UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q/A
 AMENDMENT
NO. 1 TO
 QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
AND EXCHANGE ACT OF 1934
 
 For
      the quarterly period ended March 31, 2004
    Commission
      File No. 0-6119
 
 **Tri-Valley
Corporation**
 (Exact
name of registrant as specified in its charter)
 
 **Delaware**
    **84-0617433**(State
      or other jurisdiction of
    (I.R.S.
      Employer Identification No.)incorporation
      or organization)
 
 **5555
Business Park South, Suite 200, Bakersfield, California
93309**
 (Address
of principal executive offices)
 
 **(661)
864-0500**
 (Registrant's
telephone number, including area code)
 
 Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
 
 
 The
number of shares of Registrant's common stock outstanding at March 31, 2004 was
20,100,627.
  
  TRI-VALLEY
CORPORATION
 
 INDEX
 PagePART
      I -
    FINANCIAL
      INFORMATION
    3Item
      1.
    Consolidated
      Financial Statements
    3Item
      2.
    Management's
      Discussion and Analysis of FinancialCondition
      and Results of Operations
    8Item
      3.
    Quantitative
      and Qualitative Disclosures About Market Risk
    10Item
      4.
    Controls
      and Procedures
    10PART
      II -
    OTHER
      INFORMATION
    10Item
      1.
    Legal
      Proceedings
    10Item
      2.
    Changes
      in Securities
    10Item
      6.
    Exhibits
      and Reports on Form 8-K
    11SIGNATURES
    
    12
 
  
  **PART
      I -**
    **FINANCIAL
      INFORMATION**
 
 **Item
      1.**
    **Unaudited
      Consolidated Financial
Statements**
 
 **TRI-VALLEY
CORPORATION**
 **CONSOLIDATED
BALANCE SHEETS**
 
 
 **ASSETS**
 
 March
      31, 2004
    Dec.
      31, 2003(Restated)
    (Restated)(Unaudited)
    (Audited)Current
      AssetsCash
    $6,748,258
    $6,006,975Accounts
      receivable, trade
    126,570
    163,825Prepaid
      expenses
    68,029
    12,029Total
      Current Assets
    6,942,857
    6,182,829Property
      and Equipment, Net
    1,523,127
    1,543,121Other
      AssetsDeposits
    372,105
    372,105Investments
      in partnerships
    17,400
    17,400Other
    13,913
    13,913Goodwill
      (net of accumulated amortization of $221,439 at December 31,
      2003)
    212,414
    212,414Total
      Other Assets
    615,832
    615,832Total
      Assets
    $9,081,816
    $8,341,782
 
 The
accompanying notes are an integral part of these condensed financial
statements.
  
  **LIABILITIES
AND SHAREHOLDERS' EQUITY**
 
 March
      31,
      2004
    Dec.
      31, 2003(Restated)
    (Restated)(Unaudited)
    (Audited)CURRENT
      LIABILITIESNotes
      and contracts payable
    $2,425
    $9,985Income
      taxes payable
    -
    39,000Trade
      accounts payable & accrued expenses
    917,070
    685,784Accounts
      payable to joint venture participants
    60,939
    91,275Advances
      from joint venture participants
    5,980,887
    5,647,150Total
      Current Liabilities
    6,961,321
    6,473,194Long-term
      Portion of Notes and Contracts Payable
    11,954
    16,805Total
      Liabilities
    6,973,275
    6,489,999CommitmentsShareholders'
      EquityCommon
      stock, $.001 par value: 100,000,000 shares authorized; 20,100,627 and
      20,097,627 issued and outstanding at March 30, 2004 and Dec. 31, 2003,
      respectively
    20,100
    20,115Less:
      Common stock in treasury, at cost, 100,025 shares
    (13,370)
    (13,370)Capital
      in excess of par value
    9,011,968
    9,010,453Accumulated
      deficit
    (6,910,157)
    (7,165,415)Total
      Shareholders' Equity
    2,108,541
    1,851,783Total
      Liabilities and Shareholders' Equity
    $9,081,816
    $8,341,782
 
 The
accompanying notes are an integral part of these condensed financial
statements.
  
