**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K**

| For                the Fiscal Year Ended December 31, 2006 | Commission                File No. 001-31852 |
|------------------------------------------------------------|----------------------------------------------|

**TRI-VALLEY      CORPORATION**

| **Delaware**                                                                  | **84-0617433**                                      |
|-------------------------------------------------------------------------------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) | (I.R.S.                Employer Identification No.) |

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

**(661)      864-0500**

| Title                of each class            | Name                of exchange on which registered |
|-----------------------------------------------|-----------------------------------------------------|
| Common                Stock, $0.001 par value | American                Stock Exchange              |

----

**TABLE      OF CONTENTS**

| **PART                I**   |                                                                                                                |   |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------|--------|
| **ITEM                1**   | **Business**                                                                                                        | 1      |
|                        | Competition                                                                                                         | 2      |
|                        | Governmental                Regulation                                                                              | 2      |
|                        | Environmental                Regulation                                                                             | 3      |
|                        | Employees                                                                                                           | 5      |
|                        | Available                Information                                                                                | 5      |
| **ITEM                1A**  | **Risk                Factors**                                                                                     | 5      |
| **ITEM                2**   | **Properties**                                                                                                      | 9      |
|                        | Oil                and Gas Operations                                                                               | 10     |
|                        | Minerals                Properties                                                                                  | 13     |
| **ITEM                4**   | **Submission                of Matters to a Vote Of Security Holders**                                              | 15     |
|                        |                                                                                                                |   |
| **PART                II**  |                                                                                                                |   |
| **ITEM                5**   | **Market                Price of the Registrant's Common Stock and Related Security Holder                Matters** | 15     |
|                        | Performance                Graph                                                                                    | 16     |
|                        | Equity                Compensation Plan Information                                                                 | 17     |
|                        | Recent                Sales of Unregistered Securities                                                              | 17     |
| **ITEM                6**   | **Selected                Historical Financial Data**                                                               | 17     |
| **ITEM                7**   | **Management's                Discussion and Analysis Of Financial Condition**                                      | 18     |
|                        | Notice                Regarding Forward-Looking Statements                                                          | 18     |
|                        | Overview                                                                                                            | 18     |
|                        | Critical                Accounting Policies                                                                         | 18     |
|                        | Other                Significant Accounting Polices                                                                 | 20     |
|                        | Results                of Operations                                                                                | 23     |
|                        | Financial                Condition                                                                                  | 25     |
|                        | Operating                Activities                                                                                 | 26     |
| **ITEM                8**   | **Financial                Statements**                                                                             | 28     |
| **ITEM                9A**  | **Controls                and Procedures**                                                                          | 65     |
|                        | Evaluation                of Disclosure Controls                                                                    | 65     |
|                        | Management’s                Report on Internal Control over Financial Reporting                               | 65     |
|                        |                                                                                                                |   |
| **PART                III** |                                                                                                                |   |
| **ITEM                10**  | **Directors                and Executive Officers of the Registrant**                                               | 69     |
| **ITEM                11**  | **Executive                Compensation**                                                                           | 73     |
|                        | Employment                Agreement with Our President                                                              | 74     |
|                        | Compensation                Committee Report                                                                        | 74     |
|                        | Aggregated                2006 Option Exercises and Year-End Values                                                 | 76     |
|                        | Compensation                of Directors                                                                            | 77     |
| **ITEM                12**  | **Security                Ownership of Certain Beneficial Owners and                Management**                    | 78     |
| **ITEM                13**  | **Certain                Relationships and Related Transactions**                                                   | 79     |
| **ITEM                14**  | **Principal                Accountant Fees and Services**                                                           | 79     |
| **ITEM                15**  | **Exhibits                and Financial Statement Schedules**                                                       | 80     |
|                        |                                                                                                                |   |
| **SIGNATURES**              | 80                                                                                                                  |

----

**PART      I**

**ITEM      1 Business**

| ·   | 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. Prior to November 2006, Select owned                50% of                Tri-Western Resources, LLC, a developer of industrial mineral operations.                Select sold its interest in Tri-Western Resources to the other 50%                joint                venturer on November 15, 2006. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Great                Valley Production Services, LLC, (“GVPS”) was formed in 2006 to operate                oil production and drilling rigs, primarily for TVOG. Tri-Valley                has sold                49% of the ownership interest to private parties and has retained                a 51%                ownership interest in this subsidiary. GVPS is a production services/well                work over company whose services will be primarily contracted to                third                parties. Operations began in the 3rd                quarter of 2006. However, from time to time TVOG may use GVPS for                its own                account. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Great                Valley Drilling Company, LLC (“GVDC”) was formed in 2006 to operate oil                drilling rigs, primarily for TVOG. Tri-Valley has sold 49% of the                ownership interest to private parties and has retained a 51% ownership                interest in this subsidiary. GVDC is based in Nevada and the majority                of                its work will be drilling wells for third parties. There will be                occasions                when TVOG contracts this company for its own account. Activities                for this                company began in the first quarter of                2007. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**Competition**

**Governmental      Regulation**

**Environmental      Regulation**

* *

**Employees**

**Available      Information**

**ITEM      1A Risk Factors**

**Risks      Involved in Oil and Gas Operations**

**Our      success depends heavily on market conditions and prices for oil and      gas**

**Estimating      oil and gas reserves leads to uncertain results and thus our estimates of value      of those reserves could be incorrect**

**Continued      production of oil and gas depends on our ability to find or acquire additional      reserves, which we may not be able to accomplish**

**The      unavailability or high cost of drilling rigs, equipment, supplies, personnel      and      oil field services could adversely affect our ability to execute our exploration      and development plans on a timely basis and within our budget.**

