TVC 10Q 09/30/06
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, 2006
|
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)
|
|
4550
California Ave., Suite 600, 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
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of
the
Exchange Act).
Large
Accelerated
Filer [ ] Accelerated
Filer [X] Non-accelerated
Filer [ ]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
[ ] No [X]
The
number of shares of the issuer’s common stock outstanding at October 31, 2006,
was 23,303,942.
TRI-VALLEY
CORPORATION
|
|
CONTENTS
|
|
|
|
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
|
9
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
13
|
|
|
|
Item
4.
|
Controls
and Procedures
|
13
|
|
|
|
|
|
|
PART
II
|
OTHER
INFORMATION
|
13
|
|
|
|
Item
1-A
|
Risk
Factors
|
13
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities
|
13
|
|
|
|
Item
6.
|
Exhibits
|
14
|
|
|
|
SIGNATURES
|
|
14
|
|
|
|
Part
I - FINANCIAL INFORMATION
|
|
|
|
Item
1. Unaudited
Consolidated Financial Statements
|
|
|
|
|
|
|
|
TRI-VALLEY
CORPORATION
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
September
30, 2006
|
|
December
31, 2005
|
|
ASSETS
|
|
(Unaudited)
|
|
(Audited)
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
3,405,017
|
|
$
|
4,876,921
|
|
Accounts
receivable, trade
|
|
|
233,470
|
|
|
273,409
|
|
Advance
receivable
|
|
|
422,456
|
|
|
158,460
|
|
Prepaid
expenses
|
|
|
42,529
|
|
|
42,529
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
4,103,472
|
|
|
5,351,319
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
|
|
|
|
|
Proved
properties
|
|
|
962,035
|
|
|
1,146,103
|
|
Unproved
properties
|
|
|
2,708,054
|
|
|
3,009,564
|
|
Other
property and equipment
|
|
|
11,765,052
|
|
|
9,480,314
|
|
|
|
|
|
|
|
|
|
Total
property and equipment, net
|
|
|
15,435,141
|
|
|
13,635,981
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
|
|
|
|
|
Deposits
|
|
|
1,578,570
|
|
|
316,614
|
|
Investments
in partnerships
|
|
|
17,400
|
|
|
17,400
|
|
Goodwill
|
|
|
212,414
|
|
|
212,414
|
|
Other
|
|
|
140,105
|
|
|
205,002
|
|
|
|
|
|
|
|
|
|
Total
other assets
|
|
|
1,948,489
|
|
|
751,430
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
21,487,102
|
|
$
|
19,738,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
September
30, 2006
|
|
December
31, 2005
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Notes
payable
|
|
$
|
947,518
|
|
$
|
966,649
|
|
Accounts
payable and accrued expenses
|
|
|
3,202,016
|
|
|
1,190,604
|
|
Amounts
payable to joint venture participants
|
|
|
265,312
|
|
|
161,747
|
|
Advances
from joint venture participants, net
|
|
|
4,475,117
|
|
|
5,318,645
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
8,889,963
|
|
|
7,637,645
|
|
|
|
|
|
|
|
|
|
Non-Current
Liabilities
|
|
|
|
|
|
|
|
Due
to joint ventures
|
|
|
380,513
|
|
|
201,748
|
|
Asset
Retirement Obligation
|
|
|
97,581
|
|
|
92,108
|
|
Long-term
portion of notes payable
|
|
|
4,764,091
|
|
|
4,234,509
|
|
|
|
|
|
|
|
|
|
Total
non-current liabilities
|
|
|
5,242,185
|
|
|
4,528,365
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
14,132,148
|
|
|
12,166,010
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
Common
stock, $.001 par value; 100,000,000 shares
|
|
|
|
|
|
|
|
authorized;
23,299,942 and 22,806,176 issued and
|
|
|
|
|
|
|
|
outstanding
at September 30, 2006, and December
31,