  **TRI-VALLEY
CORPORATION**
 **CONSOLIDATED
STATEMENTS OF OPERATIONS**
 (Unaudited)
 
 For
      the Three MonthsEnded
      March 302004
    2003(restated)RevenuesSale
      of oil and gas
    $227,419
    $266,647Other
      income
    13,493
    6,613Sale
      of oil & gas prospects
    1,145,000
    -0-Interest
      income
    369
    3,520Total
      Revenues
    1,386,281
    276,780Cost
      and ExpensesOil
      and gas lease expense
    18,070
    56,325Mining
      exploration expenses
    38,621
    30,307Project
      geology, geophysics, land & administration
    440,219
    289,019Depletion,
      depreciation and amortization
    7,233
    7,233Interest
    26,292
    713General
      administrative
    600,588
    314,590Total
      Cost and Expenses
    1,131,023
    698,187Net
      Income (Loss)
    $255,258
    $(421,407)Basic
      & Diluted Earnings per Share
    $.01
    $(.02)Weighted
      Average Number of Shares
    20,099,627
    19,731,348
 
 The
accompanying notes are an integral part of these condensed financial
statements.
  
  **TRI-VALLEY
CORPORATION**
 **CONSOLIDATED
STATEMENTS OF CASH FLOWS**
 (Unaudited)
 
 For
      the Three MonthsEnded
      March 31,2004
    2003(restated)
    (unaudited)(unaudited)Cash
      Flows from Operating ActivitiesNet
      profit/(loss)
    $255,258
    $(421,407)Adjustments
      to reconcile net income to net cash used from operating
      activities:Depreciation,
      depletion and amortization
    7,233
    7,233Non-cash
      mining exploration expenseChanges
      in operating capital:Prepaids-(increase)decrease
    (56,000)
    -0-Accounts
      receivable-(increase)decrease
    37,255
    (210,691)Trade
      accounts payable-increase(decrease)
    192,286
    (347,477)Accounts
      payable to joint ventureparticipants
      and related parties-increase(decrease)
    (30,336)
    147,653Advances
      from joint ventureParticipants-increase(decrease)
    333,737
    481,791Net
      Cash Provided/(Used) by Operating Activities
    739,433
    (342,898)Cash
      Flows Provided/(Used) by Investing ActivitiesCapital
      expenditures
    12,761
    (94,649)Cash
      Flows from Financing ActivitiesPrincipal
      payments on long-term debt
    (12,411)
    (16,027)Proceeds
      from issuance of common stock
    1,500
    25,650Net
      Cash Provided/(Used) by Financing Activities
    (10,911)
    9,623Net
      Increase in Cash and Cash Equivalents
    741,283
    (427,924)Cash
      and Cash Equivalents at Beginning of Period
    6,006,975
    1,936,294Cash
      and Cash Equivalents at End of Period
    $6,748,258
    $1,508,370Supplemental
      Information:Cash
      paid for interest
    $26,292
    $713Cash
      paid for taxes
    $4,925
    $5,446
 
 
 The
accompanying notes are an integral part of these condensed financial
statements.
  
  **TRI-VALLEY
CORPORATION**
 **NOTES
TO CONDENSED FINANCIAL STATEMENTS**
 **FOR
THE THREE MONTHS ENDED**
 **March
31, 2004 AND 2003**
 (Unaudited)
 
 **NOTE
1 - BASIS OF PRESENTATION**
 
 Business
and Restatement
 The
financial information included herein is unaudited; however, such information
reflects all adjustments (consisting solely of normal recurring adjustments),
which are, in the opinion of management, necessary for a fair statement of
results for the interim periods. The results of operations for the three-month
period ended March 31, 2004, are not necessarily indicative of the results to be
expected for the full year.
 
 The
accompanying consolidated financial statements do not include footnotes and
certain financial presentations normally required under generally accepted
accounting principles; and, therefore, should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December 31,
2003.
 
