Tri-Valley Corp (fka TVLYQ)

[jonesieatl]

Operating Results cont'd

Using this statement from the 10Q as a starting point ....

"Oil and gas revenues in the first quarter of 2008 included
approximately $382,000 from the sale of oil and gas, compared
to $164,000 in the first quarter of 2007"

.... I want to see if we can come up with a production estimate for bbls of oil and mcf of gas for the 1st quarter , or at least take a stab at interpolating what production from PV might have been included in TIV's 1Q08 SEC filing.

The production tables in the iBox with their rough estimates of net revenues to TIV based on several assumptions gives a total for Oil in 1Q07 of $75,244 and a total for Gas in 1Q07 of $72,250 for total 1Q07 (not 08) Oil/Gas revenues of $147,494.

Comparing that to TIV's "$164,000 in the first quarter of 2007" shows about a 10% difference , meaning that some of the variables such as recovery cost per bbl and/or recovery cost per mcf and/or NRI% for oil and gas wells may have changed since they were last pulled out of various TIV filings.

Could be an oil calc problem , could be gas , could be both.

Also , while we are relegated to using an arbitrary crude oil or natural gas price each month based on specific monthly closing prices of those commodities , we have no real way of knowing exactly what gross price TIV gets for their oil and NG , so there's some more room for differences.

Anyway , my spreadsheet came up about 10% light when calculating net revenues so we'll have to keep that in mind (along with digging TIV's newer statements about those factors out of some filings at some point) in this exercise.

Based on the existing assumptions about variables the spreadsheet calcs January 2008 net revenues totaling $76,409.

(By the way, that's a record month when compared to every month in 2007 , you have to go back to June 2006 to beat that.)

Making the aforementioned 10% 'correction' yields $84,899 for January.

Closing Prices 
                                Oil(bbl)    Gas(mcf) 
  
 January                       91.75        8.07 
 February                     101.84        9.37 
 March                        101.58       10.10

For now we'll assume all of the wells included in TIV's January report to DOGGR kept producing at January rates in February and March and we'll incorporate the Feb. and Mar. Closing Prices shown in the table above.

That gives us 1Q08 total net revenues for oil and gas from reported wells (including the 10% correction) of $287,325.

TIV said they had net revenues in 1Q08 for oil and gas of $382,000 , so we need to find another $94,675.

Visiting the PRs:

On 3/14/08 TIV said they were going to hook up the Moffat Ranch East 48X-7 on 3/17/08 at initial delivery rate of 1MMCF per day.

At March's closing NG price of $10.101/MCF that could have given 15 days of production , 15MMCF , grossing $151,515.

Is there OPUS involvement here? Assuming so , we'll use 25% as TIV's NRI.

Using TIV's earlier statement about NG recovery cost being $1.41 and that 25% NRI we see that TIV's part of March's 48X-7 production could have been $32,591.

That leaves us still needing $62,084 to close the gap.

If we stick to the assumption that existing (reported-to-DOGGR) wells maintained their January production rates throughout February and March , I don't know where else to fill that gap other than with PV wells.

Back to the PRs:

PRs on 1/4/08 and 1/18/08 said that after initial test steaming a PV well was seeing a "steady production rate in excess of 200 barrels per day on pump".

Those PRs alone spanned a 14 day period of time. And it wasn't until a PR on 2/15/08 that TIV said PV-1 was being put back on a "full steam cycle to begin steady production." So it sounds like it produced at least two weeks and possibly more.

Using the average of February/March Light Crude Oil closing prices of $101.71 (relevant to PV wells? I don't know.) and a recovery cost of $15.23/bbl (I have no idea if that is relevant to a steaming operation , probably not) , along with an assumed NRI for TIV for PV wells of 25% , the production required for TIV to net another $62,084 for 1Q08 would be 2,872 bbls.

Since TIV has reported sporadic production of 200+ bbls per day from 1 PV well after steaming , realizing production of 2,872 bbls would only have required 14.36 producing days at 200 bbls per day during all of 1Q08.

That certainly sounds possible to me. Even higher recovery costs at PV due to steaming and/or crude price differentials for potentially heavier oil could quite possibly have been offset by more than 14.36 producing days during the quarter and/or higher than 200 BOPD output.

All of the above is simply speculation based on the known facts along with incorporating some assumptions regarding a few variables.

It is apparent from the 10-Q that in January 2008 TIV moved into record-setting territory.

At $382,000 oil/gas revenues for the quarter (and there's no speculation in that number) they were hitting average monthly oil/gas revenues not seen from TIV in recent years.

At the risk of being redundant I think it's worth speculating that they perhaps did that with a 'so-so' quarter at S. Belridge and Edison + an above-average quarter at Dutch Slough and Rio Vista + a maximum of two weeks of 48X-7 production + only partial-quarter production from 1 PV well .... and some nice prices for oil and gas.

Next we can determine what sort of gross production numbers (7 PV wells underway? More Moffat in the mix?) are required to get TIV to break-even and on to profitability with a positive EPS from which to extrapolate a PPS based on an appropriate PE multiple ... but that's for another day! ;)

JMHO

jonesie