----

**Tri-Valley      Corporation**

**                               Delaware**
**84-0617433**

**4550      California Avenue, Suite 600, Bakersfield, California      93309**

**(661)      864-0500**

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|                     |                                                                      | Page                                                    |   |
|--------------------------|---------------------------------------------------------------------------|---------------------------------------------------------|--------|
|                     |                                                                      |                                                    |   |
| PART                I -  | FINANCIAL                INFORMATION                                      |          3 |   |
|                     |                                                                      |                                                    |   |
| Item                1.   | Consolidated                Financial Statements                          |          3 |   |
|                     |                                                                      |                                                    |   |
| Item                2.   | Management's                Discussion and Analysis of Financial          |                                                    |   |
|                     | Condition                and Results of Operations                        |        14            |   |
|                     |                                                                      |                                                    |   |
| Item                3.   | Quantitative                and Qualitative Disclosures about Market Risk |        18            |   |
|                     |                                                                      |                                                    |   |
| Item                4.   | Controls                and Procedures                                    |        18            |   |
|                     |                                                                      |                                                    |   |
| PART                II - | OTHER                INFORMATION                                          |        19            |   |
|                     |                                                                      |                                                    |   |
| Item                1A.  | Risk                Factors                                               |        19            |   |
|                     |                                                                      |                                                    |   |
| Item                2.   | Unregistered                Sales of Equity Securities                    |        19            |   |
|                     |                                                                      |                                                    |   |
| Item                6.   | Exhibits                                                                  |        19            |   |
|                     |                                                                      |                                                    |   |
| SIGNATURES               |                                                                      |        19            |   |
|                     |                                                                      |                                                    |   |

----

**Part      I - FINANCIAL INFORMATION**

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      BALANCE SHEETS**

**ASSETS**

|                                               |   | September                30, |       |   | December                31, |   |
|----------------------------------------------------|--------|------------------------------|------------|--------|-----------------------------|--------|
|                                               |   | 2007                         |       |   | 2006                        |   |
|                                               |   | (Unaudited)                  |       |   | (Audited)                   |   |
|                                               |   |                         |       |   |                        |   |
| Current                assets                      |   |                         |       |   |                        |   |
| Cash                                               |   | $                            | 12,513,051 |   |                        | $      | 15,598,215 |   |
| Accounts                receivable, trade          |   |                         | 333,171    |   |                        |   | 377,278 |   |
| Prepaid                expenses                    |   |                         | 551,768    |   |                        |   | 42,529 |   |
|                                               |   |                         |       |   |                        |   |   |   |
| Total                current assets                |   |                         | 13,397,990 |   |                        |   | 16,018,022 |   |
|                                               |   |                         |       |   |                        |   |   |   |
| Property                and equipment, net         |   |                         |       |   |                        |   |   |   |
| Proved                properties                   |   |                         | 1,325,667  |   |                        |   | 1,407,925 |   |
| Unproved                properties                 |   |                         | 2,534,969  |   |                        |   | 2,792,340 |   |
| Rigs                                               |   |                         | 6,564,809  |   |                        |   | 5,371,593 |   |
| Other                property and equipment        |   |                         | 4,121,296  |   |                        |   | 2,504,185 |   |
|                                               |   |                         |       |   |                        |   |   |   |
| Total                property and equipment, net   |   |                         | 14,546,741 |   |                        |   | 12,076,043 |   |
|                                               |   |                         |       |   |                        |   |   |   |
| Other                assets                        |   |                         |       |   |                        |   |   |   |
| Deposits                                           |   |                         | 159,833    |   |                        |   | 309,833 |   |
| Investments                in partnerships         |   |                         | 17,400     |   |                        |   | 17,400 |   |
| Investment                in marketable securities |   |                         | 370,000    |   |                        |   | - |   |
| Goodwill                                           |   |                         | 212,414    |   |                        |   | 212,414 |   |
| Other                                              |   |                         | 20,413     |   |                        |   | 20,413 |   |
|                                               |   |                         |       |   |                        |   |   |   |
| Total                other assets                  |   |                         | 780,060    |   |                        |   | 560,060 |   |
|                                               |   |                         |       |   |                        |   |   |   |
| **Total                assets**                    |   | $                            | 28,724,791 |   |                        | $      | 28,654,125 |   |