 
 **NOTE
2 - RESTATEMENTS OF PRIOR FINANCIAL INFORMATION**
 
 Amendment
No. 1 on Form 10-Q/A of the Company’s quarterly report on Form 10-Q for the
quarter ended March 31, 2004 includes unaudited restated financial information
for the three months ended March 31, 2004 and 2003. The original Form 10-Q was
filed with the Securities and Exchange Commission on May 14, 2004. The purpose
of the Amendment is to restate the Company’s previously reported financial
information for the three months ended March 31, 2004 due to change in revenue
recognition polity relating to turnkey drilling revenue.
 
 The
Company receives monies from third parties who participate in drilling oil and
gas wells and had previously recognized revenue and associated costs when the
drilling began, as long as drilling was completed by close of books based on
accrual accounting, due to the fact that the monies received was nonrefundable.
The Company changed its accounting policy in December 2003 to recognize turnkey
revenue and associated costs when oil or gas well is drilled to a target depth
and/or logged. As the result of this change, drilling revenue and related costs
decreased in the fourth quarter of 2003, and increased in the first quarter of
2004. The Company restated its 2003 financial statements.
 
 The
restatement did not affect the cash flow statements.
  
  **NOTE
2 - RESTATEMENTS OF PRIOR FINANCIAL INFORMATION
(Continued)**
 
 The
effect of the restatement resulting from this accounting policy change is as
follows:
 
 As
      Previously
    
    AsReported
    Adjustments
    Restated
    Reference(unaudited)
    
    (unaudited)Three
      Months Ended March 31, 2004Sales
      of oil and gas prospects
    $
      13,493
    $
      1,131,507
    $
      1,145,000
    [1]Other
      income
    369
    13,493
    13,862**Total
      Revenues**
    **241,281**
    **1,145,000**
    **1,386,281**Mining
      exploration expense
    38,231
    390
    38,621**Cost
      of oil and gas prospects sold**
    **94,432**
    **345,787**
    **440,219****Total
      Cost and Expenses**
    **784,845**
    **346,178**
    **1,131,023****Net
      Loss**
    **(543,564)**
    **798,822**
    **255,258****Basic
      and diluted earnings (loss) per****common
      share and common equivalent**
    **$
      (0.03)**
    **$
      0.04**
    **$
      0.01**As
      of March 31, 2004Prepaid
      expenses
    12,029
    56,000
    68,029
    [2]Total
      Current Assets
    6,886,857
    56,000
    6,942,857Property
      and Equipment, Net
    1,517,520
    5,607
    1,523,127**Total
      Assets**
    **9,020,209**
    **61,607**
    **9,081,816**Accounts
      payable & accrued expenses
    890,679
    26,391
    917,070
    [3]**Total
      Current Liabilities**
    **6,934,930**
    **26,391**
    **6,961,321****Total
      liabilities**
    **6,946,884**
    **26,391**
    **6,973,275****Accumulated
      deficit**
    **(6,945,373)**
    **35,216**
    **(6,910,157)**
    [4]**Total
      Shareholders' Equity**
    **2,073,325**
    **35,216**
    **2,108,541****Total
      Liabilities and Shareholders' Equity**
    **9,020,209**
    **61,607**
    **9,081,816**
 
 The
restatements were due to the following changes:
 
 1.
    Recognition
      of sales related to turnkey drilling of $1,145,000 was deferred from 2003
      to first quarter of 2004 when oil or gas well was drilled to its target
      depth and/or logged.  2.
    The
      adjustment represents capitalization of expenditure previously
      expensed.  3.
    The
      amount represents miscellaneous expenses erroneously omitted from accrual
      in previously reported liabilities  4.
    The
      accumulated deficits were revised to reflect the increase in net turnkey
      drilling revenue.  
  **NOTE
3 - PER SHARE COMPUTATIONS**
 
 Per share
computations are based upon the weighted-average number of common shares
outstanding during each year. Common stock equivalents are not included in the
computations since their effect would be anti-dilutive.
 
