Tri-Valley Corporation (NYSE Amex:TIV) today announced that drilling has begun on the first of six new vertical wells to develop proved undeveloped (“PUD”) reserves at its Claflin oil project, located in the Edison Oil Field near Bakersfield, California. The Company expects to complete the drilling of all six wells to an approximate depth of 1,000 feet within the next three weeks. Following completion, the new wells will receive their initial steam injection cycle and should be producing first oil by June. An evaluation period of 60 to 90 days will follow to analyze results before commencing the second drilling phase at Claflin.
“We are off to a successful start on a key 2011 initiative for the Company, to increase oil production by converting a portion of our PUD reserves into the proved, developed, and producing (“PDP”) category,” said Maston N. Cunningham, President and CEO of Tri-Valley Corporation. “Based upon our year-end independent reserve report, Claflin has over two million barrels of PUD reserves in place. Our plan is to drill a total of 22 new wells at Claflin during the year, including 13 vertical wells and nine horizontal wells, and to install facility upgrades. If we are successful, we expect Claflin to exit the year with gross daily production of about 800 barrels of oil with an API gravity of 16 degrees and anticipate a peak oil production rate of about 1,200 barrels per day from the site in 2012. We also anticipate that additional PUD reserves can be established as these existing locations are converted into the PDP category.”
During 2010, the Company reactivated four of eight existing wells at Claflin that had been drilled during the 1960’s in order to hold the lease by production. Permitting for a 3-D seismic program of Claflin and the adjoining Brea lease, which Tri-Valley also holds, is underway with results from the seismic study anticipated by late May. The seismic data will allow the Company to optimize the locations of its development wells and provide better control during the drilling of horizontal wells on the properties. Tri-Valley has a 100% working interest and an 87.5% net revenue interest in Claflin.