Tri-Valley Corp (fka TVLYQ)

[jonesieatl]

2008 Russell Reconstitution

Closing stock prices on this past Friday 5/30/08 were the prices which will be used by the Russell Indexes for their 2008 Reconstitution.

TIV's closing price of $6.50 will be multiplied by TIV's outstanding float-adjusted share count to arrive at a market capitalization for ranking purposes , e.g. , to determine whether or not Tri-Valley will be added to the Russell 2000 Index.

Pertinent Russell / Tri-Valley information from several sources is provided below , including one aspect of the Russell Reconstitution Methodology which may have particular relevance to Tri-Valley's prospect of being or not being included in the Russell 2000 this year.

Last year: On June 25, 2007 newly reconstituted membership lists for the Russell Global Index and the Russell 3000® Index, Russell 1000® Index, Russell 2000® Index and Russell Microcap® Index were posted on www.russell.com/indexes.

This year: The 2008 reconstitution of the Russell Indexes will take place after the market close on June 27, 2008.

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Key Dates in 2008

"On the last trading day in May ( this year May 30 ,2008 ), all eligible securities globally are ranked by their total market capitalization."

June 13  Preliminary additions and deletions to the Russell Global Index and the Russell 3000® published 
  
 June 20  Updates to the list of additions and deletions 
  
 June 27  Updates to the list of additions and deletions 
  
 June 27  Reconstitution final after the close of the U.S. markets 
  
 June 30  Final membership lists posted for the Russell Global Index, Russell 3000®, Russell 1000®,  
          Russell 2000®, Russell Midcap® and the Russell Microcap® indexes

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Russell Indexes Performance Since 2007 Reconstitution

The Russell 2000 lost ground in overall value in terms of prices per share since last year , predicting a loss of overall market capitalization of the included companies.

Index Performance measured between 6/25/07 (the date 2007 Reconstitution lists were published) and 5/30/08 (the date this year on which Russell took its snapshot of companies market capitalizations)

Russell 3000® Index	         -4.80% 
  
 Russell 2000® Index	         -9.27% 
 Russell 2000® Growth Index	 -4.86%	 
 Russell 2000® Value Index	-13.72% 
  
 Russell 1000® Index	         -4.37% 
  
 Russell Microcap® Index	        -17.98% 
 Russell Microcap® Growth Index	-16.40	 
 Russell Microcap® Value Index	-19.47

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Tri-Valley Russell-relevant facts:

Per TIV 1Q08 10-Q: "The number of shares of Registrant's common stock outstanding at April 30, 2008, was 26,404,109"

TIV PPS on 5/30/08: $6.50

TIV Mkt. Cap. as of closing 5/30/08: $171,626,708.50

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Russell Explanation of Float Adjustments:

Capitalization Adjustments

"The following types of shares are removed from total market capitalization to arrive at free float or available market capitalization. Adjustments are based on information recorded in SEC corporate filings or other reliable sources in the event of missing or questionable data:

• Cross-ownership by another Russell 3000E Index or Russell Global Index member: Shares held by another member of a Russell index (including Russell global indexes) is considered cross-ownership, and all shares will be adjusted regardless of percentage held.

• Large corporate and private holdings: Shares held by another listed company (non-member) or by private individuals will be adjusted if they are greater than 10% of shares outstanding. Share percentage is determined by those shares held by either an individual or a group of individuals acting together. For example, officers and directors holdings would be summed together to determine whether they exceed 10%. Not included in this class, however, are institutional holdings, including investment companies, partnerships, insurance companies, mutual funds, banks or venture capital firms."

http://www.swiftpage5.com/SpeClicks.aspx?Acc=RussellIndexGroup.rusindex&SPCED=C080229170600&LNK=1&UId=7892

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TIV Officers and Directors Holdings: 3,107,261

(Note: The above total is not a comprehensive total but rather is comprised of the reported holdings of Mssrs. Gamble , Blystone , Miller , Lockhart and Kandle.)

The above total represents greater than 10% of TIV's most recently reported outstanding share count of 26,404,109 shares and could possibly be excluded "from (TIV's) total market capitalization to arrive at free float or available market capitalization".

The "free float" component of the Russell Reconstitution Methodology will be included in this year's Russell 2000/3000 Analysis spreadsheet.

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Spreadsheet with various data and estimates follows:

I don't have access to the kinds of data which Ms. Roberts has access to regarding summaries/totals of changes in actual market capitalizations of thousands of companies so I'll have to assume her prediction of a 37% decrease in the minimum market cap. required for R2K inclusion must be based on such data.

That would certainly be a record-setting reduction when looking at the changes over the last 13-14 years , but then the last 12 months have perhaps been record-setting months in more than just prices of oil and gas.

My estimate would have been a simple 20% reduction from last year's minimum market cap. requirement , and since 1995 that has been the largest reduction we've seen , occurring in 1999.

However , in light of Ms. Roberts' relatively close prediction in 2007 and assuming she does have access to far more data than I do , I'm going to take her educated opinion into account and 'meet her in the middle' so to speak with a prediction of a 29% reduction in the minimum market cap. required for R2K inclusion in 2008. She will probably turn out to be closer with her 37% lol.

Comment: As the spreadsheet shows , if in fact TIV's Officers/Directors holdings are removed by Russell in a 'free-float' calculation , TIV's 5/30/08 closing price of $6.50 will not be enough to warrant inclusion even using Ms. Roberts' prediction.

Note: For purposes of this analysis I have not gone back and tallied Officers/Directors holdings for previous years , thus the "N/A" in the Free Float sections prior to 2008.

Summary:

                      TIV PPS Required          TIV PPS Required 
 Predictor         Using Total Outstanding   Using Free-Float Adjustment 
  
 Ms. Roberts               $6.25                     $7.08 
 jonesie                   $7.04                     $7.98