 
 **NOTE
4 - RECENT ACCOUNTING PRONOUNCEMENTS**
 
 In July
2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" (SFAS 143). Under SFAS 143, the fair value of a liability for an
asset retirement obligation should be recorded in the period in which it is
incurred. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss if the settled
amount differs from the liability recorded. SFAS 143 is effective for fiscal
years beginning after June 15, 2002. We are currently evaluating this guidance
and have not determined the impact on our financial position, results of
operations, or net cash flows; however, we anticipate these results will be
immaterial.
 
 In June
2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit
or Disposal Activities" (SFAS 146). SFAS 146 addresses the financial accounting
and reporting for costs associated with exit or disposal activities. SFAS 146
states that a liability for a cost associated with an exit or disposal activity
shall be recognized and measured initially at its fair value in the period when
the liability is incurred. A liability is established only when present
obligations to others are determined. SFAS 146 does not apply to costs
associated with the retirement of long-lived assets covered in SFAS 143 (see
above). It applies to a cost associated with an exit activity that does not
involve an entity newly acquired in a business combination or with a disposal
activity covered by SFAS 144 (see above). We will apply SFAS 146 for exit or
disposal activities initiated after December 31, 2002. We are evaluating this
guidance and do not believe that it will have a material impact on our financial
position, results of operations, or net cash flows.
 
 
 **NOTE
5 -**  **MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**  **AND
RESULTS OF OPERATIONS**
 
 Notice
Regarding Forward-Looking Statements
 This
report contains forward-looking statements. The words, "anticipate," "believe,"
"expect," "plan," "intend," "estimate," "project," "could," "may," "foresee,"
and similar expressions are intended to identify forward-looking statements.
These statements include information regarding expected development of the
Company's business, lending activities, relationship with customers, and
development in the oil and gas industry. Should one or more of these risks or
uncertainties occur, or should underlying assumptions prove incorrect, actual
results may vary materially and adversely from those anticipated, believed,
estimated or otherwise indicated.
 
 Petroleum
Activities
 The most
intense activity for Tri-Valley during the first quarter of 2004 was the
anticipated diesel oil frac of the Sunrise-Mayel #2H-Redrill well in the McClure
Shale from 6100' to 6970'. The frac was done on March 7, 2004, and was designed
to input 150,000-lbs of sand utilizing 52,000-gallons of gelled diesel fuel. The
frac job did not go as expected with the well refusing to readily accept the
sand being pumped into it. After inputting only 70,000 lbs. of sand, the
pressure became too high to continue to pump and the job was aborted. Upon
reopening the well to backflow and evaluate, the well showed strange,
non-typical backflow characteristics by not back flowing the sand and diesel
oil. It was soon discovered that the casing itself had obviously failed,
probably right at the beginning of the frac job, and that the frac actually went
out into a shallow zone and was non-effective. Another redrill of this well or
the drilling of another well is currently being studied.
 
 Also,
during the first quarter, an attempt was made to recomplete the Pimental #1-15
into a shallower producing horizon, but the zone tested water. Currently a foam
frac of some even shallower producing sands, which have already produced gas, is
in the planning stages and is expected to occur in the last portion of the
second quarter or early in the third quarter.
 
 A
successful recompletion was done on the Webb Tract #2 into what has become a new
zone discovery for the area, in the Capay Shale interval, testing 350-MDF/D. As
with the Pimental #1-15, a foam frac is scheduled in the last portion of the
second quarter or early in the third quarter.
 
 **NOTE
5 -**  **MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**  **AND
RESULTS OF OPERATIONS (Continued)**
 
 Precious
Metals
 There was
no physical activity this quarter on our Alaska claim block. However, with the
strengthening gold price and gathering support of the investment community to
underwrite gold exploration and production projects, the Company has determined
to pursue the spin-off of its Richardson, Alaska gold project into a new, stand
alone mining company and is interviewing candidates to lead that effort and
organize the management team. The Company believes its stock presently receives
little or no value for its gold project assets and the spin-off would provide
shareholders with stock that is independently valued as a gold company by the
market.
 
