicates highly anomalous amounts of gold, silver, arsenic, antimony,
bismuth, tellurium, and tungsten are present in an area measuring approximately
1700 meters by 900 meters. Gold in soil values in the grid range up to 1,130
parts per billion. The association of metals in the anomalous area of the soil
grid, coupled with the geologic and geophysical observations, is consistent
with
a model of gold deposits associated with granitic intrusives. Gold deposits
of
this style have been the subject of exploration and development in Interior
Alaska in recent years. Examples include the Donlin Creek deposit; the Fort
Knox
deposit; and the Pogo deposit. Select believes the data obtained to date at
Shorty Creek are sufficient to begin designing additional work on the prospect
in 2006, including drilling to further evaluate the potential for commercial
gold mineralization.
The
Richardson program during the third quarter has included extensive compilation
and reprocessing of existing public and private data for the entire property,
and soil sampling and drilling on the Democrat Prospect within the Richardson
Property. The soil sampling and drilling program were ongoing at the end of
the
third quarter. The soil sampling program is designed to collect approximately
1,100 samples within an irregular polygon approximately 1 kilometer wide and
8
kilometers long on a grid of approximately 32 sample lines, spaced 200 meters
apart, with samples collected at 25 meter intervals. The soil program is
designed to detect areas of mineralization along a geologic feature believed
to
be conducive to gold mineralization. The drilling program is planned to drill
9
holes generally within the area of the soil grid. A total of approximately
3,000
feet of core drilling is anticipated. The drilling program is designed to test
for mineralization and to provide a better understanding of the controls of
mineralization. Both the soil sampling program and the drilling program are
expected to be completed in the forth quarter.
The
Typhoon Property field program consisted of soil sampling and measurement of
magnetic properties on the property to support evaluation for lode gold
mineralization. The sampling was conducted on an approximately 3.7 square
kilometer segment of the property encompassed by a grid measuring approximately
2,000 meters east-west and 1,850 meters north-south. Soil sampling was conducted
at intervals of 50 meters along north-south lines spaced 200 meters apart.
Approximately 400 soil samples were collected; field conditions precluded sample
collection at a minor number of sites. Magnetic measurements were taken at
intervals of 12.5 meters along soil survey lines, and were collected
concurrently with the soil sampling program. Soil geochemical results and
geophysical measurements will be evaluated in the fourth quarter, but suggest
the possibility of a large system at depth.
Industrial
Minerals
In
December 2004, Select Resources entered an agreement with Trans Western
Materials to form Tri-Western Resources LLC, a joint venture operated by Select
Resources Corporation, to operate industrial minerals mining and processing
operations. The first joint venture is to reopen the Monarch Mine in eastern
Kern County, California, to supply central and southern California customers
with high grade calcium carbonate. Tri-Western has also permitted and is mining
specialty basalt from a deposit near Boron, California. In the third quarter,
Select Resources prepared a milling plant that was purchased earlier this year
for use in processing material mined from Monarch. We had expected to begin
production from the mine towards the end of August, but our production schedule
was delayed in order to complete necessary work on the mill. We now believe
that
we could begin production and delivery of basalt in November and calcium
carbonate in December 2005.
In
July
2005, Select Resources completed the acquisition of the Admiral Calder Mine
and
associated assets near Ketchikan, Alaska. The Admiral Calder Mine is a
non-operating mine which has been developed to produce high-brightness calcium
carbonate, which is used for fillers and pigments in paper, plastics, paint
and
other manufactured products, and chemical grey calcium carbonate, which is
used
in agriculture and smelting operations. The acquisition and the mine are
described in our Current Report on Form 8-K/A filed with the SEC on September
28, 2005. Our plans to redevelop the mine are on hold while we complete other
previously identified opportunities, including the precious metals claims,
the
Monarch Mine and the basalt mine described in the preceding
paragraphs.