----

**LIABILITIES      AND STOCKHOLDERS' EQUITY**

|                                                                                                                                                  |   | September                30, |        |   | December                31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|--------|-----------------------------|--------|
|                                                                                                                                                  |   | 2007                         |        |   | 2006                        |   |
|                                                                                                                                                  |   | (Unaudited)                  |        |   | (Audited)                   |   |
| Current                liabilities                                                                                                                    |   |                         |        |   |                        |   |
| Notes                payable                                                                                                                          |   | $                            | 352,958     |   |                        | $      | 619,069 |   |
| Notes                payable – related parties                                                                                                  |   |                         | 54,182      |   |                        |   | 501,036 |   |
| Accounts                payable and accrued expenses                                                                                                  |   |                         | 4,837,587   |   |                        |   | 2,237,116 |   |
| Amounts                payable to joint venture participants                                                                                          |   |                         | 180,346     |   |                        |   | 280,815 |   |
| Advances                from joint venture participants, net                                                                                          |   |                         | 6,321,228   |   |                        |   | 5,408,909 |   |
|                                                                                                                                                  |   |                         |        |   |                        |   |   |   |
| Total                current liabilities                                                                                                              |   |                         | 11,746,301  |   |                        |   | 9,046,945 |   |
|                                                                                                                                                  |   |                         |        |   |                        |   |   |   |
| Non-Current                Liabilities                                                                                                                |   |                         |        |   |                        |   |   |   |
| Asset                retirement obligation                                                                                                            |   |                         | 234,714     |   |                        |   | 216,714 |   |
| Long-term                portion of notes payable – related parties                                                                             |   |                         | 657,925     |   |                        |   | 698,963 |   |
| Long-term                portion of notes payable                                                                                                     |   |                         | 1,774,514   |   |                        |   | 2,047,885 |   |
|                                                                                                                                                  |   |                         |        |   |                        |   |   |   |
| Total                non-current liabilities                                                                                                          |   |                         | 2,667,153   |   |                        |   | 2,963,562 |   |
|                                                                                                                                                  |   |                         |        |   |                        |   |   |   |
| Total                liabilities                                                                                                                      |   |                         | 14,413,454  |   |                        |   | 12,010,507 |   |
|                                                                                                                                                  |   |                         |        |   |                        |   |   |   |
| Stockholders'                equity                                                                                                                   |   |                         |        |   |                        |   |   |   |
| Common                stock, $.001 par value; 100,000,000 shares                                                                                      |   |                         |        |   |                        |   |   |   |
| authorized;                24,707,684 and 23,546,655 issued and                                                                                       |   |                         |        |   |                        |   |   |   |
| outstanding                at September 30, 2007, and December 31,                                                                                    |   |                         |        |   |                        |   |   |   |
| 2006,                respectively                                                                                                                     |   |                         | 24,567      |   |                        |   | 23,407 |   |
| Less:                common stock in treasury, at cost,                                                                                               |   |                         |        |   |                        |   |   |   |
| 100,025                shares                                                                                                                         |   |                         | (13,370     | )      |                        |   | (13,370 | ) |
| Capital                in excess of par value                                                                                                         |   |                         | 34,978,613  |   |                        |   | 28,692,780 |   |
| Additional                paid in capital – warrants                                                                                            |   |                         | 905,713     |   |                        |   | 247,313 |   |
| Additional                paid in capital - stock options                                                                                             |   |                         | 1,656,306   |   |                        |   | 1,262,404 |   |
| Additional                paid in capital – Great Valley Drilling Company, LLC and Great Valley                Production Services Company, LLC |   |                         | 2,152,961   |   |                        |   | 5,438,087 |   |
| Accumulated                deficit                                                                                                                    |   |                         | (25,383,453 | )      |                        |   | (19,007,003 | ) |
| Accumulated                other comprehensive income                                                                                                 |   |                         | (10,000     | )      |                        |   | - |   |
|                                                                                                                                                  |   |                         |        |   |                        |   |   |   |
| Total                stockholders' equity                                                                                                             |   |                         | 14,311,337  |   |                        |   | 16,643,618 |   |
|                                                                                                                                                  |   |                         |        |   |                        |   |   |   |
| **Total                liabilities and stockholders’ equity**                                                                                   |   | $                            | 28,724,791  |   |                        | $      | 28,654,125 |   |