 Three
Months Ended March 31, 2004 As Compared With Three Months Ended March 31,
2003
 
 In the
quarter ended March 31, 2004, revenue was $1,386,281 compared to $276,780 for
the same quarter in 2003. This increase was due to turnkey drilling revenue
recognized when wells drilled to the targeted depth.
 
 Three
Months Ended March 31, 2004 As Compared With Three Months Ended March 31,
2003 (Continued)
 Costs and
expenses increased $432,836 for the period ending March 31, 2004, compared to
the same period in 2003. Oil & gas lease expenses were $38,255 less for the
quarter ended March 31, 2004, due to no workover expenses. Project geology,
geophysics, land and administration expenses were $151,200 higher for the
quarter ended March 31, 2004, compared to the same quarter in 2003. This
increase is associated with the turkey revenue recognized for wells drilled to
the targeted depth. General and administration costs were $285,998 higher for
the quarter ended March 31, 2004, compared to the same quarter in 2003. The
primary increase was due to the expensing of our litigation activities from the
lawsuit with Armstrong Petroleum which is $182,984. Also, higher accounting
expenses related to preparation of our annual audit and 10-K and implementation
of the Sarbanes-Oxley Act. In addition, our insurance premium increased relating
to our D&O insurance, and our investor relations expenses were
higher.
 
 For the
quarter ended March 31, 2004, we had a income of $255,258 compared to a loss of
$421,407 for the quarter ended March 31, 2003.
 
 Capital
Resources and Liquidity
 We have
funded our oil and gas exploration activities primarily with proceeds raised
through privately placed drilling programs. We make decisions on the amount of
capital expenditures for drilling as funds become available for that purpose. We
do not, as a rule, rely on borrowings to fund drilling operations or other
activities.
 
 Current
assets were $6,942,857 at March 31, 2004, compared to $6,182,827 as of December
31, 2003. This is due to an increase of cash related to investments in our
OPUS-I drilling program. Property and equipment is $19,994 less for the period
ended March 31, 2004 compared to year end due write-off of asset
cost.
 
 Current
liabilities were $6,961,321 for the three months ended March 31, 2004, compared
to $6,473,194 for the period ended December 31, 2003. This increase is due to
advances from joint venture participants in our drilling programs for drilling
activities in our limited liability drilling program, and accrued expenses
related to the Armstrong lawsuit.
 
 OPERATING
ACTIVITIES. We had a positive cash flow of $739,433 for the three months ended
March 31, 2004 compared to a negative cash flow of $342,898 for the same period
in 2003. This change is due to an increase in advances from joint venture
partners. Our primary source of funds is comprised of selling prospects and oil
and gas sales.
 
 INVESTING
ACTIVITIES. In the first three months of 2004 we had $12,761 in capital
expenditures. This was the result of write-off of asset costs. These were
miscellaneous lease acquisition costs that were no longer
prospective.
 
 FINANCING
ACTIVITIES. Net cash used by financing activities was $10,911 for the three
months ended March 31, 2004 compared to $9,623 provided for the same period in
2003. This change was due to payments on long-term debt $12,411 and proceeds
from the exercise of stock options $1,500.
  
  
 **NOTE
6 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK**
 
 Tri-Valley
Corporation does not engage in hedging activities and does not use commodity
futures or forward contracts in its cash management functions.
 
 
 **NOTE
7 - CONTROLS AND PROCEDURES**
 
 As of
March 31, 2004, an evaluation was performed under the supervision and with the
participation of the Company's management, including the Company's CEO and CFO,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based on that evaluation, the Company's management,
including the CEO and CFO, concluded that the Company's disclosure controls and
procedures were effective as of March 31, 2004. There have been no significant
changes in the Company's internal controls or in other factors that could
significantly affect internal controls subsequent to March 31,
2004.
 
