Tri-Valley Corporation says that production tests, on three of its horizontal wells into the Vaca Tar Sands at its Pleasant Valley site in the Oxnard, California oilfield have flow tested at rates considerably above 1,000 barrels oil per day per well. There are four other such wells on that same lease, in addition to the newly completed horizontal well at Pleasant Valley's Lenox Ranch Lease, all of which have also been completed in the same shallow Vaca zone. The Company is continuing to install new infrastructure to handle much greater production volumes than had been originally planned in its initial conservative forecast for well delivery rates.

Using some of the 40 years of industry experience in Canada's Athabasca Tar Sand development, Tri-Valley began drilling the Vaca Tar Sands first horizontal wells in late 2007, then steaming and cautiously producing them initially at low rates to avoid sand build up. After several months with no evidence of sand entry into the bores, intermittent tests of the wells showed a potential of much higher production rates and, subsequently, Tri-Valley began completely re-configuring its production facilities accordingly.

A landmark study in 2000 by the late Dr. Roger Butler, the so-called father of the Steam Assisted Gravity Drainage (SAGD) technique, postulated that horizontally drilled wells with companion steam injector bores could produce at sustained rates of 500-700 barrels of oil per day for seven to ten years without decline. Tri-Valley now believes those estimates may in fact be too low in the Vaca zone it is now producing.

At present, Tri-Valley engages in alternating steam/soak/production cycles in advance of drilling dedicated well bores for continuous steaming of the formation and may drill one such dedicated steaming well bore this year to test the efficacy of that approach. However, it is now confirmed that the Company's methods under the cyclic approach can deliver well beyond the initial design of the project. Tri-Valley has just completed its eighth horizontal Vaca Tar Sands well and is preparing to drill several more in 2009.

"Much higher production rates per well can significantly lower the per barrel lifting costs which are critical to maintaining a positive margin, especially when oil prices are lower, and they can result in huge upside for Tri-Valley and its Opus partners once oil prices increase again. We are confident we can very substantially increase well production rates and that oil prices will resume going up on the overall trend to better reward the investors and the Company in the coming months and years, and that these wells are good for many decades of strong production to build substantial share value," said F. Lynn Blystone, president and chief executive officer.

Tags: Tri-Valley Corporation