2005, respectively
|
|
|
23,300
|
|
|
22,806
|
|
Less:
common stock in treasury, at cost,
|
|
|
|
|
|
|
|
100,025
shares
|
|
|
(13,370
|
)
|
|
(13,370
|
)
|
Capital
in excess of par value
|
|
|
28,036,459
|
|
|
25,629,775
|
|
Additional
paid in capital - stock options
|
|
|
926,180
|
|
|
-
|
|
Additional
paid in capital - Great Valley Drilling /
|
|
|
|
|
|
|
|
Great
Valley Production
|
|
|
5,425,120
|
|
|
|
|
Accumulated
deficit
|
|
|
(27,042,735
|
)
|
|
(18,066,491
|
)
|
|
|
|
|
|
|
|
|
Total
shareholders’ equity
|
|
|
7,354,954
|
|
|
7,572,720
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholder’s equity
|
|
$
|
21,487,102
|
|
$
|
19,738,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of oil and gas
|
|
$
|
268,385
|
|
$
|
193,537
|
|
$
|
878,362
|
|
$
|
569,045
|
|
Sale
of minerals
|
|
|
125,031
|
|
|
-
|
|
|
185,084
|
|
|
-
|
|
Other
income
|
|
|
54,179
|
|
|
14,863
|
|
|
158,952
|
|
|
34,817
|
|
Drilling
and development
|
|
|
900,000
|
|
|
-
|
|
|
1,459,556
|
|
|
8,132,500
|
|
Interest
income
|
|
|
8,716
|
|
|
14,606
|
|
|
22,462
|
|
|
93,950
|
|
Total
Revenues
|
|
|
1,356,311
|
|
|
223,006
|
|
|
2,704,416
|
|
|
8,830,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas lease expense
|
|
|
54,395
|
|
|
25,712
|
|
|
157,157
|
|
|
65,278
|
|
Mining
lease expense
|
|
|
|
|
|
-
|
|
|
|
|
|
1,022,616
|
|
Mining
exploration expense
|
|
|
923,663
|
|
|
46,411
|
|
|
3,342,542
|
|
|
2,660,252
|
|
Drilling
and development
|
|
|
344,082
|
|
|
197,900
|
|
|
813,491
|
|
|
6,025,294
|
|
Operating
expenses - Great Valley
Drilling/Great
Valley Production
|
|
|
514,049
|
|
|
|
|
|
514,049
|
|
|
|
|
Depletion,
depreciation and
amortization
|
|
|
345,515
|
|
|
7,233
|
|
|
895,735
|
|
|
136,054
|
|
Interest
|
|
|
207,418
|
|
|
421
|
|
|
600,049
|
|
|
55,061
|
|
Impairment
loss
|
|
|
-
|
|
|
-
|
|
|
458,564
|
|
|
-
|
|
General
and administrative
|
|
|
1,291,627
|
|
|
424,433
|
|
|
3,974,133
|
|
|
3,304,480
|
|
Non-cash
stock option expense
|
|
|
348,760
|
|
|
-
|
|
|
926,180
|
|
|
-
|
|
Total
Costs and Expenses
|
|
|
4,029,509
|
|
|
702,110
|
|
|
11,681,900
|
|
|
13,269,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(2,673,198
|
)
|
$
|
(479,104
|
)
|
$
|
(8,977,484
|
)
|
$
|
(4,438,723
|
)
|
Earnings
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(.11
|
)
|
$
|
(.02
|
)
|
$
|
(.39
|
)
|
$
|
(.20
|
)
|
Diluted
|
|
$
|
(.10
|
)
|
$
|
(.02
|
)
|
$
|
(.34
|
)
|
$
|
(.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
23,285,921
|
|
|
20,703,935
|
|
|
23,296,441
|
|
|
22,427,713
|
|
Diluted
|
|
|
26,170,432
|
|
|
20,703,935
|
|
|
26,166,613
|
|
|
22,427,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
2006
|
|
2005
|
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(8,977,484
|
)
|
$
|
(4,438,723
|
)
|
Adjustments
to reconcile net income to net cash used from
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
895,735
|
|
|
136,054
|
|
Non-cash
stock transactions
|
|
|
143,043
|
|
|
2,309,700
|
|
Impairment,
dry hole and other disposals of property
|
|
|
458,564
|
|
|
-
|
|
Stock
options
|
|
|
926,180
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Changes
in operating capital:
|
|
|
|
|
|
|
|
Prepaids
- (increase)
|
|
|
-
|
|
|
(2,473
|
)
|
Deposits
- (increase) decrease
|
|
|
(87,059
|
)
|
|
(221,770
|
)
|
Accounts
receivable - increase (decrease)
|
|
|
(224,057
|
)
|
|
(301,951
|
)
|
Trade
accounts payable - increase (decrease)
