Tri-Valley Resumes Its Sunrise Natural Gas Project

Tri-Valley is resuming completion efforts on its Sunrise-Mayel No. 2 HR by redrilling the horizontal leg of the well bore in preparation for a new hydraulic fracture program for the gas saturated McClure Shale formation. The previous frac job ruptured casing above the horizontal leg and the frac energy escaped into a higher, non-productive zone leaving the main pay zone untested.

Large amounts of petroleum are now being produced ten to seventeen miles away down dip in the oil phase of the McClure Shale from major oil company efforts that pioneered the horizontal drilling and hydraulic fracturing techniques of the hydrocarbon bearing zones of the formation. Tri-Valley believes its shallower gas phase should also yield commercial flow rates.

"If, as expected, we are successful in demonstrating commercial flow rates from this test well on our 8,000 acre lease block, we will immediately move to develop the entire property for what we believe is a potential exceeding 3.3 trillion cubic feet of natural gas in place. To put that into perspective, even at 70% recovery, it would approximately equal California's remaining proved, producing natural gas reserves, the State's preferred fuel which it now imports for nearly 90% of its daily needs," said F. Lynn Blystone, president and chief executive officer.

Joseph R. Kandle, president of the Company's operating subsidiary, Tri-Valley Oil & Gas Co. noted that the nation's biggest gas plays are in the tight formations of Wyoming's Jonah Field and the Barnett Shale of central Texas and these took multiple efforts to finally achieve commercial delivery.

"While our most recent effort was frustrated because of a mechanical failure, we believe a successful frac on the new horizontal leg will enable the formation to deliver natural gas at substantial rates. We began our program based on $2.00 per MMBTU gas prices and note that it is now $8.00 per MMBTU for December delivery. So, we have four times as much incentive to work on this project as we did when we started. Persistence that achieves commercial flow rates could pay enormous rewards for our shareholders, drilling partners and benefit consumers," Kandle said.

Tri-Valley has chosen to pursue very large exploration targets that can result in exponential increase in value on discovery success. However, these targets have the odds stacked against them in this high-risk end of the business. So, the company has an expanded inventory of prospects to increase the odds of success. In the case of Sunrise, the gas has already been discovered so the exploration risk is gone, but mechanical risk is still formidable. However, this risk is now substantially mitigated by the emerging success of other companies achieving commercial production in the same formation although the Sunrise zone characteristics are not exactly similar and call for different completion techniques, which Tri-Valley believes it has now developed. The stakes for the Company and its investors are huge.

"We like to point out that the mapped area of closure plus the independently estimated potential gas per foot in place indicates the possibility of a source nine times larger than the 1962 Lathrop Gas Field discovery that launched Occidental Petroleum on its rise to become one of America's largest corporations. Now that we know the natural gas is there in Sunrise, we have the investor strength and determination to devise and implement commercial retrieval methods either immediately or down the road as we persevere, and the investing public needs to be aware of the magnitude of the benefit when we crack the code of Mother Nature in this instance," Blystone said.

The Sunrise Natural Gas Project, some 30 miles north of Bakersfield, California by the City of Delano, is one of nearly two dozen large and very large exploration prospects in the inventory of the TVOG Opus I Drilling Program LP from which Tri-Valley seeks to find a "company maker" success. The Company is fully funded for the next four project efforts and expects to more than double that in 2005.