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| 8-K - TRI VALLEY CORP 8-K 3-16-2011 - TRI VALLEY CORP | tv317118k.htm |
Exhibit 99.1
Tri-Valley Corporation
Maston Cunningham, President & CEO
NYSE Amex: TIV
March 2011
Safe Harbor Disclosure:
This presentation contains forward-looking statements that
involve risks and uncertainties. Actual results, events and
performance could vary materially from those contemplated by
these forward-looking statements which include such words and
phrases as exploratory, wildcat, prospect, speculates, unproved,
prospective, very large, expect, potential, etc. Among the factors
that could cause actual results, events and performance to differ
materially are risks and uncertainties discussed in "Item IA. Risk
Factors" and "Item 7. Management's Discussion and Analysis of
Financial Condition" contained in the company's Annual Report
on SEC Form 10-K for the year ended December 31, 2009, and
similar information contained in the company’s Quarterly Report
on SEC Form 10Q for the quarter ended September 30, 2010.
involve risks and uncertainties. Actual results, events and
performance could vary materially from those contemplated by
these forward-looking statements which include such words and
phrases as exploratory, wildcat, prospect, speculates, unproved,
prospective, very large, expect, potential, etc. Among the factors
that could cause actual results, events and performance to differ
materially are risks and uncertainties discussed in "Item IA. Risk
Factors" and "Item 7. Management's Discussion and Analysis of
Financial Condition" contained in the company's Annual Report
on SEC Form 10-K for the year ended December 31, 2009, and
similar information contained in the company’s Quarterly Report
on SEC Form 10Q for the quarter ended September 30, 2010.
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Tri-Valley is…
• A significantly different company from a year ago
• Focused on California heavy oil production with nearly
10 MMB of net 3P reserves, and over 3 MMB of net
contingent resources
contingent resources
• Positioned to become the largest oil sands producer in
California
California
• Executing a plan to monetize two large Alaskan exploration
stage gold projects (porphyry and intrusion related
systems)
stage gold projects (porphyry and intrusion related
systems)
• Building oil production volume and revenue in 2011
• Significantly reducing operating costs
• Focused on generating cash flow from operations
• Led by an experienced, proven management team
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Pleasant Valley - Oxnard, CA
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Pleasant Valley - Oxnard, CA
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Oxnard Field
Hwy 126
Pleasant Valley - Leases
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Lennox
Scholle-
Livingston
Livingston
Hunsucker
Title Under Litigation
Pleasant Valley - Oxnard, CA
• An “unconventional” heavy oil project to exploit 128 MMB
OOIP from the Upper Vaca Tar Sands from properties
located in the Oxnard Oilfield
OOIP from the Upper Vaca Tar Sands from properties
located in the Oxnard Oilfield
• Oxnard Oilfield, discovered in 1937, has 400 MMB OOIP in
the Upper Vaca Tar as estimated by the CA Dept. of Oil &
Gas
the Upper Vaca Tar as estimated by the CA Dept. of Oil &
Gas
• Upper Vaca Tar is analogous to the Canadian Athabasca
Oil Sands
Oil Sands
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Pleasant Valley - Oxnard, CA
• TIV is the first operator to produce heavy oil from horizontal
wells drilled into the Upper Vaca Tar Formation
wells drilled into the Upper Vaca Tar Formation
• Maximum recovery up to 60% of OOIP will require
deployment of latest Canadian technologies, such as Steam-
Assisted, Gravity-Drainage (SAGD)
deployment of latest Canadian technologies, such as Steam-
Assisted, Gravity-Drainage (SAGD)
• SAGD Pilot is planned for second half of 2011
• TIV Ownership: 25.00% Working Interest (WI) and 18.75%
Net Revenue Interest (NRI) + small ORRI’s
Net Revenue Interest (NRI) + small ORRI’s
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Steam Assisted Gravity Drainage Diagram
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Recovery Factor
75%
65%
70%
20 to 60%
250’
100°F
Vaca Tar Sands vs. Canada’s Oil Sands
Claflin - Bakersfield, CA
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Claflin
• 2.0 MMB net proved reserves (SEC); 16° API gravity
