Tri-Valley Corporation (NYSE Amex:TIV) today announced its financial results for the third quarter ended September 30, 2011. Oil and gas production revenues increased 15% to $516,000 in the third quarter of 2011 compared with $447,000 in the third quarter of 2010, reflecting an increase in production at both the Pleasant Valley and Claflin oil fields, as well as slightly higher oil prices. Net production in the recent third quarter totaled 8,676 barrels of oil compared with 6,638 barrels of oil in the same quarter of 2010, an increase of 31%. Net production costs increased 47% in the recent third quarter compared with the same quarter a year ago, largely the result of higher repairs and maintenance costs.
The Company also announced that it recently signed two new crude oil sales contracts. Plains Marketing, L.P., an affiliate of Plains All American Pipeline, L.P., is the new customer for the crude oil produced from Pleasant Valley. The Company also signed a new crude oil sales contract with ConocoPhillips Company for the sale of crude oil produced from Claflin. Under the new contracts, effective November 1, 2011, pricing has been tied to a basket of California oil price postings for Midway-Sunset rather than West Texas Intermediate (WTI) under the previous contract. The posted prices on the Midway Sunset crude have been averaging approximately $22 per barrel more than WTI in recent months.
“This has been an extremely busy and productive period for Tri-Valley,” said Maston Cunningham, President and CEO. “We made progress on both production and pricing of our oil operations. Production at both our Pleasant Valley and Claflin oil fields increased in the third quarter and we expect that to continue, as we complete the steaming of the remaining five of eight new wells at Claflin. The recent agreements with Plains and ConocoPhillips will help us to maximize the revenues we receive from the sale of our crude oil. While we cannot predict how long the price differential between Midway Sunset and WTI may continue, we still expect to realize higher oil prices over the next 12 months.”