**Our      oil and gas reserves are concentrated in California**

**Oil      and gas drilling and production activities are subject to numerous mechanical      and environmental risks that could cause less production**

**Drilling      is a speculative activity, because assessments of drilling prospects are      inexact**

**Governmental      regulations make production more difficult and production costs      higher**

**Risks      Involved in Our Mineral Exploration Business**

**Our      industrial mineral operations have not yet begun to realize significant      revenue**

**Our      mining operations may not be profitable.**

**Our      operations may be adversely affected by risks and hazards associated with the      mining industry that may not be fully covered by      insurance.**

|   | • | Unanticipated                hydrologic conditions, including flooding and periodic interruptions                due                to inclement or hazardous weather                conditions. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Risks      Involved in Our Operations Generally**

**Forward      Looking Statements**

**ITEM      2 Properties**

**Oil      and Gas Operations**

|                             | BBL        | MCF     |
|----------------------------------|------------|---------|
|                             |       |    |   |   |
| December                31, 2006 | Oil        | 275,452 | Natural                Gas | 787,017 |
| December                31, 2005 | Oil        | 218,030 | Natural                Gas | 779,598 |
| December                31, 2004 | Condensate | 162     | Natural                Gas | 742,401 |

|                             | Year                Ended   | Year                Ended   | Year                Ended   |
|----------------------------------|-----------------------------|-----------------------------|-----------------------------|
|                             | December                31, | December                31, | December                31, |
|                             |  **2006**         |  **2005**         |  **2004**         |
|                             |                        |                        |                        |
| Natural                Gas (MCF) | 86,177                      | 128,602                     | 126,942                     |
| Crude                Oil (BBL)   | 6,600                       | 17                          | 22                          |

----

|                            | Year                Ended   | Year                Ended   | Year                Ended   |
|---------------------------------|-----------------------------|-----------------------------|-----------------------------|
|                            | December                31, | December                31, | December                31, |
|                            | 2006                        | 2005                        | 2004                        |
|                            |                        |                        |                        |   |   |   |
|                            | Gas                (Mcf)    | Oil                (BBL)    | Gas                (Mcf)    | Oil* | Gas                (Mcf) | Oil* |
| Sales                Price      | $6.45                       | $57.10                      | $7.00                       | $44.34 | $5.66 | $40.60 |
|                            |                        |                        |                        |   |   |   |
| Production                Costs | $1.41                       | $15.23                      | $0.73                       | * | $1.14 | * |
|                            |                        |                        |                        |   |   |   |
| Net                Profit       | $5.04                       | $41.87                      | $6.27                       | * | $4.52 | * |

| Wells                (1) | Acres                (2) |
|--------------------------|--------------------------|
| Gross                    | Net                      | Gross | Net |
| 35                       | 10.62                    | 2,852 | 778.67 |

| (1)   | "Gross"                wells represent the total number of producing wells in which we                have a working interest. "Net" wells represent the number of gross                producing wells multiplied by the percentages of the working interests,                which we own. "Net wells" recognizes only those wells in which                we                hold an earned working interest. Working interests earned at payout                have                not been included. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | "Gross"                acres represent the total acres in which we                have a working interest; "net" acres represent the aggregate of the                working interests, which we own in the gross                acres. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        | Year                Ended   | Year                Ended   | Year                Ended   |
|-------------|-----------------------------|-----------------------------|-----------------------------|
|        | December                31, | December                31, | December                31, |
|        |  ***2006***       |  ***2005***       |  ***2004***       |
|        |                        |                        |                        |
| Exploratory |                        |                        |                        |
| Producing   | -0-                         | -0-                         | -0-                         |
| Dry         | -0-                         | 1                           | 1                           |
| Total       | -0-                         | 1                           | 1                           |
|        |                        |                        |                        |
| Development |                        |                        |                        |
| Producing   | -2-                         | -0-                         | -0-                         |
| Dry         | -0-                         | -0-                         | -0-                         |
| Total       | -2-                         | -0-                         | -0-                         |

----

|  ***State***  |   |  ***Gross                Acres***  |   |  ***Net                Acres***  |
|-------------------------|--------|----------------------------------------------|--------|--------------------------------------------|
| California              |   | 21,321                                       |   | 19,747                                     |
| Nevada                  |   | 18,559                                       |   | 18,559                                     |

| Expires                in 2007 | 6,466                acres |
|--------------------------------|----------------------------|
| Expires                in 2008 | 4,524                acres |
| Expires                in 2009 | 3,193                acres |

**Minerals      Properties**

**Metals**

|  ***State***  |   |  ***Gross                Acres***  |   |  ***Net                Acres***  |
|-------------------------|--------|----------------------------------------------|--------|--------------------------------------------|
| Alaska                  |   | 28,720                                       |   | 27,926                                     |

----

|  ***State***  |   |  ***Gross                Acres***  |   |  ***Net                Acres***  |
|-------------------------|--------|----------------------------------------------|--------|--------------------------------------------|
| Alaska                  |   | 9,700                                        |   | 9,700                                      |

**Industrial      Minerals**

**ITEM      4 Submission of Matters To A Vote Of Security Holders**

|  Measure                #1 - Election of Directors  |
|---------------------------------------------------------------|
|                                                          |  **FOR**  |  **AGAINST**  |  **ABSTAIN**  |
| F.                Lynn Blystone                               | 19,502,183 | 29,669 |   |
| Milton                J. Carlson                              | 19,446,236 | 85,616 |   |
| G.                Thomas Gamble                               | 19,504,231 | 27,621 |   |
| Dennis                P. Lockhart                             | 19,505,161 | 26,691 |   |
| Henry                Lowenstein                               | 19,503,161 | 28,691 |   |
| William                H. Marumoto                            | 19,449,636 | 82,216 |   |
| Loren                J. Miller                                | 19,505,515 | 26,337 |   |

|   |  18,776,572 |  733,810 |  21,470 |
|--------|------------------|---------------|--------------|