Results
of Operations
Our
total
revenue for the three months and nine months ended September 30, 2005, exceeded
total revenue for the same periods in 2004 by $6,558,568 and $6,086,115,
respectively. The increased revenues recorded from drilling and development
revenues resulted from the drilling of the Midland Trail Prospect in the third
quarter. We have drilled two wells so far in 2005, compared to one well for
the
full year in 2004. Our total drilling revenues for the first nine months of
2005
have exceeded total drilling revenues for the first nine months of 2004 by
nearly $6.1 million, and for the full year in 2004 by nearly $4.6 million.
We
record revenue received by us from joint ventures for drilling and development
when we complete drilling wells that have been sold to venture partners,
including the Opus-I drilling partnership sponsored by us. Our drilling
activities are affected by factors beyond our control, such as availability
of
drilling equipment and delays in the regulatory permitting process to drill
new
wells. Unavailability of drilling equipment continues to create problems and
delays in beginning projects and may curtail our drilling activity for the
rest
of 2005 below the level that we otherwise could comfortably manage and afford.
We are addressing that problem by purchasing our own production/drilling
rig.
Our
oil
and gas production has been lower in 2005 than in 2004, mainly because two
wells
that were producing
during
the first part of 2004 have been shut-in since late 2004 and have not produced
in 2005. We plan to rework these wells to restart production in commercial
quantities. Higher gas prices kept our income from oil and gas production at
approximately the same level in the third quarter of 2005 as it was in 2004,
though total income from the sale of oil and gas in the first nine months of
2005 was down $46,760 from the first nine months of 2004.
We
receive interest on cash advances and investments from joint venture partners
and others, pending expenditure of funds received on oil and gas drilling and
other activities. In the third quarter we continued to receive interest income
substantially in excess of prior years ($34,234 for the quarter) because we
continue to receive and hold substantial advances for oil and gas investment
and
other projects. We expect our interest income to remain at approximately these
levels for the rest of 2005, though it will fall as we expend funds on drilling
projects. Interest income is a relatively insignificant part of our total
income. Timing of our expenditures on drilling depends on many factors that
are
outside of our control, including availability of drilling
equipment.
Our
costs
and expenses rose $6,425,396 in the third quarter over a year ago, and total
costs for the nine months of 2005 were $9,360,583 higher than the nine months
of
2004. The main reasons for the cost increase in the third quarter were higher
oil and gas drilling project expenses due to drilling the Midland Trail Prospect
($4,805,801 in the third quarter of 2005 versus $197,900 in the third quarter
of
2004) and greatly increased mining lease expense and administrative expenses
generated by the start-up cost of our Select Resources mining operation.
Depletion, depreciation and amortization increased $114,355. The increase
reflects depreciation of newly acquired equipment and facilities for use by
Tri-Western and Select for the industrial minerals activity.
Mining
lease expenses in the third quarter of 2005 mainly consisted of expenses
incurred in preparation and operation of the mill at the Tri-Western Monarch
Mine in California. In the third quarter of 2004 we incurred no expenses for
mining lease expenses because we performed no exploration work on our Alaska
property, which was the only mining property we owned at the time. Mining lease
expense will likely continue to increase in the rest of 2005 as mining
operations begin at the Monarch Mine. Prior to the third quarter in 2005, we
recorded non-cash expenses of $2.31 million from issuance of our unregistered
stock to royalty owners to acquire their interest on our Richardson, Alaska
properties. During the third quarter our mining exploration expenses of $416,042
consisted of geologic and engineering consulting fees for our Alaska and Yukon
precious metals properties and the Monarch Mine in California. Total mining
exploration expenses of $2.66 million in the first nine months of 2005 are
more
than double our total mining exploration expense for the full year in 2004,
and
Select Resources is continuing to look for additional properties to acquire.
Funds to acquire additional properties would likely come from the proceeds
of
private equity investments in Tri-Valley by third party investors. We do not
have a budget or target for a specified number or amount of mining property
acquisitions in 2005 or future years and we are reviewing a variety of precious
and base metal and industrial mineral submittals for additional
opportunities.
