Tri-Valley Starts Development, Enhanced Oil Production at Claflin Project

Tri-Valley announced a new initiative to expand oil production at its Claflin project in the Edison Oil Field, near Bakersfield, California.

During 2010, the Company began its initial effort on the Claflin property to reactivate partially depleted oil wells previously drilled in the 1960s. Today Tri-Valley has four reactivated wells in production at Claflin, averaging approximately 30 barrels of oil per day with an average API gravity of 16 degrees from a cyclic steaming program. Based on existing reserves, analog production data from neighboring operations, and the results of these initial four wells, the Company is embarking on a program to further develop and enhance this producing asset. The first phase of Tri-Valley's plan for Claflin includes acquisition of 3-D seismic data for the property and the drilling of five new vertical wells by June 2011. This initial phase is estimated to require $2 million in new capital including expenditures for upgrades to facilities and infrastructure to reduce operating costs associated with current and future oil production. The Company is in the process of contracting the 3-D seismic acquisition work and arranging for a rig to spud the first well. The Company's net share of Claflin's total proved reserves is estimated at 1.7 million barrels.

"Tri-Valley has a 100% working interest in both the Claflin and the adjoining Brea lease, and as a result, these two 80-acre leases offer an excellent opportunity to substantially increase our net oil production," said Maston N. Cunningham, President and CEO of Tri-Valley. "The Edison Field is the site of a proven oil reserve, and our leases cover attractive portions of the area at relatively shallow depths. In addition, the Claflin and Brea economics are favorable to Tri-Valley with 87.5% and 83.33% revenue interests accruing to the Company, respectively."

"While we accomplished a great many things in 2010, in my opinion the most important accomplishment was positioning Tri-Valley to aggressively move forward in the development of our oil properties in 2011. We have been able to clean up our balance sheet, address our capital structure, and as a result, we can use proceeds from our ATM (at the market) financing to fund these projects," continued Mr. Cunningham. "We are also furthering our understanding of the asset by conducting a 3-D seismic study that will help us pinpoint the most productive areas to drill at the site and reduce drilling risks for the horizontal wells. With positive results from Phase 1 of this program, we will expand into Phase 2 which will include the drilling of horizontal wells and additional vertical wells, and later, initial drilling on the Brea site."

As currently contemplated, the full development plan for Claflin would include 13 vertical and nine horizontal wells. The Company estimates that completion of the total program would return approximately 1.7 million net barrels of oil for Tri-Valley over 15 years. Adjacent fields currently produce approximately 15 barrels of oil per day per vertical well on two-acre spacing. The Company's goal is to recognize at least similar results from this Phase 1 activity.

"The Claflin program will be important to significantly increasing our oil production in 2011 and 2012," concluded Mr. Cunningham.


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