**PART      II**

**ITEM      5 Market Price Of The Registrant's Common Stock And Related Security Holder      Matters**

|   |                          |  **Sales                Prices**  |  **Closing                Prices**  |
|--------|-------------------------------|---------------------------------------------|-----------------------------------------------|
|   |                          | High                                        | Low                                           | High | Low |
| 2006   |                          |                                        |                                          |   |
|   | Fourth                Quarter | $10.20                                      | $6.75                                         | $10.07 | $6.77 |
|   | Third                Quarter  | $8.01                                       | $5.80                                         | $7.49 | $5.84 |
|   | Second                Quarter | $9.50                                       | $5.52                                         | $9.01 | $5.63 |
|   | First                Quarter  | $8.77                                       | $7.30                                         | $8.69 | $7.35 |
|   |                          |                                        |                                          |   |   |
|   |                          |  **Sales                Prices**  |  **Closing                Prices**  |
|   |                          | High                                        | Low                                           |         High |                         Low |
| 2005   |                          |                                        |                                          |   |
|   | Fourth                Quarter | $12.25                                      | $5.52                                         | $11.75 | $6.14 |
|   | Third                Quarter  | $14.09                                      | $8.51                                         | $14.00 | $8.99 |
|   | Second                Quarter | $14.30                                      | $8.13                                         | $14.30 | $9.12 |
|   | First                Quarter  | $17.50                                      | $7.70                                         | $17.27 | $7.90 |

----

**Performance      Graph**

|   |   |
|--------|--------|

|   |                                  |    |    |                        |    |    |    |    |   |   |
|--------|---------------------------------------|---------|---------|-----------------------------|---------|---------|---------|---------|--------|--------|
|   |                                  |    |    | December                31, |    |    |    |
|   |                                  |    |    | 2001                        | 2002    | 2003    | 2004    | 2005    | 2006   |   |
|   | Tri-Valley                Corporation | $100.00 | $87.50  | $275.00                     | $764.38 | $486.25 | $593.13 |    |
|   | S                & P 500 Index    |    | $100.00 | $76.63                      | $96.85  | $105.56 | $108.73 | $123.54 |   |
|   | AMEX                Oil Index         |    | $100.00 | $85.93                      | $108.20 | $138.68 | $189.78 | $228.50 |   |
|   |                                  |    |    |                        |    |    |    |    |   |   |

----

**Equity      Compensation Plan Information **

|                                                                      | Total                securities to be issued upon exercise of outstanding options or vesting                of                restricted stock |   | Securities                remaining available for future issuance under equity compensation                plans                (excluding securities reflected in column (a)) |
|---------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Plan                category                                        | Number                                                                                                                                         |   | Weighted-average                exercise price                                                                                                                                 |   |
|                                                                      | (a)                                                                                                                                            |   | (b)                                                                                                                                                                            |   | (c) |
| Equity                compensation plans approved by security holders     | 2,581,850                                                                                                                                      |   | $2.95                                                                                                                                                                          |   | 824,000 |
|                                                                      |                                                                                                                                           |   |                                                                                                                                                                           |   |   |
| Equity                compensation plans not approved by security holders | 333,000                                                                                                                                        |   | $0.50                                                                                                                                                                          |   | - |
|                                                                      |                                                                                                                                           |   |                                                                                                                                                                           |   |   |
| Total                                                                     | 2,914,850                                                                                                                                      |   | $2.67                                                                                                                                                                          |   | 824,000 |

**Recent      Sales of Unregistered Securities**

**ITEM      6 Selected Historical Financial Data**

|                                                       |   | Year                Ended December 31, |       |
|------------------------------------------------------------|--------|----------------------------------------|------------|
|                                                       |   | 2006                                   |       | 2005 |   | 2004 |   | 2003 |   | 2002 |   |
| Income                Statement Data:                      |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                   |   | $                                      | 4,936,723  |   | $ | 12,528,606 |   | $ | 4,498,670 |   | $ | 6,464,245 |   | $ | 6,284,908 |   |
| Operating                Income (Loss)                     |   | $                                      | (5,881,276 | ) | $ | (9,730,071 | ) | $ | (1,171,005 | ) | $ | 456,109 |   | $ | 769,130 |   |
| Gain                on disposal of discontinued operations |   | $                                      | 4,940,764  |   | $ | 0.00 |   | $ | 0.00 |   | $ | 0.00 |   | $ | 0.00 |   |
| Net                loss                                    |   | $                                      | (940,512   | ) | $ | (9,730,071 | ) | $ | (1,171,005 | ) | $ | 456,109 |   | $ | 769,130 |   |
| Basic                Earnings per share:                   |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                from continuing operations             |   | $                                      | (0.25      | ) | $ | (0.43 | ) | $ | (0.06 | ) | $ | 0.02 |   | $ | 0.04 |   |
| Income                from discontinued operations, net    |   | $                                      | 0.21       |   | $ | 0.00 |   | $ | 0.00 |   | $ | 0.00 |   | $ | 0.00 |   |
| Basic                Earnings Per Share                    |   | $                                      | (0.04      | ) | $ | (0.43 | ) | $ | (0.06 | ) | $ | 0.02 |   | $ | 0.04 |   |
|                                                       |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                Sheet Data:                         |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property                and Equipment, net                 |   | $                                      | 12,076,043 |   | $ | 13,635,981 |   | $ | 1,778,208 |   | $ | 1,543,121 |   | $ | 1,974,501 |   |
| Total                Assets                                |   | $                                      | 28,654,125 |   | $ | 19,738,730 |   | $ | 14,473,326 |   | $ | 8,341,782 |   | $ | 4,634,874 |   |
| Long                Term Obligations                       |   | $                                      | 2,963,562  |   | $ | 4,528,365 |   | $ | 6,799 |   | $ | 16,805 |   | $ | 26,791 |   |
| Stockholder's                Equity                        |   | $                                      | 16,643,618 |   | $ | 7,572,720 |   | $ | 6,796,903 |   | $ | 1,851,783 |   | $ | 1,262,306 |   |