• 22 Wells to be drilled and equipped during 2011
• Exit rate at year-end 2011 estimated at 800 BOPD
• Peak production is estimated at 1,200 BOPD in 2012
• $8.9 Million of average annual net operating profit for
first three years
first three years
• TIV Ownership: 100% Working Interest (WI) and
87.5% Net Revenue Interest (NRI)
87.5% Net Revenue Interest (NRI)
• TIV has acquired the Brea lease, a similar adjoining
property to develop in 2012
property to develop in 2012
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Claflin 3-D Seismic Area of 3-D 1.5 sq-miles
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Initial 6
Wells
Wells
Index Map
Producing wells
New Development
Wells
Future Wells
Claflin Development
Significant Cost Reductions
• Reduced annualized G&A costs over $1 Million
• Salary and Benefit Expense reduced 18% for 2011:
• Eliminated five positions
• Outsourced IT
• Reduced other contract services
• Potential to reduce Pleasant Valley production costs per
barrel by 20% with increased volumes and other cost
reductions in 2011
barrel by 20% with increased volumes and other cost
reductions in 2011
• Potential to reduce Claflin production costs per barrel by
50% with increased volumes from new wells in 2011
50% with increased volumes from new wells in 2011
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Alaska Mineral Properties
Fairbanks
Richardson
Shorty Creek
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Shorty Creek
• Shorty Creek is a potential world-class porphyry deposit
• Contiguous to ITH’s Livengood property containing 13.3
Million oz of gold resource at 0.5 grams/ton cut-off (heap
leach quality)
Million oz of gold resource at 0.5 grams/ton cut-off (heap
leach quality)
• Asarco had multiple intercepts during 1988-89 program
• Drilled 20 holes, eight had gold intercepts ranging from 0.53 grams
gold /ton up to 4.5 grams gold/ton
gold /ton up to 4.5 grams gold/ton
• Six anomalies have been identified for further exploration
work in the 2010 NI 43-101 Report evaluation, which
indicates a large porphyry copper, gold, and molybdenum
system up to eight miles in diameter
work in the 2010 NI 43-101 Report evaluation, which
indicates a large porphyry copper, gold, and molybdenum
system up to eight miles in diameter
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Shorty Creek
Shorty Creek Claims
52 Sq. Miles
International Tower Hill
13.3 million oz gold
at 0.50 grams/ton
Elliot Hwy
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Shorty Creek Exploration
• Drilling and other exploration work on the six
anomalies identified in the NI 43-101 Report
may ultimately require $10-15 Million in new
investment
anomalies identified in the NI 43-101 Report
may ultimately require $10-15 Million in new
investment
• Ideal joint venture opportunity for a major or
mid-tier gold or copper producer to earn a
majority interest
mid-tier gold or copper producer to earn a
majority interest
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Richardson
• Have identified six anomalies with surface geochem sampling,
limited core drilling, and some previous mining
limited core drilling, and some previous mining
• All of the anomalies are associated with the Intrusion Related
Gold Deposit Model
Gold Deposit Model
• NI 43-101 study is in progress and is to be completed by
March 31, 2011
March 31, 2011
• Drilling and other Exploration work on identified anomalies
may require $10-15 MM in new investment
may require $10-15 MM in new investment
• Also a joint venture opportunity for a major or mid-tier gold
producer to earn a majority interest
producer to earn a majority interest
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Richardson
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Richardson Hwy
44 Sq. Mi. of Claims
Shamrock
Bald Knob
Democrat
Hilltop
May’s Pit
Experienced Management Team
Maston Cunningham - President and CEO
• Joined TIV in 2009; became CEO in March 2010
• 22 years with Occidental Petroleum, includes 15 years abroad
• President & GM of Oxy’s subsidiary in Ecuador
John Durbin - CFO
• 30-year career in senior financial positions with Conoco and DuPont
• Extensive international experience
Michael Stark - VP of Exploration
• 12 years with Ivanhoe Energy; most recently as VP of Exploration and Land
• 20 years with Occidental Petroleum, includes 9 years abroad
Jim Kromer - VP of Operations
• 44 years experience in drilling, production, engineering, and operations
