Total Revenues More Than Triple to $1.6 Million in 2Q 2010
Production Costs Decrease 61%
Conference Call Today at 4:30 p.m. Eastern Time
Aug. 2, 2010 (Business Wire) -- Tri-Valley Corporation (NYSE Amex: TIV) today announced its financial results for the second quarter ended June 30, 2010.
Total revenues for the second quarter increased to $1.6 million from $0.5 million in the second quarter of 2009. Oil and gas revenues grew 50% from the year ago level to $0.5 million, reflecting significantly higher production in the quarter and higher oil prices. Second quarter production totaled 6,875 barrels of oil versus 3,816 barrels in the same period of 2009, an increase of 80%. Total revenues also included a $1.1 million gain on the sale of assets during the quarter. Production costs declined 61% from the second quarter of 2009 primarily due to reductions in contract labor, repairs, and transportation costs.
“We made great progress on several key initiatives during the quarter, increasing oil production and reducing production costs,” said Maston Cunningham, Tri-Valley’s President and CEO. “During the quarter we completed the installation of artificial lift on the four remaining horizontal wells at the Pleasant Valley oil sands project in Oxnard, California, and we completed 30-day extended steam cycles on four of those wells. In June, we reinitiated cyclic steaming at our Claflin project near Bakersfield. Currently there are seven active production wells at the site. The result of our efforts has been a 39% increase in total net production from the first quarter of 2010.”
“Turning to our mineral assets, during the second quarter, an independent consultant completed a Canadian National Instrument 43-101 style evaluation on our Select Resources subsidiary’s 30,000 acre Shorty Creek prospect in Alaska that indicates a potentially large porphyry copper, gold and molybdenum system which may cover an area approximately eight miles in diameter. Additionally, the Division of Geological & Geophysical Surveys (DGGS) of the Division of Natural Resources in the state of Alaska is completing a special project this summer to prepare a new geologic surface map covering a 150 square mile area that includes our Shorty Creek prospect. We believe this newer surface mapping, combined with our previous data from the property, should enable a much higher quality and a more detailed interpretation of the geology and economic potential of the property,” continued Mr. Cunningham.
“In the months ahead, we will be initiating the drilling operations for a horizontal injector well at the Pleasant Valley site which will be used to evaluate the efficacy of Steam Assisted Gravity Drainage (SAGD) technology in significantly increasing oil recovery at the site. To this end, we have successfully recruited a new senior operations engineer with Canadian oil sands SAGD experience for this drilling project and SAGD start-up. The timing for drilling the new injection well is being dictated by completion of current cyclic steaming operations and heat dissipation in the reservoir to facilitate drilling. We currently anticipate the initiation of SAGD operations to start late this fall or early winter with evaluation of the results in mid 2011. At Claflin, we are working to complete the initial steam injection cycles on the remaining wells as quickly as possible, and plan to commence drilling new wells at Claflin as part of our 2010 financing program.
“We remain focused on our strategy to improve profitability by growing revenues through increased oil and gas production and to leverage this growth by controlling production costs and expenses. We believe that our success, along with longer-term opportunities to realize value from our oil and mineral assets, should result in an enhanced valuation of Tri-Valley for our investors. The team has executed well so far, and we look forward to our continued progress,” Mr. Cunningham concluded.
Second Quarter and First Six Months 2010 Financial Highlights
Second quarter revenues more than tripled from the same quarter of 2009 to $1.6 million. Oil and gas production revenues grew 50% to $0.5 million. The Company also recognized a $1.1 million gain on the sale of non-strategic assets in California.
In April, the Company executed a $5 million Securities Purchase Agreement for its common stock and warrants to raise capital to expand oil and gas production. The financing had an impact on costs and expenses in the second quarter. Total costs and expenses were $5.8 million compared with $2.7 million in the second quarter last year. Included in the current results were $3.3 million of non-recurring costs associated with the securities offering in April that included a non-cash warrant expense of $2.9 million and $0.4 million in investment advisory fees and legal costs. With these costs, the Company reported a net loss of $4.2 million, or $(0.11) per share, in the second quarter of 2010 compared with a net loss of $2.2 million, or $(0.08) per share, in the same quarter of 2009. Excluding gains on the sale of assets and financing and warrant expenses, net loss for the second quarter of 2010 was approximately $2.0 million compared with $2.2 million in the comparable quarter of 2009.