----

**ITEM      7 Management's Discussion And Analysis Of Financial      Condition**

**Notice      Regarding Forward-Looking Statements**

**Overview**

**Critical      Accounting Policies**

*"Accounting      for Asset Retirement Obligations"*

***.***
*Accounting      for Stock-Based Compensation—Transition and Disclosure*

**Other      Significant Accounting Policies**

**Rig      Operations**

**Mining      Activity**

**Results      of Operations**

**Financial      Condition**

----

|                                              | Payments                Due By Period |
|---------------------------------------------------|---------------------------------------|
|                                              | Less                than 1year        | 1-3                years | 3-5                years | After                5years | Total |
| Long                term debt(1)                  | $1,120,101                            | $                841,933 | $                786,267 | $1,118,652 | $                3,866,953 |
| Operating                lease commitments (2)    | 371,280                               | 371,280 | 30,940 | - | 773,500 |
| Total                contractual cash obligations | $                1,491,381            | 1,213,213 | $                817,207 | $1,118,652 | $                4,640,453 |

| (1)   | Represents                cash obligations for principal payments and interest payments on                various                loans that are all secured by the asset financed. For further detail,                see                Note 4 to the financial statements. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Lease                agreement of new corporate headquarters in Bakersfield, California,                lease                terms are until March 2011 at a monthly payment of $15,470. (See                Note 11                to the Consolidated Financial Statements in Item                8) |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Activities**

*“Shared      Based Payment”*

| ·   | Cash                flow from operating activities, |
|--------------------|-----------------------------------------------------|

| ·   | Borrowings                from financial institutions (which we typically                avoid), |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | Debt                offerings, which could increase our leverage and add to our need                for cash                to service such debt (which we typically                avoid), |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Additional                offerings of our equity securities, which would cause dilution of                our                common stock, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sales                of portions of our working interest in the prospects within our                exploration program, which would reduce future revenues from its                exploration program, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sale                to an industry partner of a participation in our exploration                program, |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | Sale                of all or a portion of our producing oil and gas properties, which                would                reduce future revenues. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

----

***INDEX***

|                                                                              | Page(s) |
|-----------------------------------------------------------------------------------|---------|
|                                                                              |    |
| Report                of Independent Auditor                                      | 29      |
|                                                                              |    |
| Consolidated                Balance Sheets at December 31, 2006 and 2005          | 30      |
|                                                                              |    |
| Consolidated                Statements of Operations for the Years Ended          |    |
| December                31, 2006, 2005 and 2004                                   | 32      |
|                                                                              |    |
| Consolidated                Statements of Changes in Shareholders' Equity for the |    |
| Years                Ended December 31, 2006, 2005 and 2004                       | 33      |
|                                                                              |    |
| Consolidated                Statements of Cash Flows for the Years Ended          |    |
| December                31, 2006, 2005 and 2004                                   | 34      |
|                                                                              |    |
| Notes                to Consolidated Financial Statements                         | 36      |
|                                                                              |    |
| Supplemental                Information about Oil and Gas Producing               |    |
| Activities                (Unaudited)                                             | 60      |

----

**REPORT      OF INDEPENDENT REGISTERED **

**PUBLIC      ACCOUNTING FIRM**

*Internal      Control—Integrated Framework*

----

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      BALANCE SHEETS**

|                                                      |   | December                31, |           |
|-----------------------------------------------------------|--------|-----------------------------|----------------|
|                                                      |   | ___2006___                  |           | ___2005___ |   |
| **ASSETS**                                                |   |                        |           |   |   |
| Current                assets                             |   |                        |                |   |   |  |   |
| Cash                                                      |   | $                           | 15,598,215     |   | $ | 4,876,921 |   |
| Accounts                receivable, trade                 |   |                        | 377,278        |   |   | 431,869 |   |
| Prepaid                expenses                           |   |                        | 42,529         |   |   | 42,529 |   |
|                                                      |   |                        |           |   |   |   |   |
| Total                current assets                       |   |                        | 16,018,022     |   |   | 5,351,319 |   |
|                                                      |   |                        |           |   |   |   |   |
| Property                and equipment, net                |   |                        |           |   |   |   |   |
| Proved                properties                          |   |                        | 1,407,925      |   |   | 1,146,103 |   |
| Unproved                properties                        |   |                        | 2,792,340      |   |   | 3,009,564 |   |
| Rigs                                                      |   |                        | 5,371,593      |   |   | 215,000 |   |
| Other                property and equipment               |   |                        | 2,504,185      |   |   | 9,265,314 |   |
|                                                      |   |                        |           |   |   |   |   |
| Total                property and equipment, net (Note 3) |   |                        | 12,076,043     |   |   | 13,635,981 |   |
|                                                      |   |                        |           |   |   |   |   |
| Other                assets                               |   |                        |           |   |   |   |   |
| Deposits                                                  |   |                        | 309,833        |   |   | 316,614 |   |
| Investments                in partnerships (Note 5)       |   |                        | 17,400         |   |   | 17,400 |   |
| Goodwill                                                  |   |                        | 212,414        |   |   | 212,414 |   |
| Other                                                     |   |                        | 20,413         |   |   | 205,002 |   |
|                                                      |   |                        |           |   |   |   |   |
| Total                other assets                         |   |                        | 560,060        |   |   | 751,430 |   |
|                                                      |   |                        |                |   |   |  |   |
| **Total                assets**                           |   | **$**                       | **28,654,125** |   | **$** | **19,738,730** |   |
|                                                      |   |                        |           |   |   |   |   |