• Conoco, Exxon, Amerada Hess, Omni Exploration, Damson Oil, Ely, Stream Energy, Matris
Exploration, and Delta Petroleum
Exploration, and Delta Petroleum
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Key Accomplishments in 2010
• Closed a $5.0 million sale of common stock in a registered
direct offering with institutional investors in April 2010
direct offering with institutional investors in April 2010
• Completed artificial lift installations for all seven horizontal
oil wells producing at Oxnard
oil wells producing at Oxnard
• Implemented expanded 30-day steam cycles at Oxnard
• Re-activated production on four existing oil wells at Claflin
• Formed an Advisory Committee with partners who own or
control a majority interest of the TVC OPUS 1 Drilling
Program, L.P., to align interests with TIV for development
of Pleasant Valley oil sands project
control a majority interest of the TVC OPUS 1 Drilling
Program, L.P., to align interests with TIV for development
of Pleasant Valley oil sands project
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Key Accomplishments in 2010
• Reorganized to focus on oil and gas production; developed
plan to monetize Alaskan properties:
plan to monetize Alaskan properties:
• Completed an NI 43-101 Report on Shorty Creek
• Opened virtual data room for Shorty Creek and Richardson
• Closed $2.5 MM sale of Admiral Calder calcium carbonate
property
property
• Built a reservoir model/simulator for PV oil sands project
• Hired a senior operations engineer with SAGD experience
for Pleasant Valley oil sands project
for Pleasant Valley oil sands project
• Cancelled warrants from April 2010 registered direct
offering to improve TIV’s capital structure
offering to improve TIV’s capital structure
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Where We Are Going in 2011?
• Increase daily gross oil production from 300 to 1,000
barrels by year-end 2011
barrels by year-end 2011
• Increase production at Claflin and Pleasant Valley
• Initiate first SAGD oil sands production in California
• Drill up to 22 new wells at Claflin
• Reach agreement with OPUS partnership to better align
interests with TIV for Oxnard oil sands development
interests with TIV for Oxnard oil sands development
• Secure an earn-in agreement with an established industry
partner to prove up gold and other minerals on one of the
Alaskan properties
partner to prove up gold and other minerals on one of the
Alaskan properties
• Achieve breakeven cash flow from operations by year-end
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TIV Valuation Metrics
Total Reserves 10.0
5.5 $110.3
$2.01
5.5 $110.3
$2.01
*NPV 10% Values on 2010 SEC Based Reserves
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$MM $/share Market Cap: 3-15-11 Closing Price $26.4 $0.48 Risked Risk Adjusted Net Asset Valuation*: MMBO MMBO $MM $/share Proved Reserves: Claflin-Brea 2.1 2.1 $35.2 $0.64 Oxnard 1.0 1.0 $30.1 $0.55 Probable Reserves: Claflin-Brea 1.7 .9 $11.8 $0.21 Oxnard .7 .4 $10.7 $0.19 Possible Reserves: Oxnard 4.5 1.1 $22.5 $0.41 Total Reserves 10.0 5.5 $110.3 $2.01 *NPV 10% Values on 2010 SEC Based Reserves
TIV Valuation Metrics
• TIV’s current $26.4 MM Market Cap represents:
o 25% discount to Claflin-Brea Proved Reserves
o 60% discount to Total Proved Reserves
o 70% discount % to Total Proved & Probable Reserves
o 75% discount to Total Proved, Probable & Possible Reserves
• Market Cap does not appear to reflect any upside value for:
o Higher Current 2011 Oil Prices vs. 2010
o Monetization of Shorty Creek & Richardson Gold Projects
o Resolution of litigation related to one property at Oxnard (3.4 MMBO
net contingent resources)
net contingent resources)
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BLM Oil and Gas Lease Auction
Tops $1.4 Million*
Tops $1.4 Million*
• Six oil and gas lease parcels in Kern County were
auctioned for a total of $1,479,093.50, including
administrative fees, by the Bureau of Land
Management’s Bakersfield Field Office Wednesday.
auctioned for a total of $1,479,093.50, including
administrative fees, by the Bureau of Land
Management’s Bakersfield Field Office Wednesday.
• Vintage Production California, Bakersfield, paid the
highest price per acre $2,000, and also paid the highest
total bid price for one parcel, $1,008,000.
highest price per acre $2,000, and also paid the highest
total bid price for one parcel, $1,008,000.
*Source: BLM News Release 3-10-2011
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