For the first six months of 2010, revenues totaled $2.6 million compared with $0.9 million a year ago. Revenues from oil and gas production increased 49% to $0.9 million from $0.6 million, and production costs decreased by 50% to $0.5 million. The net loss for the first half of 2010 was $6.4 million, or $(0.18) per share, compared with $5.3 million, or $(0.19) per share, in the comparable period in 2009. Excluding gains on sale of assets and financing and warrant expenses, net loss for the first six months of 2010 was approximately $4.1 million versus $5.3 million in the prior year period.
Conference Call
The company has scheduled a conference call to discuss its second quarter results and current business developments today, August 2, 2010 at 4:30 p.m. ET. To access the call, dial 877-941-8609. To access the live webcast of the call, visit Tri-Valley’s website at www.tri-valleycorp.com.
An audio replay will be available for seven days following the call at 800-406-7325. The password required to access the replay is 4333057#. An archived webcast will also be available at www.tri-valleycorp.com.
About Tri-Valley
Tri-Valley Corporation explores for and produces oil and natural gas in California, and has two exploration-stage gold properties and a high grade calcium carbonate quarry in Alaska. Tri-Valley is incorporated in Delaware and is publicly traded on the NYSE Amex exchange under the symbol "TIV." Our company website, which includes all SEC filings, is www.tri-valleycorp.com.
Forward-looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. Actual results, events and performance could vary materially from those contemplated by these forward-looking statements which includes such words and phrases as exploratory, wildcat, prospect, speculates, unproved, prospective, very large, expect, potential, etc. Among the factors that could cause actual results, events and performance to differ materially are risks and uncertainties discussed in "Item IA. Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition" contained in the company's Annual Report on Form 10-K for the year ended December 31, 2009.
| TRI-VALLEY CORPORATION CONSOLIDATED BALANCE SHEET | |||||
| ASSETS | |||||
| June 30, 2010 | December 31, 2009 | ||||
| (Unaudited) | (Audited) | ||||
| Current Assets | |||||
| Cash | $ | 1,692,028 | $ | 290,926 | |
| Accounts Receivable TVOG Production Accrual | 890,505 | 33,623 | |||
| Accounts Receivable - Trade | 44,391 | 63,151 | |||
| Prepaid Expenses | 473,458 | 16,889 | |||
| Accounts Receivable from Joint Venture Partners | 646,314 | 1,432,785 | |||
| Accounts Receivable - Other | 114,518 | 25,717 | |||
| Total Current Assets | 3,861,214 | 1,863,091 | |||
| Property and Equipment - Net | |||||
| Proved Properties | 25,265 | 25,265 | |||
| Unproved Properties | 1,693,296 | 1,551,998 | |||
| Rig | 1,093,829 | 1,132,847 | |||
| Other Property and Equipment | 4,472,761 | 5,470,295 | |||
| Total Property and Equipment - Net | 7,285,151 | 8,180,405 | |||
| Other Assets | |||||
| Deposits | 365,919 | 172,913 | |||
| Investments in Joint Venture Partnerships | 23,284 | 17,400 | |||
| Goodwill | 212,414 | 212,414 | |||
| Other | - | 13,800 | |||
| Total Other Assets | 601,617 | 416,527 | |||
| Total Assets | $ | 11,747,982 | $ | 10,460,023 | |