|
|
|
1,969,495
|
|
|
(287,123
|
)
|
Accounts
payable to joint venture participants
|
|
|
|
|
|
|
|
And
related parties - increase (decrease)
|
|
|
282,330
|
|
|
102,307
|
|
Advances
from joint venture participants - increase (decrease)
|
|
|
(843,528
|
)
|
|
1,107,712
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided (Used) by Operating Activities
|
|
|
(5,456,781
|
)
|
|
(1,596,267
|
)
|
|
|
|
|
|
|
|
|
Cash
Flows Used by Investing Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(3,152,217
|
)
|
|
(7,114,128
|
)
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
Principal
payments on long-term debt
|
|
|
(821,940
|
)
|
|
(52,600
|
)
|
Issuance
of long-term debt
|
|
|
1,379,780
|
|
|
5,157,130
|
|
Net
proceeds from additional paid in capital - Great Valley
|
|
|
|
|
|
|
|
Drilling
/ Great Valley Production
|
|
|
5,425,120
|
|
|
-
|
|
Proceeds
from issuance of common stock
|
|
|
1,154,134
|
|
|
2,181,414
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
7,137,094
|
|
|
7,285,944
|
|
|
|
|
|
|
|
|
|
Net
Increase (Decrease) in Cash and Cash Equivalents
|
|
|
(1,471,904
|
)
|
|
(1,424,451
|
)
|
Cash
and Cash Equivalents at Beginning of Period
|
|
|
4,876,921
|
|
|
11,812,920
|
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents at End of Period
|
|
$
|
3,405,017
|
|
$
|
10,388,469
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
580,115
|
|
$
|
55,061
|
|
Cash
paid for taxes
|
|
|
|
|
$
|
$
17,865
|
|
Non-cash
investing activity:
|
|
|
|
|
|
|
|
Common
stock in exchange for prospect acquisition
|
|
$
|
100,000
|
|
$
|
2,464,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|
TRI-VALLEY
CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note
1 - Description of Business and Basis of Presentation
Description
of Business
Tri-Valley
Corporation (“TVC” or the Company), a Delaware corporation formed in 1971, is in
the business of exploring, acquiring and developing petroleum and metal and
mineral properties and interests therein. Tri-Valley has five subsidiaries
and
three operating segments or business lines.
· |
Tri-Valley
Oil & Gas Company (“TVOG”) operates the oil & gas activities. TVOG
derives the majority of its revenue from oil and gas drilling and
development. TVOG primarily generates its own exploration prospects
from
its internal database, and also screens prospects from other geologists
and companies. TVOG generates these geological “plays” within a certain
geographic area of mutual interest. The prospect is then presented
to
potential co-venturers. The company deals with both accredited individual
investors and energy industry companies. TVOG serves as the operator
of
these co-ventures. TVOG operates both the oil and gas production
segment
and the drilling and development segment of our business
lines.
|
· |
Select
Resources Corporation (“Select”) was created in late 2004 to manage, grow
and operate Tri-Valley’s mineral interests. Select operates the Minerals
segment of our business lines both through a joint venture with
Tri-Western Resources, LLC and as owner/operator of individual
properties.
|
· |
Great
Valley Production Services, LLC, (“Great Valley Productions Services”) was
formed in 2006 to operate oil production and drilling rigs, primarily
for
TVOG. Tri-Valley plans to sell 49% of the ownership interest and
retain a
51% ownership interest in this subsidiary and remain operator.