----

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

|                                                                                                           |   | For                the Three Months |       |   | For                the Nine Months |   |
|----------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|--------|------------------------------------|--------|
|                                                                                                           |   | Ended                September 30,  |       |   | Ended                September 30, |   |
|                                                                                                           |   | 2007                                |       |   | 2006                               |   |   | 2007 |   |   | 2006 |   |
| Revenues                                                                                                       |   |                                |       |   |                               |   |   |   |   |   |   |   |
| Sale                of oil and gas                                                                             |   | $                                   | 204,699    |   |                               | $      | 268,385 |   |   | $ | 536,900 |   |   | $ | 878,362 |   |
| Rig                income                                                                                      |   |                                | 266,404    |   |                               |   | - |   |   |   | 2,077,273 |   |   |   | - |   |
| Drilling                & Development                                                                      |   |                                | 3,285,227  |   |                               |   | 900,000 |   |   |   | 3,285,227 |   |   |   | 1,459,556 |   |
| Other                income                                                                                    |   |                                | 156,260    |   |                               |   | 46,158 |   |   |   | 829,200 |   |   |   | 150,931 |   |
| Interest                income                                                                                 |   |                                | 61,776     |   |                               |   | 7,663 |   |   |   | 262,083 |   |   |   | 19,600 |   |
|    Total                Revenues                                                                |   |                                | 3,974,366  |   |                               |   | 1,222,206 |   |   |   | 6,990,683 |   |   |   | 2,508,449 |   |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Costs                and expenses                                                                              |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Oil                and gas lease expense                                                                       |   |                                | 56,352     |   |                               |   | 54,395 |   |   |   | 260,845 |   |   |   | 157,157 |   |
| Mining                exploration expenses                                                                     |   |                                | 61,058     |   |                               |   | 158,718 |   |   |   | 174,210 |   |   |   | 436,611 |   |
| Drilling                and development                                                                        |   |                                | 1,890,199  |   |                               |   | 344,082 |   |   |   | 2,748,288 |   |   |   | 813,491 |   |
| Rig                operations                                                                                  |   |                                | 179,896    |   |                               |   | 514,049 |   |   |   | 959,904 |   |   |   | 514,049 |   |
| Depletion,                depreciation and amortization                                                        |   |                                | 253,745    |   |                               |   | 176,525 |   |   |   | 740,062 |   |   |   | 399,269 |   |
| Interest                                                                                                       |   |                                | 69,555     |   |                               |   | 91,042 |   |   |   | 218,221 |   |   |   | 271,410 |   |
| Impairment                loss                                                                                 |   |                                | 229,569    |   |                               |   | - |   |   |   | 476,431 |   |   |   | 458,564 |   |
| General                and administrative                                                                      |   |                                | 2,560,953  |   |                               |   | 1,362,241 |   |   |   | 7,789,171 |   |   |   | 3,989,520 |   |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Total                costs and expenses                                                                        |   |                                | 5,301,327  |   |                               |   | 2,701,052 |   |   |   | 13,367,132 |   |   |   | 7,040,071 |   |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Loss                from continuing operations, before income taxes and discontinued                operations |   |                                | (1,326,961 | )      |                               |   | (1,478,846 | ) |   |   | (6,376,449 | ) |   |   | (4,531,622 | ) |
| Tax                provision                                                                                   |   |                                | -          |   |                               |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Loss                from continuing operations, before  discontinued                                 |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|     operations                                                                             |   |                                | (1,326,961 | )      |                               |   | (1,478,846 | ) |   |   | (6,376,449 | ) |   |   | (4,531,622 | ) |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Loss                from discontinued operations                                                               |   |                                | -          |   |                               |   | (1,194,352 | ) |   |   | - |   |   |   | (4,445,862 | ) |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income (Loss)                                                                               |   | $                                   | (1,326,961 | )      |                               | $      | (2,673,198 | ) |   | $ | (6,376,449 | ) |   | $ | (8,977,484 | ) |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Basic                net loss per share:                                                                       |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Loss                from continuing operations                                                                 |   | $                                   | (.05       | )      |                               | $      | (.06 | ) |   | $ | (.26 | ) |   | $ | (.20 | ) |
| Income                (loss) from discontinued operations, net                                                 |   | $                                   | -          |   |                               | $      | (.05 | ) |   | $ | - |   |   | $ | (.19 | ) |
| Basic                loss per common share                                                                     |   | $                                   | (.05       | )      |                               | $      | (.11 | ) |   | $ | (.26 | ) |   | $ | (.39 | ) |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average number of shares                                                               |   |                                | 24,667,768 |   |                               |   | 23,285,921 |   |   |   | 24,692,750 |   |   |   | 23,296,411 |   |
|                                                                                                           |   |                                |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Potentially                dilutive shares outstanding                                                         |   |                                | 28,039,242 |   |                               |   | 26,170,432 |   |   |   | 28,061,268 |   |   |   | 26,166,613 |   |