 
 **NOTE
8 - CHANGES IN SECURITIES**
 
 We issued
3,000 shares of common stock for aggregate consideration of $1,500.00 ($0.50 per
share) upon exercise of options by an officer of the Company. The shares were
issued in reliance on the exemption from registration requirements provided by
Section 4(2) of the Securities Act of 1933.
 
 **NOTE
9 - COMMITMENTS AND CONTINGENCIES**
 
 On
November 7, 2002 a judgment of $141,500 was awarded to Armstrong Petroleum
against Tri-Valley Corporation. This was the result of a lawsuit that was filed
against Tri-Valley alleging a breach of contract. Armstrong and Tri-Valley
disagreed on the amount of royalties that were due Armstrong. Tri-Valley filed
an appeal of this judgment. On March 24, 2004, the appellate court affirmed the
decision of the trial court. We are considering whether to appeal the appellate
court judgment to the California Supreme Court. Tri-Valley Corporation created a
cash reserve for this judgment in 2002 when this verdict was awarded and in 2004
accrued liabilities in the amount of $182,984 for a total of $217,000 in losses
that may occur as a result of this lawsuit.
  
  **Item
      2.**
    **Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations**
 
 **Business
Review**
 
 Notice
Regarding Forward-Looking Statements
 
 This
report contains forward-looking statements. The words, “anticipate,” “believe,”
“expect,” “plan,” “intend,” “estimate,” “project,” “could,” “may,” “foresee,”
and similar expressions are intended to identify forward-looking statements.
These statements include information regarding expected development of the
Company’s business, lending activities, relationship with customers, and
development in the oil and gas industry. Should one or more of these risks or
uncertainties occur, or should underlying assumptions prove incorrect, actual
results may vary materially and adversely from those anticipated, believed,
estimated or otherwise indicated.
 
 Petroleum
Activities
 
 The most
intense activity for Tri-Valley during the first quarter of 2004 was the
anticipated diesel oil frac of the Sunrise-Mayel #2H-Redrill well in the McClure
Shale from 6100’ to 6970’. The frac was done on March 7, 2004, and was designed
to input 150,000-lbs of sand utilizing 52,000-gallons of gelled diesel fuel. The
frac job did not go as expected with the well refusing to readily accept the
sand being pumped into it. After inputting only 70,000 lbs. of sand, the
pressure became too high to continue to pump and the job was aborted. Upon
reopening the well to backflow and evaluate, the well showed strange,
non-typical backflow characteristics by not back flowing the sand and diesel
oil. It was soon discovered that the casing itself had obviously failed,
probably right at the beginning of the frac job, and that the frac actually went
out into a shallow zone and was non-effective. Another redrill of this well or
the drilling of another well is currently being studied.
 
 Also,
during the first quarter, an attempt was made to recomplete the Pimental #1-15
into a shallower producing horizon, but the zone tested water. Currently a foam
frac of some even shallower producing sands, which have already produced gas, is
in the planning stages and is expected to occur in the last portion of the
second quarter or early in the third quarter.
 
 A
successful recompletion was done on the Webb Tract #2 into what has become a new
zone discovery for the area, in the Capay Shale interval, testing 350-MDF/D. As
with the Pimental #1-15, a foam frac is scheduled in the last portion of the
second quarter or early in the third quarter.
 
 Precious
Metals
 
 There was
no physical activity this quarter on our Alaska claim block. However, with the
strengthening gold price and gathering support of the investment community to
underwrite gold exploration and production projects, the Company has determined
to pursue the spin-off of its Richardson, Alaska gold project into a new, stand
alone mining company and is interviewing candidates to lead that effort and
organize the management team. The Company believes its stock presently receives
little or no value for its gold project assets and the spin-off would provide
shareholders with stock that is independently valued as a gold company by the
market.
  
  
 **Item
      2.**
    **(Continued)**
 
 Three
Months Ended March 31, 2004 as compared with Three Months ended March 31,
2003
 
 In the
quarter ended March 31, 2004, revenue was $1,386,281 compared to $276,780 for
the same quarter in 2003. This was due to drilling in the first
quarter.
 