As
of September 30, 2006, $4,306,000 has been invested by private parties
in
a 48% ownership interest.
|
· |
Great
Valley Drilling Company, LLC (“Great Valley Drilling”) was formed in 2006
to operate oil drilling rigs, primarily for TVOG. Tri-Valley has
sold 49%
of the ownership interest to private parties for $1,760,000 and has
retained a 51% ownership interest in this
subsidiary.
|
· |
Tri-Valley
Power Corporation is inactive at the present
time.
|
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, 2006, 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 our Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on March 31, 2006, for the year ended
December 31, 2005.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company, its
wholly-owned subsidiaries, Tri-Valley Oil & Gas Co., and Select Resources,
Inc. and Tri-Valley Power Corporation, since their inception. Partially owned
subsidiaries Great Valley Drilling Company, LLC and Great Valley Production
Services, LLC are also included. Because the Company is the principal
beneficiary of a mining venture, it has also consolidated a 50% owned joint
venture, Tri-Western Resources, LLC. Other partnerships in which the Company
has
an operating or nonoperating interest in which the Company is not the primary
beneficiary and owns less than 51%, are proportionately combined. These include
Opus I, Martins-Severin, Martins-Severin Deep, and Tri-Valley Exploration 1971-1
partnerships. All material intra and intercompany accounts and transactions
have
been eliminated in combination and consolidation
Note
2 - Per Share Computations
Basic
earnings per share computations are based upon the weighted-average number
of
common shares outstanding during each year. Diluted earnings per share include
common stock equivalents
Note
3 - 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.
The
Company adopted Statement 123R as of January 1, 2006, using the "modified
prospective" method permitted by the Statement. The 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.
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. We adopted FIN 47 as of December 31, 2005.
We
do not expect the adoption of FIN 47 to have a material impact on our
consolidated results of operations and financial condition.
In
April 2006, the FASB issued FSP FIN 46R - 6,
Determining the Variability to Be Considered in Applying FASB Interpretation
No. 46R. FSP FIN 46R - 6 addresses the requirement to
determine the variability to be considered in applying FASB Interpretation
No. 46 based on an analysis of the design of the entity. Specifically, the
FSP requires (1) an analysis of the nature of the risks in the entity and (2)
a
determination of the purpose(s) for which the entity was created and
determination of the variability (created by the risks identified in Step 1)
the
entity is designed to create and pass along to its interest holders. As
required, we adopted FSP FIN 46R - 6 effective July 1,
2006, for any new arrangements entered into after the effective date. Although
we do not expect the adoption of FSP FIN 46R - 6 to have a
material financial impact, we currently are unable to determine the potential
impact in future periods.
The
Financial Accounting Standards Board (FASB) issued SFAS
154,
"Accounting
Changes and Error Corrections": SFAS 154 replaces APBO 20, Accounting Changes,
and SFAS 3, Reporting Accounting Changes in Interim Financial Statements. Unless
it is impracticable to do so, SFAS 154 requires retrospective application to
prior periods' financial statements of voluntary changes in accounting principle
and to changes required by an accounting pronouncement in instances where the
pronouncement does not include specific transition provisions. This statement
is
effective for accounting changes and error corrections made in fiscal years
beginning after December 15, 2005. No such changes have been made by the Company
in 2006.
Note
4 - Notes Payable
During
the third quarter, we purchased two Chevrolet Silverado trucks and signed two
notes for $49,174.05 and $31,978.57. Both notes are for 60 months and have
interest rates of 4.90% and 6.90% respectively. The lender is GMAC.
Note
5 - Changes in Securities
During
the third quarter of 2006, we issued 24,541 shares of common stock. A director
exercised stock options issued previously to purchase 3,000 shares of common
stock totaling $1,500. We issued 5,280 shares to a consultant for $43,042.00
of
services at an agreed price of $8.15 per share. The remaining 16,261 shares
were
issued as a $100,000. deposit on the purchase of three leases at a price of
$6.15 per share.