----

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                             |   | For                the Nine Months |        |
|----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-------------|
|                                                                                                                             |   | Ended                September 30, |        |
|                                                                                                                             |   | 2007                               |        |   | 2006 |   |
| Cash                Flows from Operating Activities                                                                              |   |                               |        |   |   |   |
| Net                loss                                                                                                          |   | $                                  | (6,376,449  | ) |   | $ | (8,977,484 | ) |
| Loss                from discontinued operations                                                                                 |   |                               | -           |   |   |   | (4,445,862 | ) |
| Loss                from continuing operations                                                                                   |   | $                                  | (6,376,449  | ) |   |   | (4,531,622 | ) |
|                                                                                                                             |   |                               |        |   |   |   |   |   |
| Adjustments                to reconcile net income to net cash used from operating                activities:                    |   |                               |        |   |   |   |   |   |
| Depreciation,                depletion and amortization                                                                          |   |                               | 740,062     |   |   |   | 895,735 |   |
| Non-cash                stock transactions                                                                                       |   |                               | -           |   |   |   | 143,043 |   |
| Impairment,                dry hole and other disposals of property                                                              |   |                               | 476,431     |   |   |   | 458,564 |   |
| Stock                options                                                                                                     |   |                               | 688,564     |   |   |   | 926,180 |   |
| Warrants                                                                                                                         |   |                               | 316,852     |   |   |   | - |   |
| Changes                in operating capital:                                                                                     |   |                               |        |   |   |   |   |   |
| Prepaids-(increase)                decrease                                                                                      |   |                               | (509,239    | ) |   |   | - |   |
| Deposits-(increase)                decrease                                                                                      |   |                               | 150,000     |   |   |   | (87,059 | ) |
| Accounts                receivable-(increase) decrease                                                                           |   |                               | 44,106      |   |   |   | (224,057 | ) |
| Trade                accounts payable-increase (decrease)                                                                        |   |                               | 1,887,506   |   |   |   | 1,969,495 |   |
| Accounts                payable to joint venture                                                                                 |   |                               |        |   |   |   |   |   |
| participants                and related parties-increase (decrease)                                                              |   |                               | (100,469    | ) |   |   | 282,330 |   |
| Advances                from joint venture participants – increase (decrease)                                              |   |                               | 912,319     |   |   |   | (843,528 | ) |
|                                                                                                                             |   |                               |        |   |   |   |   |   |
| Net                cash provided (used in) continuing operations                                                                 |   |                               | (1,770,317  | ) |   |   | (1,153,962 | ) |
| Net                cash provided by (used in) discontinued operations                                                            |   |                               | -           |   |   |   | (4,302,819 | ) |
| **Net                cash provided (used) by operating activities**                                                              |   |                               | (1,770,317  | ) |   |   | (5,456,781 | ) |
|                                                                                                                             |   |                               |        |   |   |   |   |   |
| Cash                Flows from Investing Activities:                                                                             |   |                               |        |   |   |   |   |   |
| Capital                expenditures                                                                                              |   |                               | (3,669,191  | ) |   |   | (3,152,217 | ) |
| Investment                in marketable securities                                                                               |   |                               | (370,000    | ) |   |   | - |   |
| Unrealized              gain (loss) in marketable securities                             |   |                               | (10,000)    |   |   |   | - |   |
| Repurchase              of minority interest in GVDC/GVPS                                                              |   |                               | (3,285,126) |   |   |   | - |   |
| Net                cash provided by (used in) continuing operations                                                              |   |                               | (7,334,317  | ) |   |   | (1,040,970 | ) |
| Net                cash provided by (used in) discontinued operations                                                            |   |                               | -           |   |   |   | (2,111,247 | ) |
|                                                                                                                             |   |                               |        |   |   |   |   |   |
| **Net                Cash Provided (Used) by Investing Activities**                                                              |   |                               | (7,334,317  | ) |   |   | (3,152,217 | ) |
|                                                                                                                             |   |                               |        |   |   |   |   |   |
| Cash                Flows from Financing Activities                                                                              |   |                               |        |   |   |   |   |   |
| Proceeds                from long-term debt                                                                                      |   |                               | -           |   |   |   | 1,379,780 |   |
| Principal                payments on long-term debt                                                                              |   |                               | (314,409    | ) |   |   | (821,940 | ) |
| Net                proceeds from additional paid in capital – stock options                                                |   |                               | 358,548     |   |   |   | - |   |
| Net                proceeds from additional paid in capital – warrants                                                     |   |                               | 658,400     |   |   |   | - |   |
| Net                proceeds from additional paid in capital – Great Valley Drilling/Great                Valley Production |   |                               |        |   |   |   | 5,425,120 |   |
| Stock                issuance costs                                                                                              |   |                               | (649,900    | ) |   |   | - |   |
| Proceeds                from issuance of common stock                                                                            |   |                               | 5,966,831   |   |   |   | 1,154,134 |   |
|                                                                                                                             |   |                               |        |   |   |   |   |   |
| Net                cash provided by (used in) continuing operations                                                              |   |                               | 6,019,470   |   |   |   | 7,137,094 |   |
| **Net                Cash Provided (Used) by Financing Activities**                                                              |   |                               | 6,019,470   |   |   |   | 7,137,094 |   |