----

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                           |   |                        |           |       |                               |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|----------------|------------|------------------------------------|
|                                                                                                                                           |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                  |   |
|                                                                                                                                           |   | December                31, |           |
|                                                                                                                                           |   | ___2006___                  |           | ___2005___ |                               |
|                                                                                                                                           |   |                        |           |       |                               |
| Current                liabilities                                                                                                             |   |                        |           |       |                               |
| Notes                payable                                                                                                                   |   | $                           | 619,069        |       | $                966,649           |
| Notes                payable - related parties                                                                                                 |   |                        | 501,036        |       | -                                  |
| Accounts                payable and accrued expenses                                                                                           |   |                        | 2,237,116      |       | 1,190,604                          |
| Amounts                payable to joint venture participants                                                                                   |   |                        | 280,815        |       | 161,747                            |
| Advances                from joint venture participants, net                                                                                   |   |                        | 5,408,909      |       | 5,318,645                          |
|                                                                                                                                           |   |                        |           |       |                               |
| Total                current liabilities                                                                                                       |   |                        | 9,046,945      |       | 7,637,645                          |
|                                                                                                                                           |   |                        |           |       |                               |
| Non-Current                Liabilities                                                                                                         |   |                        |           |       |                               |
| Due                to joint ventures                                                                                                           |   |                        | -              |       | 201,748                            |
| Asset                Retirement Obligation                                                                                                     |   |                        | 216,714        |       | 92,108                             |
| Long-term                portion of notes payable - related parties                                                                            |   |                        | 698,963        |       | -                                  |
| Long-term                portion of notes payable                                                                                              |   |                        | 2,047,885      |       | 4,234,509                          |
|                                                                                                                                           |   |                        |           |       |                               |
| Total                non-current liabilities                                                                                                   |   |                        | 2,963,562      |       | 4,528,365                          |
|                                                                                                                                           |   |                        |           |       |                               |
| Total                liabilities                                                                                                               |   |                        | 12,010,507     |       | 12,166,010                         |
|                                                                                                                                           |   |                        |           |       |                               |
| Stockholders’                equity                                                                                                      |   |                        |           |       |                               |
| Common                stock, $.001 par value; 100,000,000 shares                                                                               |   |                        |           |       |                               |
| authorized;                23,546,655 and 22,806,176 issued and                                                                                |   |                        |           |       |                               |
| outstanding                at December 31, 2006, and 2005                                                                                      |   |                        | 23,407         |       | 22,806                             |
| Less:                common stock in treasury, at cost,                                                                                        |   |                        |           |       |                               |
| 100,025                shares at December 31, 2006 and 2005.                                                                                   |   |                        | (13,370        | )          | (13,370)                           |
|                                                                                                                                           |   |                        |           |       |                               |
| Capital                in excess of par value                                                                                                  |   |                        | 28,692,780     |       | 25,629,775                         |
| Additional                paid in capital - warrants                                                                                           |   |                        | 247,313        |       | -                                  |
| Additional                paid in capital - stock options                                                                                      |   |                        | 1,262,404      |       | -                                  |
| Additional                paid in capital - Great Valley Drilling Company, LLC and Great Valley                Production Services Company LLC |   |                        | 5,438,087      |       | -                                  |
| Accumulated                deficit                                                                                                             |   |                        | (19,007,003    | )          |                  (18,066,491) |
|                                                                                                                                           |   |                        |           |       |                               |
| Total                stockholders’ equity                                                                                                |   |                        | 16,643,618     |       | 7,572,720                          |
|                                                                                                                                           |   |                        |                |       |                               |
| **Total                liabilities and stockholder’s equity**                                                                            |   | **$**                       | **28,654,125** |       | **$                19,738,730**    |
|                                                                                                                                           |   |                        |           |       |                               |

