"We are in the strongest financial position in our history with ample cash to fund our development and exploration projects which are underway for 2007 and our capital formation program to sustain and expand those projects is also growing apace," said F. Lynn Blystone, chairman and chief executive officer.
He noted that the Opus Drilling partnership still has nearly $50 million in funding calls available to perform development work on its three producing properties including the Temblor Valley properties in the South Belridge oilfield 40 miles west of Tri-Valley's Bakersfield, California headquarters and the parcel some 15 miles east of Bakersfield in the Edison oilfield. A waterflood project on one of the Belridge zones is underway and progressing.
The Company has commenced operations to drill its first test well on its Pleasant Valley property in the Oxnard oilfield 90 miles southwest of Bakersfield to begin proving up an estimated 22 million barrels of steam recoverable oil with only two permits remaining to start drilling. Drilling will also begin in the Chowchilla Ranch and the Moffat Ranch Gas fields 120 miles north of Bakersfield in the third and fourth quarters.
Tri-Valley is preparing its Oil King deep prospect, which is part of its Hondo exploration play, a search for oil-bearing horizons below 15,000 feet. The Oil King prospect is in concert with the earlier Ekho deep discovery, which found enormous amounts of high quality oil locked in tight formations that, so far, has resisted treatments to produce at commercial rates. These obstacles are now being dealt with by Tri-Valley in a joint effort with one of the world's premier scientific research organizations and belief is mounting that a solution for the low permeability conditions will be found both for the Ekho No. 1 and the Sunrise Natural Gas Project discovery of a massive new gas field also locked in a tight shale formation.
To deal with the acute shortage of both production and drilling rigs, Tri-Valley began buying rigs in 2006 and refurbishing them to better than new status with modern engines and digital controls. The Company's first production rig has so far serviced more than 40 existing wells in the Temblor Valley properties and its No. 103 rig has drilled four new wells in Temblor Valley West with a fifth to be drilled in this quarter. Another drill rig will leave the yard for field testing this quarter as the company steps up its drilling of new shallow wells.
Tri-Valley's drilling subsidiary is drilling both geothermal and oil wells in Nevada for other operators while the Company prepares its 11,000-acre Oil Springs exploration prospect in Nye County, Nevada. Both production and drilling subsidiaries are operating profitably.
To further support development of heavy oil zones in Temblor Valley and Pleasant Valley production properties, Tri-Valley has acquired a fleet of steam generators to provide downhole heat and repressure the formations for enhanced recovery. These are being refurbished to meet new environmental regulations before going into service. The Company is making arrangements to increase the fleet as new wells are drilled on these properties.
In its mineral division, Tri-Valley is looking to activate its Admiral Calder Mine in Alaska which hosts a high grade, high bright deposit deemed to be among the top one percent of such deposits in the world. The Company also plans further work on its 60 square miles of claims for gold exploration also in Alaska. The Company is also doing precious metal prospecting for outside clients in Utah and West Africa.
"We are experiencing rapid growth in building our asset platform to add shareholder value and our staff has increased in technical, drilling and administrative categories to support the development of these assets. We've been fortunate to attract good people in all departments," Blystone said.
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