 Costs and
expenses increased $432,836 for the period ending March 31, 2004, compared to
the same period in 2003. Oil & gas lease expenses were $38,255 less for the
quarter ended March 31, 2004, due to no workover expenses. Project geology,
geophysics, land and administration expenses were $151,200 higher for the
quarter ended March 31, 2004, compared to the same quarter in 2003. This
increase is due to increased activity in lease acquisitions. General and
administration costs were $285,998 higher for the quarter ended March 31, 2004,
compared to the same quarter in 2003. The primary increase was due to the
expensing of our litigation activities from the lawsuit with Armstrong Petroleum
which is $182,984. Also, higher accounting expenses related to preparation of
our annual audit and 10-K and implementation of the Sarbanes-Oxley Act.
Additionally our insurance premium increased relating to our D&O insurance,
and our investor relations expenses were higher.
 
 For the
quarter ended March 31, 2004, we had a profit of $255,258 compared to a loss of
$421,407 for the quarter ended March 31, 2003.
 
 Capital
Resources and Liquidity
 
 We have
funded our oil and gas exploration activities primarily with proceeds raised
through privately placed drilling programs. We make decisions on the amount of
capital expenditures for drilling as funds become available for that purpose. We
do not, as a rule, rely on borrowings to fund drilling operations or other
activities.
 
 Current
assets were $6,942,857 at March 31, 2004, compared to $6,182,829 as of December
31, 2003. This is due to an increase of cash related to investments in our
OPUS-I drilling program. Property and equipment is $19,994 less for the period
ended March 31, 2004 compared to year end due write off of asset
cost.
 
 Current
liabilities were $6,961,321 for the three months ended March 31, 2004, compared
to $6,473,194 for the period ended December 31, 2003. This increase is due to
advances from joint venture participants in our drilling programs for drilling
activities in our limited liability drilling program, and accrued expenses
related to the Armstrong lawsuit.
 
 **Operating
Activities.** We had a
positive cash flow of $739,433 for the three months ended March 31, 2004
compared to a negative cash flow of $342,898 for the same period in 2003. This
change is due to an increase in advances from joint venture partners. Our
primary source of funds is comprised of selling prospects and oil and gas sales.
 
 **Investing
Activities.** In the
first three months of 2004 we had $12,761 in capital expenditures. This was the
result of write off of asset costs. These were miscellaneous lease acquisition
costs that were no longer prospective.
 
 **Financing
Activities.** Net cash
used by financing activities was $10,911 for the three months ended March 31,
2004 compared to $9,623 provided for the same period in 2003. This change was
due to payments on long-term debt $12,411 and proceeds from the exercise of
stock options $1,500.
 
 **Item
3.** **Quantitative
and Qualitative Disclosures About Market Risk**
 
 Tri-Valley
Corporation does not engage in hedging activities and does not use commodity
futures or forward contracts in its cash management functions.
 
 **Item
4.** **Controls
and Procedures**
 
 As of
March 31, 2004, an evaluation was performed under the supervision and with the
participation of the Company’s management, including the Company’s CEO and CFO,
of the effectiveness of the design and operation of the Company’s disclosure
controls and procedures. Based on that evaluation, the Company’s management,
including the CEO and CFO, concluded that the Company’s disclosure controls and
procedures were effective as of March 31, 2004. There have been no significant
changes in the Company’s internal controls or in other factors that could
significantly affect internal controls subsequent to March 31,
2004.
 
 **PART
II - OTHER INFORMATION**
 
 **Item
1.**  **Legal
Proceedings**
 
 On
November 7, 2002 a judgment of $141,500 was awarded to Armstrong Petroleum
against Tri-Valley Corporation. This was the result of a lawsuit that was filed
against Tri-Valley alleging a breach of contract. Armstrong and Tri-Valley
disagreed on the amount of royalties that were due Armstrong. Tri-Valley filed
an appeal of this judgment. On March 24, 2004, the appellate court affirmed the
decision of the trial court. We are considering whether to appeal the appellate
court judgment to the California Supreme Court. Tri-Valley Corporation created a
cash reserve for this judgment in 2002 when this verdict was awarded and in 2004
accrued liabilities in the amount of $182,984 for a total of $217,000 in losses
that may occur as a result of this lawsuit.
 