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
Petroleum
Activities
In
the
third quarter of 2006, TVOG, in conjunction with Great Valley Production
Services, LLC, bought at auction, all of the major components that would allow
Production Rig #103 to be utilized as a drilling rig capable of drilling to
approximately 5,500 feet. Over a two month period, we reconditioned, modified
and assembled the components to allow Rig #103 to function as a drilling rig.
On
August 18, 2006, using a single daylight crew, Rig #103 spudded its first TVC
well, the Lundin-Weber #D-353-30, in the South Belridge Field, to drill a well
into the Diatomite formation. The well was drilled to 1,500 feet, completed,
and
ultimately 3-stage hydraulically fractured with 510,000-lbs of 10/40 sand on
September 23, 2006. Following the clean-out of well following the hydraulic
fracturing job by Halliburton, Rig #103 was moved to the Lundin-Weber #D540-30
location on September 29, 2006. Also during the third quarter, we continued
to
refurbish Rig #75 (a single pulling unit) and Rig #105 for delivery to Great
Valley Production Services, some time in the fourth quarter.
With
the
completion of these refurbishing tasks in the fourth quarter, we expect to
be in
the enviable position of being able to perform production work on any of our
wells to 12,000 feet and to drill a well to 5,500 feet without relying on third
parties contractors for a production or drilling rig to conduct and fulfill
our
future obligations. In recent years we have suffered delays in our planned
drilling activities due to unavailability of drilling rigs, equipment and crews
in California. The availability of rigs, equipment and crews from Great Valley
Production Services should help to reduce or eliminate these delays in the
future.
In
house
planning continued on a large natural gas exploration play in the San Joaquin
Valley in which we have 100% working interest. We plan to commence drilling
in
mid to late 2007.
While
developing its producible properties in conjunction with our Opus Drilling
Program LP, we continue to assemble high potential exploration targets in an
effort to add significant value.
Great
Valley Production Services, LLC
Great
Valley Production Services had two of its remanufactured rigs crewed and working
in the third quarter on our Temblor Valley West property. Rig #60, a “single”
production rig, was employed re-working idle wells to restore them to
production. The Company expects continued use of that rig to service the 49
existing wells on the property. Rig #103, a “double” production rig modified to
drill up to 5,500 feet, successfully drilled the first development test well
to
1,500 feet into the Diatomite formation, a traditionally low permeability zone
that can carry exceptional quantities of oil. The new crew performed very well
and is speeding up the procedure on the second test well. Great Valley
Production Services continues to recruit personnel to build crew strength and
man additional rigs as they come out of re-manufacture. In the fourth quarter,
Great Valley Production Services expects to put into service Rig #75, a single
production rig that can also drill to 2,000 feet, and Rig #105, a double that
is
one of the largest production rigs on the west coast and can perform workovers
on wells up to 18,000 feet or drill to 8,000 feet.
Great
Valley Drilling Co., LLC
This
10,000 foot Nevada based rig is still completing an existing contract, so Great
Valley Drilling has yet to take possession of the rig. Great Valley Drilling
has
obtained its contractors license and arranged for proper insurance when the
rig
and crew transfer. In anticipation of the transfer, Great Valley Drilling is
negotiating its first contract to drill a well in Nevada and expects the rig
to
be able to work rather continuously because of the scarcity of rigs in Nevada,
which is becoming an exploration province of wider interest.
Mining
Activities
Precious
Metals
Mineral
programs in the third quarter consisted largely of continued assessment and
compilation of the geologic information collected in previous work programs
associated with the Richardson and Shorty Creek properties in Alaska.
The
Company also undertook an on-site visit of the Richardson property, including
the evaluation of adjacent claims. During this visit, Select also undertook
annual repair and maintenance activities associated with the Richardson
Roadhouse, 65 miles south of Fairbanks at milepost 295 on the Alaska Richardson
Highway, which is owned by Select and has been used in the past as a base camp
for Richardson related exploration activities.
During
the third quarter, Select evaluated and rejected one gold property in central
Oregon.