----

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS  (Continued)**

| **Net                Decrease in Cash and Cash Equivalents**    |   |   | (3,085,164 | )      |   |   | (1,471,904 | )      |
|-----------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
| Cash                and Cash Equivalents at Beginning of Period |   |   | 15,598,215 |   |   |   | 4,876,921  |   |
|                                                            |   |   |       |   |   |   |       |   |
| Cash                and Cash Equivalents at End of Period       |   | $      | 12,513,051 |   |   | $      | 3,405,017  |   |
|                                                            |   |   |       |   |   |   |       |   |
| Supplemental                Information:                        |   |   |       |   |   |   |       |   |
| Cash                paid for interest                           |   | $      | 218,221    |   |   | $      | 580,115    |   |

----

**TRI-VALLEY      CORPORATION**

**NOTES      TO CONDENSED FINANCIAL STATEMENTS**

**FOR      THE NINE MONTHS ENDED**

**September      30, 2007 and 2006**

**NOTE      1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION**

| ·   | Tri-Valley                Oil & Gas Company (“TVOG”) operates the oil & gas                activities.  TVOG derives the majority of its revenue from oil                and gas drilling and turnkey development. TVOG primarily generates                its own                exploration prospects from its internal database, and also screens                prospects from other geologists and companies.  TVOG generates                these geological “plays” within a certain geographic area of mutual                interest.  The prospect is then presented to potential                co-ventures.  The company deals with both accredited individual                investors and energy industry companies.  TVOG serves as the                operator of these co-ventures. TVOG operates both the oil and gas                production segment and the drilling and development segment of our                business lines. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Select                Resources Corporation (“Select”) was created in late 2004 to manage, grow                and operate Tri-Valley’s mineral interests. Select operates the minerals                segment of our business lines. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Great                Valley Production Services, LLC, (“GVPS”) was formed in 2006 to operate                oil production services, well work over and drilling rigs, primarily                for                TVOG.  However, from time to time TVOG may contract various                units to third parties when not immediately needed for TVOG projects.                Tri-Valley has retained 64% of the ownership interest and the remainder                is                owned by private parties.  Operations began in the third quarter                of 2006. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Great                Valley Drilling Company, LLC (“GVDC”) was formed in 2006 to operate oil                drilling rigs, primarily in Nevada where Tri-Valley has 17,000 acres                of                prospective oil leases.  However, because rig availability is                scarce in Nevada, GVDC has an opportunity to do contract drilling                for                third parties in both petroleum and geothermal projects.  For                the time being GVDC, whose operation began in the first quarter of                2007,                expects its primary activity will be contract drilling for third                parties.                TVC exercised its option to buy back the minority interest in GVDC                in May                2007 and the buy back was finalized by the end of June 2007. The                cost to                buy back the minority interest was $1,319,040.  GVDC is now 100%                owned by TVC. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Tri-Valley                Power Corporation is inactive at the present                time. |
|--------------------|---------------------------------------------------------------------------------------------|

----

**NOTE      2 - PER SHARE COMPUTATIONS**

**NOTE      3 – SUMMARY OF RECENTLY ISSUED ACCOUNTING PRONOUCEMENTS**

*“Accounting for Uncertainty in Income Taxes*

*“Fair Value      Measurements.”*

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements*

*The Fair Value Option for      Financial Assets and Financial Liabilities*

----

**NOTE      3 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)**

**NOTE      4 - INVESTMENT**

*Accounting for Certain      Investments in Debt and Equity Securities*

|                                | September                30, 2007 |
|-------------------------------------|-----------------------------------|
|                                |                              |
| Net                cost of equities | $                380,000          |
| Unrealized                Losses    | (10,000)                          |
|                                |                              |
| Fair                Market Value    | $                370,000          |
|                                |                              |

*“Foreign Currency Translation*

**NOTE      5 - CHANGES IN SECURITIES**

----

**NOTE      5 - CHANGES IN SECURITIES (Continued)**

**NOTE      6 – STOCK BASED COMPENSATION EXPENSE**

**NOTE      7 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS**

*“Disclosure      about Segments of an Enterprise and Related Information.”*

