Production & Reserves

Overview
Tri-Valley holds both producing and exploration acreage for natural gas. Current production is modest as the company has focused on oil in recent years, but natural gas activity is now being included in Tri-Valley’s 2007 projects. While production has declined over the past three years, reserves have increased and Tri-Valley expects this trend to continue as it begins drilling prospects in its Great Valley Ranch Gas Complex, which is thought to hold a potential in the range of 500 billion cubic feet.

Tri-Valley’s natural gas reserves are calculated by an independent engineering firm qualified to compile reports for filing with the SEC. Only proved developed reserves are listed in our filings, although properties typically have additional upside in other categories used by the industry such as proved undeveloped, probable, and possible. Commodity price is a material factor since higher prices tend to permit higher cost reserves yet to be produced. Conversely, low prices can halt the production of high cost reserves, and lower the amount of producible reserves.

Using year-end oil and gas prices and current levels of lease operating expenses, the estimated present value of the future net revenue to be derived from our proved developed oil and gas reserves, discounted at 10%, was $6,121,295 (December 31, 2006), $7,056,072 (December 31, 2005), and $1,958,238 (December 31, 2004). The unaudited supplemental information attached to our consolidated financial statements provides more information on oil and gas reserves and estimated values.

Natural Gas Production
The following table sets forth the net quantities of natural gas that we produced during:

2006 Natural Gas (MCF) 86,177
2005 Natural Gas (MCF) 128,602
2004 Natural Gas (MCF) 126,942

Natural Gas Reserves
Our estimated future net recoverable natural gas reserves from proved developed properties as of December 31, 2006, 2005, and 2004 were as follows:

December 31, 2006 Natural Gas (MCF) 787,017
December 31, 2005 Natural Gas (MCF) 779,598
December 31, 2004 Natural Gas (MCF) 742,401

Tri-Valley’s production and reportable reserves are now increasing rapidly with the development of its producing properties.   Tri-Valley Corporation has attained its Operation Catapult goal of producing 1,000 barrels of oil equivalent per day (BOED) by the end of the second quarter nearly two months ahead of schedule.  Production from 39 active wells reached 1,015 BOED on May 8, 2008 and is still increasing, and there are seven more wells yet to be put on line.