Lease
operating expenses in the third quarter were approximately equal to 2004. Lease
expense for the nine months is down 36% from 2004 levels. Lease operating
expenses may increase again in 2006 if we are successful in bringing wells
drilled in 2005 into production or in reworking the shut-in wells, but it is
too
early to predict whether this will occur.
Interest
expense has increased dramatically in the third quarter as we have engaged
in
long term borrowing to finance mining equipment purchases. We will continue
to
incur interest costs at least at the present level for the foreseeable future
as
we repay our long term debt.
General
and administrative costs increased $1,841,135 for the nine months ended
September 30, 2005, compared to the same period in 2004. The cost increases
were
caused by expenses related to implementation of our revised procedures for
internal control over financial reporting and to continued start-up costs for
Select Resources and Tri-Western, including salaries and consulting fees,
insurance and fees payable under the Tri-Western operating
agreement.
Our
net
loss from operations in the third quarter of 2005 was $345,932, compared to
$479,104 in the third quarter of 2004. The loss was narrower in 2005 due to
our
revenues from drilling operations in the third quarter. Nevertheless, the
overall costs of expanding our mining activities resulted in much higher
expenses in the first nine months of 2005 than in 2004, and our overall loss
from operations in the first three quarters increased to $4.44 million in 2005,
compared to $1.64 million in 2004.
Financial
Condition
Capital
Resources and Liquidity
Current
assets were $11,130,957 at September 30, 2005, compared to $12,250,984 as of
December 31, 2004. This decrease is due to cash outlay for the mining operation.
Accounts receivable-related parties of $146,155 is accrued rent payable from
Tri-Western Resources, LLC, to our wholly owned subsidiary Select Resources
Corp. Property and equipment is $9,442,073 higher at September 30, 2005, than
at
December 31, 2004, due to the purchase of a mill site by Select Resources for
$2,500,000, purchase of the Pleasant Valley Energy Corporation for $2,964,000,
and the acquisition of equipment by Select Resources and Tri-Western. We
increased our deposits by $221,770 in connection with the acquisition of
equipment by Select Resources and Tri-Western and purchase of two bonds required
by governmental agencies for Tri-Western.
Current
liabilities are $1,100,027 more as of September 30, 2005, compared to December
31, 2004 due to increases in advances from joint venture participants related
to
the Opus drilling partnership. Long term liabilities increased $4,927,399 as
Tri-Western financed equipment and Select Resources borrowed to purchase the
mill site and property discussed under MD&A - Overview - Mining
Activities.-
page
10.
Tri-Valley has guaranteed repayment of this debt and believes the value of
the
property and facilities is substantially greater than the loan
balance.
Operating
Activities
We
had a
negative cash flow of $1,596,267 for the nine months ended September 30, 2005
compared to positive $662,721 for the same period in 2004. Our loss from
operations was $4,438,723, which included non-cash expenses of $2.3 million
in
stock to reacquire mining royalties on our Richardson, Alaska, claim and $2.46
million in value of stock issued to acquire Pleasant Valley Energy Corp.
Accounts payable decreased as we paid in connection with our drilling
operations.
Investing
Activities
Cash
used
in investing activities was $7,114,128 for the nine months of 2005. This was
used for investment in plant acquisition for Select Resources and equipment
for
Tri-Western.
Financing
Activities
Net
cash
provided by financing activities was $7,285,944 for the first nine months of
2005. Approximately $1.7 million of this amount consists of a Select Resources
long-term secured loan entered in connection with acquisition of its California
mill site for the Monarch Mine, $2 million for the acquisition of the Admiral
mine and $1.4 million for Tri-Western equipment financing. The remainder was
provided by sales of common stock in individually negotiated private
transactions, which will be used for property acquisitions and working
capital.
Item
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Tri-Valley
Corporation does not engage in hedging activities and does not use commodity
futures nor forward contracts in its cash management functions.