Base
Metals
Select
added two copper properties to its base metals exploration portfolio. Both
properties are located in Nevada. The first property, the FARJK claims, target
oxide copper in Nye County and covers roughly one square mile and the claim
position can be expanded. Select controls 100% of this claim block. The second
property, the Delcer property, with oxide and sulphide copper, covers
approximately one square mile in Elko County. This property has experienced
limited copper production that dates back to World War I. Select is a joint
venture participant in the Delcer property.
During
the third quarter, Select continued its arrangement to assist Duluth Metals
Limited, a Canadian corporation, in its initial public offering and listing
on
the Toronto Stock Exchange. Duluth Metals is involved in the acquisition and
exploration of copper, nickel and platinum group metals in the Duluth Complex
in
northern Minnesota. Duluth Metals is providing Select financial remuneration,
stock options and assistance by Duluth Metals on the monetizing of Select and
its properties as compensation for Select providing management and technical
assistance to Duluth Metals.
Industrial
Minerals
During
the third quarter, the Tri-Western Resources Joint Venture (50% owned and
managed by Select) continued to expand production of cinders from the joint
venture’s Boron facilities. Primary demand was from lightweight block
manufacturers (cinder block) and as decorative stone. The Boron basalt plant
continued to produce limited production of roofing granules and is generating
revenue. In addition, both cinder and basalt fine grind materials and dusts
are
being tested for sale into the horticultural markets. Continued expansions
of
the facilities will be determined based on increased demand and revenue
generation potential in the marketplace.
Limited
work associated with continued permitting activities was undertaken on the
Monarch calcium carbonate property in California during this
period.
The
Admiral Calder calcium carbonate mine in Alaska (100% owned and managed by
Select) was on care and maintenance during the third quarter. Select continued
its market and operational assessment studies for the Admiral Calder quarry
product as the mine is in the top 1% of high grade chemical and high brightness
calcium carbonate deposits in the world, and one of the few deposits to be
directly on tidewater. Repair and maintenance activities at the site were
initiated in the third quarter.
Results
of Operations
For
the
quarter ended September 30, 2006, total revenues were approximately $1.1 million
more than the same period in 2005, but revenue for the first nine months of
2006
was $6.1 million less than the first nine months of 2005. We had a net loss
from
operations of $2.7 million for the quarter and $9 million for the nine months,
compared to a net loss of $500,000 in the third quarter and $4.4 million in
the
first nine months of 2005.
For
the
past three fiscal years, our largest source of revenue has been sale of oil
and
gas prospects to joint ventures. We record revenue from drilling and development
when we complete drilling wells that have been sold to venture partners,
including the OPUS I drilling partnership sponsored by Tri-Valley. In the first
quarter of 2006, we recorded no income from drilling and development. In the
second quarter we completed and recorded one prospect for $559,556, and in
the
third quarter we turn keyed the Lundin Weber 352 well for $900,000. The drop
in
drilling and development income was the largest component in our loss for the
nine month period in 2006. We believe that our revenue from drilling activities
during the fourth quarter of 2006, using our newly acquired drilling rigs,
will
help to increase total 2006 revenue from drilling and development.
Our
revenues from the sale of oil and gas increased from $193,537 in the third
quarter of 2005 to $268,385 in the third quarter of 2006. This increase was
due
to the acquisition of oil producing properties and price increases.
We
began
to realize income from production and sale of industrial minerals from our
Boron
facilities in the second quarter of 2006. In the third quarter, our revenues
from the sale of minerals more than doubled from the second quarter to about
$125,000 from $60,000 as we ramped up operations. We expect sale of minerals
to
continue increasing in the fourth quarter. We had no revenue from mineral
operations prior to the second quarter of 2006.
Company
other income rose from $14,863 for the third quarter of 2005 to $54,179 for
the
third quarter of 2006. This was primarily due to receiving $43,000 from Duluth
Metals for consulting services. Other revenue for the first nine months of
2006
increased by $124,135 over the same period in 2005, $43,000 from the previously
mentioned consulting and approximately $80 thousand increase from well
operations which we bill to other parties. This increase is due to the increased
number of wells which the Company is servicing due to an acquisition.