 **Item
2.**  **Changes
in Securities**
 
 We issued
3,000 shares of common stock for aggregate consideration of $1,500.00 ($0.50 per
share) upon exercise of options by an officer of the Company. The shares were
issued in reliance on the exemption from registration requirements provided by
Section 4(2) of the Securities Act of 1933.
 
 **Item
6.**  **Exhibits
and Reports on Form 8-k**
 
 (a)
    Exhibits 31.1 Rule
13a-14(a)/15d-14(a) Certification
 31.2 Rule
13a-14(a)/15d-14(a) Certification
 32.1 18
U.S.C. § 1350 Certification
 32.2 18
U.S.C. § 1350 Certification
 (b)
Reports on form 8-K:
 None
 
 
 
 
 
 
 
 
 
 
 **SIGNATURES**
 
 
 
 
 Pursuant
to the requirement of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 
 TRI-VALLEY
CORPORATION
 
 
 
 
 March 28,
2004  /s/
F. Lynn Blystone
 F. Lynn
Blystone
 President
and Chief Executive Officer
 
 
 March 28,
2004  /s/
Thomas J. Cunningham
 Thomas J.
Cunningham
 Secretary,
Treasurer, Chief Financial Officer
 
  
  **Exhibit
31.1**
 I, F.
Lynn Blystone, President and Chief Executive Officer of Tri-Valley Corporation,
certify that:
 1. I have
reviewed this quarterly report on Form 10-Q of Tri-Valley
Corporation;
 2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;3. Based on my knowledge, the
financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods
presented in this report;
 4. The
registrant's other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15) for the registrant and have:
 a)
designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
 b)
designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
 c)
evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
 d)
disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
 5. The
registrant's other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
 a) all
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and
report financial information; and
 b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control over financial
reporting.
 Date:
      March 28, 2004
    
    /s/F.
      Lynn BlystoneF.
      Lynn Blystone, President and Chief Executive
Officer
 
 
 
 
 
 
 
 
  
  
 **Exhibit
31.1**
 I, Thomas
J. Cunningham, Chief Financial Officer of Tri-Valley Corporation, certify
that:
 1. I have
reviewed this quarterly report on Form 10-Q of Tri-Valley
Corporation;
 2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
 3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
 4. The
registrant's other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15) for the registrant and have:
 a)
designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
 b)
designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
 c)
evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
 d)
disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
 5. The
registrant's other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
 a) all
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and
report financial information; and
 b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control over financial
reporting.
 
 Date:
      March 28, 2004
    
    /s/Thomas
      J. CunninghamThomas
      J. Cunningham, Chief Financial Officer
 
  
  
 **Exhibit
32.2**
 
 **Certification
Pursuant to 18 U.S.C. § 1350**
 
 The
undersigned, Thomas J. Cunningham, Chief Financial Officer of Tri-Valley
Corporation, a Delaware corporation (the "Company"), pursuant to 18 U.S.C. 1350,
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, hereby
certifies that:
 
 (1) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004
(the "Report") fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934; and
 
 (2) the
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.
 
 Date:
      March
      28, 2004
    
    /s/Thomas
      J. CunninghamThomas
      J. Cunningham, Chief Financial Officer
 
 
 
 
 
 
 **Exhibit
32.2**
 
 **Certification
Pursuant to 18 U.S.C. § 1350**
 
 
 The
undersigned, F. Lynn Blystone, President and Chief Executive Officer of
Tri-Valley Corporation, a Delaware corporation (the "Company"), pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of
2002, hereby certifies that:
 
 (1) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004
(the "Report") fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934; and
 
 (2) the
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.
 
 Date:
      March
      28, 2004
    
    /s/F.
      Lynn BlystoneF.
      Lynn Blystone, President and Chief Executive
Officer