Significantly, the Company is engaged in negotiating for additional interests in the area and, therefore, did not disclose the specific location nor the amount of cash and unregistered, restricted stock used in the purchase, although it noted the stock paid amounted to less than 5% of the Company's outstanding shares.
As part of the purchase terms, Tri-Valley agreed to a $5 million, two-year work commitment. With that obligation already fully funded, Tri-Valley plans to immediately initiate efforts to rework shut-in wells, and in addition, to drill and test a new horizontal well to generate production cash flow in 2005 and beyond.
"New technology is now available to fully develop this property and we are confident we can achieve a much higher recovery than the original estimates. Also, oil and gas prices are much higher than those used in the original calculations which further bolsters the economic recovery potential. We are also excited by the existence of several deeper, untested zones which offer a substantial exploration component to add even more upside," said Joseph R. Kandle, president of Tri-Valley Oil & Gas Co., the Company's operating subsidiary.
"This acquisition puts Tri-Valley on the map with a significant proven undeveloped reserve base and the potential to multiply it substantially with advanced technology and exploration success. It's a strategic part of our goal to add major intrinsic value per share and build increasing cash flow for 2005 and the ensuing years. This project dovetails with our high impact exploration programs also underway for rapid value buildup," said F. Lynn Blystone, president and CEO of Tri-Valley Corporation.
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