Item
4 - CONTROLS AND PROCEDURES
As
of
September 30, 2005, an evaluation was performed under the supervision and with
the participation of our management, including our Chief Executive Officer
and
Chief Financial Officer, of the effectiveness of the design and operation of
our
disclosure controls and procedures. These controls and procedures are based
on
the definition of disclosure controls and procedures in Rule 13a-15(e) and
Rule
15d-15(e) promulgated under the Securities Exchange Act of 1934. These rules
require that we present the conclusions of the CEO and CFO about the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report.
Management,
including our CEO and CFO, do not expect that our disclosure controls and
procedures or internal control over financial reporting will prevent all errors
and fraud. In designing and evaluating our control system, management recognized
that any control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance of achieving the desired control
objectives. Further, the design of a control system must reflect the fact that
there are resource constraints, and management necessarily was required to
apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures. Because of the inherent limitations in all control systems,
no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, that may affect our operations have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake.
As
described in our Form 10-K for the year ended December 31, 2004, management
conducted an evaluation for the effectiveness of internal control as of December
31, 2004, and concluded that Tri-Valley’s internal control over financial
reporting was not effective as of that date. As described below, we have
instituted a remediation program to eliminate material weaknesses in our
internal control over financial reporting which were identified in 2004. Our
previous restatements of prior period financial statements have corrected all
known data entry errors. In the first quarter of 2005 we hired additional
accounting personnel and reassigned duties and authority to assure adequate
separation of responsibilities relating to financial reporting and control
activities. We worked on further documentation of the system in the second
quarter. We expect to complete documenting the system and to test it during
the
third quarter of 2005.
Nevertheless,
for the period ending September 30, 2005, our internal control improvements
had
not been fully implemented and had not been tested. As a result, management
concluded that the effectiveness of its internal control over financial
reporting during this period was not sufficiently adequate to rely solely upon
them for our financial reporting. Instead, we relied on compensating controls
and procedures to ensure the reliability of the disclosures made in this report.
These consisted of consultation between management, the audit committee and
outside auditors, including an independent accounting firm retained separately
from our independent auditors to advise us specifically on disclosure control
and internal control over financial reporting. Based on those consultations,
management’s evaluation of the information gathered in preparation of this
report, and the work done to improve internal control through the end of
September, our management, including the CEO and CFO, concluded that our
disclosure controls and procedures were effective as of September 30,
2005.
Changes
In Internal Controls - 3rd
Quarter
Remediation
During
the latter part of 2004 we discovered and corrected two entry errors in prior
financial statements. We corrected those items and restated our financial
statements accordingly. In reviewing our internal controls over financial
reporting we identified what management believes were several material
weaknesses. During the first quarter of 2005 we implemented a formal remediation
program designed to correct identified and reported material weaknesses and
deficiencies in a complete and expeditious manner with the objective of
eliminating risks to financial reporting and strengthening internal
controls.
During
the third quarter we continued our remediation activities which
include:
· |
continuing
our flow charting and narrative development of operational processes,
financial reporting activities, remediation changes and other internal
controls.
|
· |
preparing
a policy and procedures manual to further detail process and internal
control specifics and will be monitored and updated as
appropriate.
|
· |
modifying
the current accounting solution and organizational structure to strengthen
internal control and mitigate potential risk to financial
reporting.
|
We
continue to work with an independent outside accounting firm, separate from
our
auditing firm, in implementing internal control assertion definitions along
with
review and periodic testing validation. Management is communicating with both
the Audit Committee and the Board of Directors to provide scheduled remediation
updates. We are currently testing the new procedures .
PART
II - OTHER INFORMATION
Item
2 - Unregistered Sales of Equity Securities
On
September 13, 2005, we issued 30,000 shares of stock to an individual to acquire
royalty interest on our Alaska project. The closing price per shares of our
stock on September 13, 2005 was $9.99. The stock was issued in reliance on
the
exemption from registration requirements provided by Section 4(2) of the
Securities Act of 1933.