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 less than prior years ($5,890 for the quarter) because we hold
decreased advances for oil and gas investment and other projects. We expect
our
interest income to remain at approximately these levels for the rest of 2006,
though it will fall as we expend funds on drilling projects. Interest income
is
a relatively insignificant part of our total income.
Our
costs
and expenses rose approximately $3.3 million in the third quarter over a year
ago, although total costs for the first nine months of 2006 were down $1.6
million from the first nine months of 2005. The overall decrease is mainly
a
reflection of decreased drilling and development activity in 2006. The changes
in operating expenses reflect start-up operations that we expect to yield future
returns, especially in the areas of mining exploration expense, operating
expenses for our drilling rig operations (Great Valley Drilling and Great Valley
Production Services) and future oil and gas development, which accounted for
much of the increase in our general and administrative costs.
Mining
exploration expenses increased to $923,663 in the third quarter of 2006 versus
$46,411 in the third quarter of 2005. Mining exploration was only beginning
in
the third quarter of 2005, and the 2006 figure represents an ongoing commitment
to mining operations at the basalt and cinder mill near Boron, California.
In
the 2005 period, we incurred $1 million in expenses for preparation of our
Monarch mine in California, in addition to $2.7 million in mining exploration
expense. Thus, overall mining expenses for the nine months have totaled about
$3.3 million in 2006 compared to $3.7 million in 2005.
Operating
expenses for the drilling subsidiaries was $514,049 in the third quarter and
the
nine month period of 2006. These subsidiaries were only formed in early 2006,
and this expenditure represents the cost of refurbishing rigs that we recently
began to operate or hope to put to work in the next quarter.
Our
mining subsidiary, Select, is
continuing our search 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
2006
or future years. We are reviewing a variety of additional precious and base
metal and industrial mineral opportunities.
The
increased general and administrative expense of $1,291,627 (versus $424,433
in
the third quarter of 2005) was spent for additional staffing for anticipated
oil
and gas exploration and development activity in coming months.
Drilling
and development costs for the third quarter rose to $344,082 from $197,900
in
the third quarter of 2005 as we began to use Great Valley Production Services
rigs and crews to develop our existing properties. During the third quarter
of
2005, the lack of available rigs and crews significantly restricted our drilling
activities. Total drilling and development costs for the nine month period
were
down 86.6% in 2006 compared to the same period in 2005.
Oil
and
gas lease expenses increased in the third quarter from the third quarter of
2005
because of expenses associated with increased production. Operating expenses
are
more than double our 2005 levels and will likely continue to increase as we
add
new wells and workover existing wells. Oil and gas lease expenses may increase
again in 2007 if we succeed in bringing wells drilled in 2006 into production
or
in reworking the shut-in wells.
In
the
first nine months of 2006, we recorded non-cash expenses of $926,180 from
issuance of stock options to our directors and employees. Prior to adoption
of
SFAS 123R in 2006, we did not record compensation expenses upon the issuance
of
stock options to directors and employees. See
Note 3 to our Unaudited Consolidated Financial Statements.
Capital
Resources and Liquidity
Our
oil
and gas activities are largely funded by selling interests in our private
drilling limited partnership. We do not borrow to fund drilling activities.
Our
drilling activity relies on our ability to raise money through our drilling
partnership.
Current
assets were approximately $4.1 million at September 30, 2006, which is lower
than December 31, 2005 by $1.2 million. The reduction in current assets is
due
primarily to a reduction of $1.5 million in our cash position. Property and
equipment was about $1.8 million higher at September 30, 2006, than at December
31, 2005 primarily due to the acquisition of equipment by Great Valley
Production Services. Deposits increased approximately $1.3 million including
a
$1.1 million pledge of Company stock as collateral for two notes payable to
the
Ed Moss Family Trust. There also were deposits on the equipment that is being
acquired for our drilling operations.