| o   | *Oil                and gas operations* include our share of revenues from oil and gas                wells on which TVOG serves as operator, royalty income and production                revenue from other partnerships in which we have operating or                non-operating interests.  It also includes revenues for                consulting services for oil and gas related                activities. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | *Rig                operations* began in 2006, when the Company acquired drilling rigs and                began operating them through subsidiaries GVPS and GVDC.  Rig                operations include income from rental of oil field                equipment. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | *Minerals*                include the Company’s mining and mineral prospects and operations, and                expenses associated with those operations.  In 2007 and 2006,                the Company recorded minerals revenue from consulting services performed                for the mining and minerals industry, which are included on the operating                statement as other income. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | *Drilling                and development* includes revenues received from oil and gas drilling                and development operations performed for joint venture partners,                including                the Opus-I drilling                partnership. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**NOTE      7 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS      (Continued)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Nine                Months Ended September 30, 2007 |       |   | Nine                Months Ended September 30, 2006 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|--------|-----------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |
| **Sales                and Other Operating Revenues**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                |       |   |                                                |   |
|    Oil                & Gas 1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                                                   | 894,004    |   |                                                | $      | 1,005,893 |   |
|    Rigs                Operations 2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                | 2,213,051  |   |                                                |   | - |   |
|    Minerals                3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                | 598,401    |   |                                                |   | 43,000 |   |
|    Drilling                and Development 4                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                | 3,285,227  |   |                                                |   | 1,459,556 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |   |   |
| Consolidated                Sales and Operating Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                | 6,990,683  |   |                                                |   | 2,508,449 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |   |   |
| Numbers                as they correspond to revenue line items as shown on the Statement                of                Operations - Nine months ended September 30, 2007, in thousands of                dollars: 1Sale                of Oil                and Gas 537, Interest income 261, Other income 962Rig                income                2,077, Other income 1363Other                income                597, Interest income 14                Drilling and                Development 3,285   |   |                                                |       |   |                                                |   |   |   |
| **Net                Income (Loss)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |   |   |
|    Oil                & Gas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                                   | (5,520,298 | )      |                                                | $      | (3,441,374 | ) |
|    Rig                Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                | (1,083,395 | )      |                                                |   | (887,998 | ) |
|    Minerals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                | (309,695   | )      |                                                |   | (5,294,177 | ) |
|    Drilling                and Development                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                | 536,939    |   |                                                |   | 646,065 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |   |   |
| Consolidated                Net Income (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                                                   | (6,376,449 | )      |                                                | $      | (8,977,484 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |   |   |
| **Total                Assets**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                |       |   |                                                |   |   |   |
|    Oil                & Gas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                                   | 18,864,353 |   |                                                | $      | 18,517,488 |   |
|    Rig                Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                | 7,520,820  |   |                                                |   | 7,853,046 |   |
|    Minerals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                | 2,339,618  |   |                                                |   | 2,283,591 |   |
|    Drilling                and Development                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                | -          |   |                                                |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |   |   |
| Consolidated                Total Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                                   | 28,724,791 |   |                                                | $      | 28,654,125 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                |       |   |                                                |   |   |   |

