The SEC rules for evaluating oil properties are necessarily conservative and do not include many factors commonly used by the petroleum industry evaluating the same property. In the case of this property, only a small section of one of the three hydrocarbon-bearing zones is used to define the total proven reserves and Tri-Valley's technical staff can make a case for many times the SEC number using commonly accepted industry standards. The Company believes it will reclassify these more speculative values as proved reserves in its SEC filings as it reworks and drills more wells which it expects to begin this quarter.
Another property is given six million recoverable barrels in the proven undeveloped category by independent engineers using standard formulas based on the most conservative, old technology extraction method. However, until it is put into production through rework of existing wells and new wells are drilled to re-confirm reservoir characteristics and production rates, the Company is not allowed to include any volume or value in its filings.
Another natural gas property presently has only a single old well with current modest production and the Company believes the entire 21 square miles are prospective for multiple additional locations for new wells.
"Through reworking more than 60 existing wells on these properties, drilling perhaps hundreds of new wells and modern technology, we expect to deliver exceptional new value to Tri-Valley shareholders. This is further supported by acquisition of our own workover and drilling rigs to provide timely support of our exploitation plans," said F. Lynn Blystone, president and chief executive officer.
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