----

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

|                                                                                                           |   | __For                the Years Ended December 31,_ |           |
|----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|----------------|
|                                                                                                           |   | ___                2006 ___                        |           | ___                2005 ___ |   | ___                2004 ___ |   |
|                                                                                                           |   |                                               |           |   |   |   |   |
| Revenues                                                                                                       |   |                                               |           |   |   |   |   |   |   |   |
| Sale                of oil and gas                                                                             |   | $                                                  | 1,029,606      |   | $ | 901,359 |   | $ | 799,474 |   |
| Rig                income                                                                                      |   |                                               | 873,368        |   |   | - |   |   | - |   |
| Royalty                income                                                                                  |   |                                               | -              |   |   | 883 |   |   | 674 |   |
| Partnership                income                                                                              |   |                                               | 45,000         |   |   | 30,000 |   |   | 30,000 |   |
| Interest                income                                                                                 |   |                                               | 72,707         |   |   | 120,904 |   |   | 45,990 |   |
| Drilling                and development                                                                        |   |                                               | 2,497,256      |   |   | 11,422,234 |   |   | 3,559,500 |   |
| Other                income                                                                                    |   |                                               | 418,786        |   |   | 53,226 |   |   | 63,032 |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |
| Total                revenues                                                                                  |   |                                               | 4,936,723      |   |   | 12,528,606 |   |   | 4,498,670 |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |
| Costs                and expenses                                                                              |   |                                               |           |   |   |   |   |   |   |   |
| Mining                exploration costs                                                                        |   |                                               | 510,583        |   |   | 6,697,441 |   |   | 1,029,898 |   |
| Production                costs                                                                                |   |                                               | 388,700        |   |   | 93,429 |   |   | 144,101 |   |
| Drilling                and development                                                                        |   |                                               | 1,799,792      |   |   | 9,267,621 |   |   | 2,224,793 |   |
| Rig                operating expenses                                                                          |   |                                               | 566,649        |   |   | - |   |   | - |   |
| General                and administrative                                                                      |   |                                               | 6,110,921      |   |   | 5,231,624 |   |   | 2,103,457 |   |
| Interest                                                                                                       |   |                                               | 396,672        |   |   | 377,944 |   |   | 33,332 |   |
| Depreciation,                depletion and amortization                                                        |   |                                               | 585,439        |   |   | 500,453 |   |   | 21,699 |   |
| Impairment                of acquisition costs                                                                 |   |                                               | 459,243        |   |   | 90,165 |   |   | 112,395 |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |  |   |
| Total                costs and expenses                                                                        |   |                                               | 10,817,999     |   |   | 22,258,677 |   |   | 5,669,675 |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |  |   |
| Loss                from continuing operations, before income taxes and discontinued                operations |   |                                               | (5,881,276     | ) |   | (9,730,071 | ) |   | (1,171,005 | ) |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |
| Tax                provision                                                                                   |   |                                               | -              |   |   | - |   |   | - |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |
| Loss                from continuing operations, before discontinued operations                                 |   |                                               | (5,881,276     | ) |   | (9,730,071 | ) |   | (1,171,005 | ) |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |
| Gain                on disposal of discontinued operations (Note 12)                                           |   |                                               | 4,940,764      |   |   | - |   |   | - |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |  |   |
| **Net                loss**                                                                                    |   | **$**                                              | **(940,512**   | **)** | **$** | **(9,730,071** | **)** | **$** | **(1,171,005** | **)** |
|                                                                                                           |   |                                               |           |   |   |   |   |   |  |   |
| Basic                net loss per share:                                                                       |   |                                               |           |   |   |   |   |   |   |   |
| Loss                from continuing operations                                                                 |   | $                                                  | (0.25          | ) | $ | (0.43 | ) | $ | (0.06 | ) |
| Income                from discontinued operations, net                                                        |   | $                                                  | 0.21           |   | $ | 0.00 |   | $ | 0.00 |   |
| Basic                loss per common share                                                                     |   | $                                                  | (0.04          | ) | $ | (0.43 | ) | $ | (0.06 | ) |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |
| **Weighted                average number of shares outstanding**                                               |   |                                               | **23,374,205** |   |   | **22,426,580** |   |   | **20,507,342** |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |  |   |
| **Potentially                dilutive shares outstanding**                                                     |   |                                               | **26,377,537** |   |   | **25,030,468** |   |   | **23,060,942** |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |
| No                dilution is reported since net income is a loss per SFAS                128                  |   |                                               |           |   |   |   |   |   |   |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |
|                                                                                                           |   |                                               |           |   |   |   |   |   |   |   |