Current
liabilities increased approximately $1.25 million in the first nine months
of
2006, due to an approximate $850,000 decrease in advances from joint venture
participants related to the Opus drilling partnership, and a $2 million increase
in accounts payable from increased purchases of capital equipment in both the
petroleum and minerals operations. Of this increase, about $1.3 million is
due
to the increase in accounts payable for our recently formed Great Valley
Production Services, which is purchasing and rebuilding drilling rigs and
equipment. Long term liabilities increased about $500,000 as we borrowed to
purchase equipment.
Operating
Activities
We
had a
negative cash flow of about $5.5 million for the nine months ended September
30,
2006, compared to a negative cash flow of $1.6 million for the same period
in
2005. Our loss from operations was nearly $9 million, which included non-cash
expenses of about $926,000 in stock option expense, $458,000 in impairment
expense and $896,000 in depreciation expense. We experienced a decrease in
deposits of $87,059. Of this amount, $1,110,000 was a non-cash deposit of our
common stock pledged as collateral on a loan, and the remainder of the deposits
was for drilling equipment.
The
largest change in cash flow was an increase in trade accounts payable which
decreased by about $287,000 in the first nine months of 2005 but increased
nearly $2 million in the first nine months of 2006. Start up expenses cost
at
Great Valley Production Services accounted for $1.3 million of this increase.
The next largest increase is advances from joint venture participants of which
went from a positive $1.1 million in the first nine months of 2005 to a negative
$844,000 for the first nine months of 2006. These funds do not contribute to
operating revenues at the time received but are held in cash until expended
in
drilling and operations. We cannot predict the levels at which we will continue
to receive funds for additional drilling
Investing
Activities
Cash
used
in investing activities was about $3.15 million for the first nine months of
2006. The purchase of drilling rigs and equipment used about $2.8 million,
primarily in Great Valley Production Services. The remainder was used for
investment in equipment for TVOG and Tri-Western Resources.
Financing
Activities
Net
cash
provided by financing activities was about $7.3 million for the first nine
months of 2006. Approximately $5.4 million of this amount consists of proceeds
from membership units in the Great Valley Production Services and the Great
Valley Drilling. Issuance of long-term debt provided $1.4 million and the
principal payments on long-term debt used about $822,000. The remaining $1.3
million 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 or forward contracts in its cash management functions.
Item
4. Controls
and Procedures
As
of
September 30, 2006, 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. Based on that
evaluation, our management, including the CEO and CFO concluded that our
disclosure controls and procedures were effective as of September 30,
2006.
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.
During
the third quarter of 2006, there were no material changes in the Company’s
internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1A. Risk
Factors
There
have been no material changes from the risk factors previously disclosed in
our
Annual Report on Form 10-K for the fiscal year ended December 31,
2005.
Item
2. Unregistered
Sales of Equity Securities
During
the third quarter of 2006, we issued 16,261 shares of our common stock in
payment for a deposit on the purchase of three leases at a price of $6.15 per
share
Also
during the third quarter of 2006, $2,048,000 in membership units of Great Valley
Production Services, LLC, were sold to 16 private investors. During the third
quarter of 2006, $207,000 in membership units of Great Valley Drilling Company,
LLC were sold to three private investors. All of these sales were made in
privately negotiated transactions in reliance on the exemption from registration
requirements of the Securities Act of 1933 contained in Section 4(2) of that
Act.
Item
6. Exhibits
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.
November
14, 2006
|
TRI-VALLEY
CORPORATION
|
|
F.
Lynn Blystone
President
and Chief Executive Officer
|
|
|
November
14, 2006
|
|
|
Arthur
M. Evans
|
|
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 14, 2006
|
/s/F.
Lynn Blystone
|
|
F.
Lynn Blystone, President and Chief Executive
Officer
|
Exhibit
31.1
I,
Arthur
M. Evans, 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 14, 2006
|
/s/Arthur
M. Evans
|
|
Arthur
M. Evans, 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, 2006 (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 14, 2006
|
/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, Arthur M. Evans, 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, 2006 (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 14, 2006
|
/s/Arthur
M. Evans
|
|
Arthur
M. Evans, Chief Financial Officer
|