I wanted to provide a periodic update to all Tri-Valley shareholders regarding Operation Catapult and the properties/projects associated with Operation Catapult, as well as provide an update on the status of Tri-Valley’s current production and reserves.

Operation Catapult

We remain significantly ahead of schedule with our goals of having a producing capacity of 500 bopd (barrels of oil per day) by the end of the first quarter and at least 1000 bopd by the end of the second quarter 2008.  It should be noted that due to steam/production cycles and phasing in of refurbished steam generators, actual production per day and sales will be lower initially.  However, the aforementioned production capacity now exists and will translate into actual increasing production revenue as we get wells up and running.

Pleasant Valley

Great News! As a result of relentless and extremely patient efforts over the last three years by Joe Kandle and our transactional law firm of Luna and Glushon, we recently added another 120 acres of adjoining lands containing 20 idle vertical well bores.  Tri-Valley intends to re-work these to put back on production as many as possible while it readies a horizontal well bore campaign on that property as well.  For those of you familiar with the current Pleasant Valley site, it is the 120 acres just across the street south and west of our Hunsucker lease drill site.  This acquisition will ultimately add millions of barrels of production and reserves to Tri-Valley’s account.  This is a major victory for Opus and Tri-Valley shareholder interests! 

Tri-Valley is finalizing permits to drill additional wells this year at Pleasant Valley, and believes its present holdings could accommodate numerous horizontal well bores just for the Vaca Tar Sand formation alone plus additional vertical wells for deeper targets.

PV-1 has completed its 2^nd steam cycle with a 25% increase in steam volume compared to cycle #1.  As expected, the well was returned to production at significantly higher flow rates and for an extended flow period.  In lieu of putting the well immediately on rod pump, we made a technical decision to temporarily re-steam the well on a 3^rd cycle to accelerate heating the reservoir for the most ideal field-wide and long-term result.  PV-1 is now on soak.

PV-2 (vertical deep test well) is currently off rod pump after adding several uphole perforation intervals.  Test holes in the casing are now being patched to improve pumping efficiency. 

PV-3 is currently on steam cycle #1 with production to follow shortly.

PV-4 has completed its initial steam cycle with our 12.5mm Btu generator and is now on pump.  The well has flowed back at favorable rates commensurate with PV-1’s first steam cycle.

PV-5 and PV-6 are completed with thermal equipment and ready for steam cycle #1.  

PV-7 and PV-8, the final wells in this segment of the drilling campaign on the Hunsucker Lease, have been drilled and are awaiting thermal completion before commencing steam cycle #1.

To enhance field development economics and decrease our lifting cost, a diluent source* has been contracted and first deliveries began in April.  This virtually eliminates and/or minimizes the costly diesel purchases for diluent use and also decreases the volume required due to the 83-85 degree API NGL (Natural Gas Liquids) as compared to 40 degree API diesel or gas condensates. 

We have finalized the purchase of additional emission credits.  This will allow additional Pleasant Valley work to commence, and it will provide much greater steam generator utilization flexibility.

* The heavy, thick Vaca tar sand oil requires the addition of light oil to thin out and dilute the oil for transport and to meet shipping specs. 

Moffat Ranch

Moffat 48X:  After remediating a problem that was producing water and temporarily killing the gas production, this well was successfully returned to production at or near 1,000 mcf per day.  A state-of-the-art technique was employed to repair this well quickly and cost-effectively. All production facilities and a sales meter run have been efficiently installed and commissioned on the 48X-7 location, which served to centralize our operations and eliminate the need to lease offset land. 

Moffat 8-12: We are continuing our attempt to restore sand-free gas production after cleaning out the well and installing a sand screen.  We anticipate production from this well in May.  A fracture stimulation may follow pending production results.

Moffat #2: Wellwork commenced on this well in early April to restore production.  A fracture stimulation may follow pending production results.

Moffat 2-7-1: The re-entry of this abandoned wellbore will commence in early May.

Moffat 17-7:  A follow-up new drill well has been permitted and the location has been prepared.  This 2^nd new drill well will likely be drilled in the latter stages of 2008.

Temblor West

D352:  The second steam cycle on this well and first steam cycle of recently added uphole perforations has been completed with our LW-22 generator.  The well will now be re-steamed again to add more heat.  The LW-22 generator will then be moved to D344 for cyclic steaming pending favorable results from D352.  An alternate plan is to move the LW-22 steam generator to Pleasant Valley.

D188:  This well was perforated uphole in the Etchegoin sand and is currently producing greater than 40 bopd.  Unfortunately, the well produced excessive sand and an inner liner was installed for mitigation. We have now replaced the inner liner with smaller slots to restore full-time production from this well.  These results support adding perfs in D540 in the near term.  If we can control the sand, it represents potential Etchegoin primary production.

Waterflood:  Incremental production from the Etchegoin waterflood pilot test has been less than expectations.  However, we are planning injector modifications to ensure focused Etchegoin water injection for prudent evaluation of waterflood potential in the field. We have agreement from an offset Operator to provide water if needed to expand the waterflood.  This is a crucial accomplishment.

Temblor East

Production:  Shields & Arms wellwork resulted in a 2.5 fold increase in field offtake during the 1^st quarter of 2008.

Overall Temblor Production

With D188 restored to full time production, overall Temblor production (East and West) now exceeds the 100 bopd target.  This may be further enhanced by Diatomite steam and Etchegoin waterflood response.

2008 Annual Shareholder’s Meeting

When:              Saturday, October 4, 2008

Where:             Double Tree Hotel

633 East Cabrillo Blvd, Santa Barbara, CA  93103

Misc:                A bus tour will be conducted from the hotel to the Pleasant Valley site

Please contact Felicia Todd at (800)579-9314 or ftodd@tri-valleycorp.com regarding questions about the hotel or to reserve a space on the bus tour. 

We are very pleased with our progress and the value that we are adding to Tri-Valley shares.  As we continue moving forward through 2008, we expect more of the same progress and results.  Our increased production, revenues, and cash flows will gradually improve our income statement and balance sheet in the coming quarters, and this will eventually command an institutional following from Wall Street.   I am personally scheduling a number of presentations at broker/investor seminars across the country to raise awareness of the rapidly emerging upside taking place at Tri-Valley as a result of these development programs.

Sincerely,

F. Lynn Blystone