----

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ EQUITY**

|                                                 |           |   |        |   |                        |   |                       |   | Additional                    |   | Additional                               |   |       |   |                         |   |          |   |                            |
|------------------------------------------------------|----------------|--------|-------------|--------|-----------------------------|--------|----------------------------|--------|-------------------------------|--------|------------------------------------------|--------|------------|--------|------------------------------|--------|---------------|--------|---------------------------------|
|                                                 |           |   |        |   |                        |   |                       |   | Paid                in        |   | Paid                in                   |   |       |   |                         |   |          |   |                            |
|                                                 | Total          |   |        |   |                        |   | Capital                in  |   | Warrants                & |   | Capital                                  |   | Common     |   |                         |   |          |   |                            |
|                                                 | Common         |   | Treasury    |   |                        |   | Excess                of   |   | Stock                         |   | GVDC                /                    |   | Stock      |   | Accumulated                  |   | Treasury      |   | Stockholders’             |
|                                                 | Shares         |   | Shares      |   | Par                Value    |   | Par                Value   |   | Options                       |   | GVPS                                     |   | Receivable |   | Deficit                      |   | Stock         |   | Equity                          |
|                                                 |           |   |        |   |                        |   |                       |   |                          |   |                                     |   |       |   |                         |   |          |   |                            |
| Balance                at December 31, 2003          | 20,097,627     |   | 100,025     |   | $                20,115     |   | $                9,010,453 |   | -                             |   | -                                        |   | -          |   | $                (7,165,415) |   | $(13,370)     |   | $                1,851,783      |
| Issuance                of common stock              | 1,738,425      |   | -           |   | 1,721                       |   | 6,761,354                  |   | -                             |   | -                                        |   | -          |   | -                            |   | -             |   | 6,763,075                       |
| Stock                issuance cost                   | -              |   | -           |   | -                           |   | (646,200)                  |   | -                             |   | -                                        |   | -          |   | -                            |   | -             |   | (646,200)                       |
| Common                stock receivable               | -              |   | -           |   | -                           |   | -                          |   | -                             |   | -                                        |   | (750)      |   | -                            |   | -             |   | (750)                           |
| Net                loss                              | -              |   | -           |   | -                           |   | -                          |   | -                             |   | -                                        |   | -          |   | (1,171,005)                  |   | -             |   | (1,171,005)                     |
|                                                 |           |   |        |   |                        |   |                       |   |                          |   |                                     |   |       |   |                         |   |          |   |                            |
| Balance                at December 31, 2004          | 21,836,052     |   | 100,025     |   | 21,836                      |   | 15,125,607                 |   | -                             |   | -                                        |   | (750)      |   | (8,336,420)                  |   | (13,370)      |   | 6,796,903                       |
|                                                 |           |   |        |   |                        |   |                       |   |                          |   | -                                        |   |       |   |                         |   |          |   |                            |
| Issuance                of common stock              | 970,124        |   | -           |   | 970                         |   | 9,199,610                  |   | -                             |   | -                                        |   | -          |   | -                            |   | -             |   | 9,200,580                       |
| Stock                issuance cost                   | -              |   |        |   |                        |   | (432,067)                  |   | -                             |   | -                                        |   | -          |   | -                            |   | -             |   | (432,067)                       |
| Common                stock receivable               | -              |   |        |   |                        |   | -                          |   | -                             |   | -                                        |   | 750        |   | -                            |   | -             |   | 750                             |
| Drilling                program equity               | -              |   |        |   |                        |   | 1,736,625                  |   | -                             |   | -                                        |   | -          |   | -                            |   | -             |   | 1,736,625                       |
| Net                loss                              | -              |   |        |   |                        |   | -                          |   | -                             |   | -                                        |   | -          |   | (9,730,071)                  |   | -             |   | (9,730,071)                     |
|                                                 |           |   |        |   |                        |   |                       |   |                          |   |                                     |   |       |   |                         |   |          |   |                            |
| Balance                at                            |           |   |        |   |                        |   |                       |   |                          |   |                                     |   |       |   |                         |   |          |   |                            |
| December                31, 2005                     | 22,806,176     |   | 100,025     |   | $                22,806     |   | $25,629,775                |   | -                             |   | -                                        |   | -          |   | $(18,066,491)                |   | $(13,370)     |   | $                7,572,720      |
|                                                 |           |   |        |   |                        |   |                       |   |                          |   |                                     |   |       |   |                         |   |          |   |                            |
| Issuance                of common stock              | 740,479        |   |        |   | 601                         |   | 3,373,745                  |   | -                             |   | -                                        |   | -          |   | -                            |   | -             |   | 3,374,346                       |
| Stock                issuance cost                   | -              |   | -           |   | -                           |   | (310,740)                  |   | -                             |   | -                                        |   | -          |   | -                            |   | -             |   | (310,740)                       |
| Warrants                (see note 10)                | -              |   | -           |   | -                           |   | -                          |   | $                247,313      |   | -                                        |   | -          |   | -                            |   | -             |   | 247,313                         |
| Stock                Based Compensation (see note 5) | -              |   | -           |   | -                           |   | -                          |   | 1,262,404                     |   | -                                        |   | -          |   | -                            |   | -             |   | 1,262,404                       |
| Great                Valley Drilling / GVPS          | -              |   | -           |   | -                           |   | -                          |   | -                             |   | $                5,438,087               |   | -          |   | -                            |   | -             |   | 5,438,087                       |
| Net                loss                              | -              |   | -           |   | -                           |   | -                          |   | -                             |   | -                                        |   | -          |   | (940,512)                    |   | -             |   | (940,512)                       |
| **Balance                at**                        |           |   |        |   |                        |   |                       |   |                          |   |                                     |   |       |   |                         |   |          |   |                            |
| **December                31, 2006**                 | **23,546,655** |   | **100,025** |   | **$                23,407** |   | **$28,692,780**            |   | **$1,509,717**                |   | ** ****$                5,438,087** |   | -          |   | **$(19,007,003)**            |   | **$(13,370)** |   | **$                16,643,618** |   |

