Tri-Valley to Complete Deep Ekho Well

Bakersfield, California
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Tri-Valley has commenced operations to complete its deep Ekho No.1 well approximately 45 miles northwest of Bakersfield, California. Drilled four years ago to a depth of 19,085 feet, the well found over 2,400 feet of pay in four zones containing exceptionally high quality 48 gravity oil and 1,400 Btu natural gas.

The zones are "tight", industry parlance for low permeability, which prohibits the oil and gas from easily flowing through the formation into the well bore for delivery to the surface and the well will not produce at commercial rates. One solution is to hydraulically fracture the zone to create multiple fissures to enhance flowing.

Shortly after drilling, the market collapsed stalling capital formation necessary to fund the pioneering "frac" effort as no well of that depth has ever been so treated in California. Ninety percent of the drilling cost had been borne by seven Canadian junior companies who elected not to continue. Tri-Valley formed a 320-acre producing unit with a six percent overriding royalty to be shared by the Canadian juniors to make room for new working interest owners.

"Independent analysis of the logs and cores estimates a potential of 133 million barrels of oil and 162 billion cubic feet of natural gas in place in the 2,450 feet of hydrocarbon saturated zones over 320 acres. The Company has forecast a possible ultimate recovery in the range of 20 million barrels of oil equivalent using a conservative 12.5% recovery factor if the frac program is successful. Given its massive potential, it's well worth pursuing, as it could be the proverbial company maker," said F. Lynn Blystone, president and chief executive officer.

Under the leadership of Joseph R. Kandle, president of the operating subsidiary, Tri-Valley Oil & Gas Co., the Company set the North American record for the longest, fastest single bit run ever by drilling 10,045 feet in 116 hours. This lowered the well cost dramatically and substantially reduced the risk and cost of searching for new hydrocarbon targets below 15,000 feet in the prolific Bakersfield producing region.

"The Bakersfield area produces three times as much oil per day as the entire State of Oklahoma and that production comes from 12,000 feet and above. We believe many huge targets remain at depth and two-thirds of the vertical dimensions of the basin remain virtually unexplored. We think that completion success on this deep well could unlock deeper targets and usher in the third century of major petroleum business in the Bakersfield region that will benefit our shareholders, drilling partners and consumers," Kandle said.

For its first attempt, Tri-Valley will frac the Vedder Sand between 18,000 and 18,500 feet and plans to use a specially formulated "heavy water" to add bottom hole pressure in addition to the pressure to be applied by surface equipment. The Company will first flow the well for two or three weeks to create a pressure sink in the zone to influence the path of energy from the frac process and keep it in the zone to maximize exposure to potential producing areas.

"With 20 million shares widely held by about 5,000 shareholders, we look for really big properties like the Ekho deep so we can achieve exponential gains for our shareholders and high net worth drilling partners if we succeed. Our proprietary database in California, the world's fifth largest economy, provides uncommon opportunity in a high-risk business. In the case of Ekho deep, we've already found the oil and gas and are now addressing the engineering challenge of getting it out. It's an exciting month for everyone," Blystone said.
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