| TRI-VALLEY CORPORATION CONSOLIDATED BALANCE SHEET | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| June 30, 2010 | December 31, 2009 | ||||||
| (Unaudited) | (Audited) | ||||||
| Current Liabilities | |||||||
| Notes Payable | $ | 389,142 | $ | 439,482 | |||
| Accounts Payable to Joint Venture Partners | - | - | |||||
| Trade - Accounts Payable and Accrued Expenses | 4,247,635 | 5,962,774 | |||||
| Non-Trade Accounts Payable | 850,000 | 850,000 | |||||
| Total Current Liabilities | 5,486,777 | 7,252,256 | |||||
| Non-Current Liabilities | |||||||
| Asset Retirement Obligation | 366,423 | 351,013 | |||||
| Long-Term Portion of Notes Payable | 1,298,565 | 1,395,649 | |||||
| Total Non-Current Liabilities | 1,664,988 | 1,746,662 | |||||
| Total Liabilities | 7,151,765 | 8,998,918 | |||||
| Stockholders' Equity | |||||||
| Common Stock, $.001 par value; 100,000,000 shares | |||||||
| authorized; 37,350,504* and 33,190,462 at June 30, 2010 and | |||||||
| December 31, 2009, respectively. | 37,351 | 33,190 | |||||
| Less: Common Stock in Treasury, at cost; 120,025 shares | (38,370 | ) | (13,370 | ) | |||
| Capital in Excess of Par Value | 56,977,612 | 51,469,228 | |||||
| Additional Paid in Capital - Warrants | 4,017,703 | - | |||||
| Additional Paid in Capital - Stock Options | 2,466,917 | 2,429,722 | |||||
| Accumulated Deficit | (58,864,996 | ) | (52,457,665 | ) | |||
| Total Stockholders' Equity | 4,596,217 | 1,461,105 | |||||
| Total Liabilities and Stockholders' Equity | $ | 11,747,982 | $ | 10,460,023 | |||
| *As of June 30, 2010, the Company had received subscriptions to purchase an additional 94,790 shares, which had not been accepted because required subscription documents had not been received from the subscribers, and the necessary stock exchange approval has not been received. | |||||||
| TRI-VALLEY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||
| Revenues | |||||||||||||||||
| Sale of Oil and Gas | $ | 465,216 | $ | 311,097 | $ | 920,989 | $ | 617,693 | |||||||||
| Gain on Sale of Asset | 1,082,693 | - | 1,673,492 | - | |||||||||||||
| Partnership Income | 7,810 | - | 7,810 | 30,033 | |||||||||||||
| Other Income | - | 193,304 | 8,155 | 205,808 | |||||||||||||
| Interest Income | 904 | 5,312 | 2,019 | 15,950 | |||||||||||||
| Total Revenue | $ | 1,556,623 | $ | 509,713 | $ | 2,612,465 | $ | 869,484 | |||||||||
| Costs and Expenses | |||||||||||||||||
| Production Costs | $ | 247,177 | $ | 632,946 | $ | 532,554 | $ | 1,058,846 | |||||||||
| Mining Exploration Expenses | 85,561 | 48,695 | 224,389 | 117,152 | |||||||||||||
| Depletion, Depreciation and Amortization | 168,904 | 445,370 | 334,292 | 895,562 | |||||||||||||
| Bad Debt Expense | - | - | - | 53,980 | |||||||||||||
| Interest Expense | 33,250 | 63,590 | 55,860 | 97,746 | |||||||||||||
| General and Administrative | 2,347,956 | 1,533,232 | 3,803,308 | 3,942,728 | |||||||||||||
| Warrant Expense | 2,855,454 | - | 4,017,703 | - | |||||||||||||
| Stock Option Expense | 24,278 | - | 51,690 | - | |||||||||||||
| Total Costs and Expenses | $ | 5,762,580 | $ | 2,723,833 | $ | 9,019,796 | $ | 6,166,014 | |||||||||
| Loss Before Minority Interest | $ | (4,205,957 | ) | $ | (2,214,119 | ) | $ | (6,407,331 | ) | $ | (5,296,530 | ) | |||||