**NOTE      8 – NOTES PAYABLE – RELATED PARTY**

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**Item      2. Management's Discussion and Analysis of Financial Condition and Results      of      Operations**

**Notice      Regarding Forward-Looking Statements**

**Results      of Operations**

|                                    |   | Third                Quarter |   |   | First                Nine Months |   |
|-----------------------------------------|--------|------------------------------|--------|--------|----------------------------------|--------|
|                                    |   | 2007                         |   |   | 2006                             |   |   | 2007 |   |   | 2006 |   |
|                                    |   |                         |   |   |                             |   |   |   |   |   |   |   |
| Oil                and gas              |   | $                            | 301    |   |                             | $      | 310 |   |   | $ | 895 |   |   | $ | 1,006 |   |
| Rig                operations           |   |                         | 269    |   |                             |   | - |   |   |   | 2,213 |   |   |   | - |   |
| Minerals                                |   |                         | 119    |   |                             |   | 12 |   |   |   | 598 |   |   |   | 43 |   |
| Drilling                and development |   |                         | 3,285  |   |                             |   | 900 |   |   |   | 3,285 |   |   |   | 1,459 |   |
|                                    |   |                         |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Total                revenues           |   | $                            | 3,974  |   |                             | $      | 1,222 |   |   | $ |  6,991 |   |   | $ | 2,508 |   |

*Oil      and Gas*

*Rig      Operations*

*Minerals      Activities*

----

*Drilling      and Development Operations*

|                                         | Quarter                Ended | Quarter                Ended |
|----------------------------------------------|------------------------------|------------------------------|
|                                         |  9/30/07                | 9/30/07                      |
| Oil                and gas                   | $                (1,689)     | $                (1,380)     |
| Rig                operations                | (874)                   | (570)                   |
| Minerals                                     | (159)                        | (1,446)                      |
| Drilling                and development      | 1,395                        | 723                          |
|                                         |                         |                         |
| Total                operating income (loss) | $                (1,327)     | $                (2,673)     |

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*See Note 4 to Consolidated Financial      Statements.*

**Item      3.     Quantitative and Qualitative Disclosures about      Market Risk**

**Item      4.     Controls and Procedures**

**PART      II - OTHER INFORMATION**

**Item      1A.  Risk Factors**

**Item      2.    Unregistered Sales of Equity      Securities**

**Item      6.    Exhibits**

| 3.1 | Conformed                bylaws of the issuer, including amendment to Article III, Section                7,                adopted at 2007 stockholders’meeting |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Signatures**

**TRI-VALLEY      CORPORATION**

*/s/F.      Lynn Blystone*

*/s/      Arthur M. Evans*

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