Item
6 - Exhibits
Item
|
Description
|
10.1
|
Purchase
and Sale Agreement by and among Sealaska Corporation and Seacal,
LLC, and
Select Resources Corporation, Inc. (April 1, 2005), incorporated
by
reference to Exhibit 2.1 of Tri-Valley’s Form 8-K filed August 1,
2005
|
10.2
|
Articles
of Merger between Coastal Oil Sands Co. and Pleasant Valley Energy
Corporation, incorporated by reference to Exhibit 2.1 of Tri-Valley’s Form
8-K filed May 12, 2005
|
10.3
|
Restated
Agreement and Plan of Merger Among Tri-Valley Corporation Coastal
Oil
Sands Co., Petrawest Ltd. And Pleasant Valley Energy Corporation,
incorporated by reference to Exhibit 2.2 of Tri-Valley’s Form 8-K filed
May 12, 2005
|
10.4
|
Amendment
No. 1 to Restated Agreement and Plan of Merger Among Tri-Valley
Corporation Coastal Oil Sands Co., Petrawest Ltd. And Pleasant Valley
Energy Corporation, incorporated by reference to Exhibit 2.3 of
Tri-Valley’s Form 8-K filed May 12, 2005
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification
|
32.1
|
18
U.S.C. § 1350 Certification
|
32.2
|
18
U.S.C. § 1350 Certification
|
SIGNATURES
Pursuant
to the requirement of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
/s/
F. Lynn Blystone
|
|
F.
Lynn Blystone
|
|
President
and Chief Executive Officer
|
November
8, 2005
|
/s/
Thomas J. Cunningham
|
|
Thomas
J. Cunningham
|
|
Secretary,
Treasurer, Chief Financial Officer
|
Exhibit
31.1
I,
F.
Lynn Blystone, President and Chief Executive Officer of Tri-Valley Corporation,
certify that:
1.
|
I
have reviewed this quarterly report on Form 10-Q of Tri-Valley
Corporation;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
|
4.
|
The
registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15) and internal
control
over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and
15d-15(f) for the registrant and
have:
|
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officers and I have disclosed, based
on our
most recent evaluation of internal control over financial reporting,
to
the registrant's auditors and the audit committee of registrant's
board of
directors (or persons performing the equivalent
functions):
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
Date:
November 8, 2005
|
/s/F.
Lynn Blystone
|
|
F.
Lynn Blystone, President and Chief Executive
Officer
|
Exhibit
31.1
I,
Thomas
J. Cunningham, Chief Financial Officer of Tri-Valley Corporation, certify
that:
1.
|
I
have reviewed this quarterly report on Form 10-Q of Tri-Valley
Corporation;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
|
4.
|
The
registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15) and internal
control
over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and
15d-15(f) for the registrant and
have:
|
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officers and I have disclosed, based
on our
most recent evaluation of internal control over financial reporting,
to
the registrant's auditors and the audit committee of registrant's
board of
directors (or persons performing the equivalent
functions):
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
Date:
November 8, 2005
|
/s/Thomas
J. Cunningham
|
|
Thomas
J. Cunningham, Chief Financial
Officer
|
Exhibit
32.1
Certification
Pursuant to 18 U.S.C. § 1350
The
undersigned, F. Lynn Blystone, President and Chief Executive Officer of
Tri-Valley Corporation, a Delaware corporation (the "Company"), pursuant to
18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of
2002, hereby certifies that:
(1)
|
the
Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 2004 (the "Report") fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934;
and
|
(2)
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date:
November 8, 2005
|
/s/F.
Lynn Blystone
|
|
F.
Lynn Blystone, President and Chief Executive
Officer
|
Exhibit
32.2
Certification
Pursuant to 18 U.S.C. § 1350
The
undersigned, Thomas J. Cunningham, Chief Financial Officer of Tri-Valley
Corporation, a Delaware corporation (the "Company"), pursuant to 18 U.S.C.
1350,
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, hereby
certifies that:
(1)
|
the
Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 2004 (the "Report") fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934;
and
|
(2)
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date:
November 8, 2005
|
/s/Thomas
J. Cunningham
|
|
Thomas
J. Cunningham, Chief Financial
Officer
|