| Minority Interest | - | (24,831 | ) | - | (53,402 | ) | |||||||||||
| Net Loss | $ | (4,205,957 | ) | $ | (2,189,288 | ) | $ | (6,407,331 | ) | $ | (5,243,128 | ) | |||||
| Basic Net Loss Per Share: | |||||||||||||||||
| Loss from Operations | $ | (0.11 | ) | $ | (0.08 | ) | $ | (0.18 | ) | $ | (0.19 | ) | |||||
| Basic Loss Per Common Share | $ | (0.11 | ) | $ | (0.08 | ) | $ | (0.18 | ) | $ | (0.19 | ) | |||||
| Weighted Average Number of Shares Outstanding | 36,902,102 | 27,614,867 | 35,039,904 | 27,536,111 | |||||||||||||
| Weighted Potentially Dilutive Shares Outstanding | 40,851,924 | 30,100,334 | 36,550,615 | 30,112,944 | |||||||||||||
| No dilution is reported since Net Income is a loss per ASC 260. | |||||||||||||||||
| TRI-VALLEY CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
| For the Six Months Ended June 30, | |||||||
| 2010 | 2009 | ||||||
| Cash Flows from Operating Activities: | |||||||
| Net Loss | $ | (6,407,331 | ) | $ | (5,243,127 | ) | |
| Adjustments to Reconcile Net (Loss) to Net Cash | |||||||
| provided (used) by Operating Activities: | |||||||
| Depreciation, Depletion and Amortization | 334,292 | 895,562 | |||||
| Impairment, Dry Hole and Other Disposals of Property | - | ||||||
| Minority Interest | - | (53,403 | ) | ||||
| Warrant Expense | 4,017,703 | - | |||||
| Stock Options | 51,690 | 272,233 | |||||
| Marketable Securities | - | ||||||
| (Gain) or Loss on Sale of Property | (1,673,492 | ) | - | ||||
| Bad Debt Expense | - | 53,980 | |||||
| Director Compensation | 95,400 | - | |||||
| Stock Warrants | - | - | |||||
| Changes in Operating Capital: | - | ||||||
| (Increase) or Decrease in Total Accounts Receivable | (926,923 | ) | 769,468 | ||||
| (Increase) or Decrease in Total Other Assets | (641,659 | ) | (308,087 | ) | |||
| Increase or (Decrease) in Accounts Payable, Deferred Revenue | |||||||
| and Accrued Expenses | (1,715,139 | ) | 2,170,039 | ||||
| Increase or (Decrease) in Accounts Payable to Joint Venture Partners | - | ||||||
| and Related Parties | (5,072,307 | ) | (912,173 | ) | |||
| (Increase) or Decrease in Accounts Receivable from Joint Venture Partners | 5,858,778 | 3,981,822 | |||||
| - | |||||||
| Net Cash Provided/(Used) by Operating Activities | $ | (6,078,988 | ) | $ | 1,626,314 | ||
| Cash Flows from Investing Activities: | |||||||
| Proceeds from the Sale of Property | 3,059,341 | - | |||||
| Capital Expenditures | (809,476 | ) | (465,096 | ) | |||
| Net Cash Provided/(Used) by Investing Activities: | $ | 2,249,865 | $ | (465,096 | ) | ||
| Cash Flows from Financing Activities: | |||||||
| Principal Payments on Long-Term Debt | (147,424 | ) | (119,599 | ) | |||
| Net Proceeds from Issuance of Warrants | - | - | |||||
| Net Proceeds from the Issuance of Stock Options | 2,200 | - | |||||
| Net Proceeds from the Issuance of Common Stock | 5,400,450 | 19,301 | |||||
| Sale or (Purchase) of Treasury Stock | (25,000 | ) | |||||
| Net Cash Provided/(Used) by Financing Activities: | $ | 5,230,226 | $ | (100,298 | ) | ||
| Net Increase or (Decrease) in Cash and Cash Equivalents: | 1,401,102 | 1,060,920 | |||||
| Cash and Cash Equivalents at Beginning of Period: | 290,926 | 2,000,787 | |||||
| Cash and Cash Equivalents at End of Period: | $ | 1,692,028 | $ | 3,061,707 | |||
