Tri-Valley announced its financial results for the first quarter ended March 31, 2010.
Total revenues for the first quarter rose to $1.2 million from $0.4 million in the first quarter of 2009. Contributing to the growth was a 93% increase in oil and gas revenues, resulting from higher oil prices and increased production in the quarter. During the quarter, production totaled 4,780 barrels of oil versus 4,363 barrels in the same period of 2009. Despite the increase in revenues, production costs were basically unchanged compared with the first quarter last year. General and administrative costs were reduced to $1.4 million from $2.4 million in the same quarter of 2009. The result was an improvement in the net loss for the quarter of $2.2 million, compared to a $3.0 million loss in the first quarter of 2009.
"The new Tri-Valley is focused on efficiently and cost-effectively increasing our oil and gas production, determining the mineralization of our properties in the Alaska Livengood-Tolovana Mining District, controlling costs and maximizing shareholder value," said Maston Cunningham, Tri-Valley's President and CEO. "Initial execution on this strategy was demonstrated in the quarter's higher production, our first sale of surplus assets, and the cost-cutting measures that resulted in the 40% reduction in G&A expenses. While we are off to a good start for the year, we are focused on the work ahead."
During the period Tri-Valley successfully completed the first extended steam cycle on two of seven horizontal wells at the company's Pleasant Valley heavy oil project in Oxnard, California. Peak rates for the project's heavy oil lease have temporarily reached 1,000 barrels of oil per day (BOPD) and averaged 256 BOPD over the month of March. Based on these results, the company initiated a second cycle on two additional wells at the site.
On April 6, the company executed a $5 million Securities Purchase Agreement for its common stock and warrants; its first entrance into the registered capital markets for financing. Proceeds from the offering will be deployed to the company's Pleasant Valley project, where a horizontal injector well will be drilled to evaluate the efficacy of utilizing Steam Assisted Gravity Drainage (SAGD) technology in materially increasing well recovery. SAGD is commonly used in the oil sands production regions of western Canada, and the company believes this is the first SAGD deployment in California. The company is currently installing artificial lift equipment on four wells at the project site, creating sufficient capacity to generate and sustain the heightened recovery levels expected to result from SAGD injection cycles. The company will use the remaining proceeds for the re-start of operations of existing wells and production facilities on its Claflin property near Bakersfield, California, and for working capital purposes.
"The successful completion of the first phase of our capital raise provides Tri-Valley with the financial resources necessary to initiate some of the key projects in its turnaround plan," said Mr. Cunningham. "With the proceeds, we are making preparations to begin drilling operations for a horizontal injector well in June, and SAGD operations are expected to commence by the end of the third quarter.
"During the remainder of 2010, we remain committed to driving revenues through increased oil and gas production at our existing sites. We seek to leverage this growth through a continued focus on costs and expense control to generate enhanced profitability. At the same time, we will prudently pursue longer-term development efforts with our oil and gas and mineral assets. The first quarter was a positive start on executing our strategy, and we believe if we continue to execute well, we will create value for our shareholders," Mr. Cunningham concluded.
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