----

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                   |   | For                the Years Ended December 31, |       |
|------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                                                                                   |   | 2006                                            |       | 2005 |   | 2004 |   |
|                                                                                                                   |   |                                            |       |   |   |   |   |
|                                                                                                                   |   |                                            |       |   |   |   |   |
| CASH                PROVIDED (USED) BY OPERATING ACTIVITIES                                                            |   |                                            |            |   |   |  |   |   |  |   |
| Net                loss                                                                                                |   | $                                               | (940,512   | ) | $ | (9,730,071 | ) | $ | (1,171,005 | ) |
| Income                from discontinued operations                                                                     |   |                                            | -          |   |   | (4,810,364 | ) |   | - |   |
| Gain                on disposal of discontinued operations, net                                                        |   |                                            | (4,940,764 | ) |   | - |   |   | - |   |
|                                                                                                                   |   |                                            |       |   |   |   |   |   |   |   |
| Loss                from continuing operations                                                                         |   |                                            | (5,881,276 | ) |   | (4,919,707 | ) |   | (1,171,005 | ) |
| Adjustments                to reconcile net (loss) to net cash                                                         |   |                                            |       |   |   |   |   |   |  |   |
| provided                (used) by operating activities:                                                                |   |                                            |       |   |   |   |   |   |  |   |
| Depreciation,                depletion, and amortization                                                               |   |                                            | 585,439    |   |   | 242,527 |   |   | 21,699 |   |
| Impairment,                dry hole and other disposals of property                                                    |   |                                            | 459,243    |   |   | 90,165 |   |   | 112,395 |   |
| Stock-based                compensation costs, net of taxes                                                            |   |                                            | 1,262,404  |   |   | - |   |   | - |   |
| Warrant                costs from issuance of restricted common stock                                                  |   |                                            | 247,313    |   |   | - |   |   | - |   |
| (Gain)                or loss on sale of property                                                                      |   |                                            | -          |   |   | 131,766 |   |   | - |   |
| Property,                mining claims & services paid with common stock                                           |   |                                            | -          |   |   | 5,666,575 |   |   | 804,180 |   |
| Changes                in operating capital:                                                                           |   |                                            |       |   |   |   |   |   |  |   |
| (Increase)                decrease in accounts receivable                                                              |   |                                            | 54,591     |   |   | (89,862 | ) |   | (28,183 | ) |
| (Increase)                decrease in prepaids                                                                         |   |                                            | -          |   |   | 53,527 |   |   | (31,719 | ) |
| (Increase)                decrease in deposits and other assets                                                        |   |                                            | 191,370    |   |   | (14,874 | ) |   | 87,671 |   |
| Increase                (decrease) in income taxes payable                                                             |   |                                            | -          |   |   | - |   |   | (39,000 | ) |
| Increase                (decrease) in accounts payable and accrued expenses                                            |   |                                            | 999,323    |   |   | (445,454 | ) |   | 552,064 |   |
| Increase                (decrease) in amounts payable to joint venture participants and related                parties |   |                                            | (82,680    | ) |   | 263,380 |   |   | 8,840 |   |
| Increase                (decrease) in advances from joint venture                                                      |   |                                            |       |   |   |   |   |   |  |   |
| participants                                                                                                           |   |                                            | 90,264     |   |   | (1,003,031 | ) |   | 674,526 |   |
|                                                                                                                   |   |                                            |       |   |   |   |   |   |   |   |
| Net                cash provided by (used in) continuing operations                                                    |   |                                            | (2,074,009 | ) |   | (24,988 | ) |   | 991,468 |   |
| Net                cash provided by (used in) discontinued operations                                                  |   |                                            | -          |   |   | (4,446,650 | ) |   | 31,719 |   |
| Net                Cash Provided (Used) by Operating Activities                                                        |   |                                            | (2,074,009 | ) |   | (4,471,638 | ) |   | 1,023,187 |   |
|                                                                                                                   |   |                                            |       |   |   |   |   |   |   |   |
| CASH                PROVIDED (USED) BY INVESTING ACTIVITIES                                                            |   |                                            |       |   |   |   |   |   |  |   |
| Proceeds                from sale of property                                                                          |   |                                            | 461,752    |   |   | - |   |   | - |   |
| Proceeds                from sale of discontinued operations                                                           |   |                                            | 13,838,625 |   |   | - |   |   | - |   |
| Capital                expenditures                                                                                    |   |                                            | (5,985,076 | ) |   | (6,494,822 | ) |   | (242109 | ) |
| (Investment                in) advance to joint project                                                                |   |                                            | -          |   |   | - |   |   | (150,000 | ) |
|                                                                                                                   |   |                                            |       |   |   |   |   |   |   |   |
| Net                cash provided by (used in) continuing operations                                                    |   |                                            | 8,315,301  |   |   | (6,494,822 | ) |   | (392,109 | ) |
| Net                cash provided by (used in) discontinued operations                                                  |   |                                            | -          |   |   | (4,256,602 | ) |   | (127,072 | ) |
|                                                                                                                   |   |                                            |       |   |   |   |   |   |   |   |
| Net                Cash Provided (Used) by Investing Activities                                                        |   |                                            | 8,315,301  |   |   | (10,751,424 | ) |   | (519,181 | ) |
|                                                                                                                   |   |                                            |       |   |   |   |   |   |   |   |
|                                                                                                                   |   |                                            |       |   |   |   |   |   |   |   |
|                                                                                                                   |   |                                            |       |   |   |   |   |   |   |   |

----

**CONSOLIDATED      STATEMENTS OF CASH FLOWS -continued**

**TRI-VALLEY      CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

| For                the Years Ended December 31, |   |   |
|-------------------------------------------------|--------|--------|
|                                            |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |

| CASH                PROVIDED (USED) BY FINANCING ACTIVITIES                                                                                                          |   |   |       |   |   |      |   |   |      |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|
| Proceeds                from long-term debt                                                                                                                          |   |   | 1,609,081  |   |   | -         |   |   | -         |   |
| Proceeds                from long-term debt - related parties                                                                                                        |   |   | 1,200,000  |   |   | 3,666,765 |   |   | -         |   |
| Principal                payments on long-term debt                                                                                                                  |   |   | (6,210,056 | )      |   | (311,673  | )      |   | (10,006   | )      |
| Net                proceeds from additional paid in capital - Great                Valley Drilling Company, LLC /Great Valley                Production Company, LLC |   |   | 5,438,087  |   |   | -         |   |   | -         |   |
| Net                Proceeds from issuance of common stock                                                                                                            |   |   | 2,442,890  |   |   | 3,101,938 |   |   | 5,310,224 |   |
|                                                                                                                                                                 |   |   |       |   |   |      |   |   |      |   |
| Net                cash provided by (used in) continuing operations                                                                                                  |   |   | 4,480,002  |   |   | 6,457,030 |   |   | 5,301,939 |   |
| Net                cash provided by (used in) discontinued operations                                                                                                |   |   | -          |   |   | 1,830,033 |   |   | -         |   |
|                                                                                                                                                                 |   |   |       |   |   |      |   |   |      |   |
| Net                Cash Provided (Used) by Financing Activities                                                                                                      |   |   | 4,480,002  |   |   | 8,287,063 |   |   | 5,301,939 |   |

| For                the Years Ended December 31,                       |   |   |
|-----------------------------------------------------------------------|--------|--------|
|                                                                  |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
| Net                Increase (Decrease) in Cash and Cash Equivalents   |   | $      | 10,721,294 |   | $ | (6,935,999 | ) | $ | 5,805,945 |   |
|                                                                  |   |   |   |   |   |   |   |   |  |   |
| Cash                at Beginning of Year                              |   |   | 4,876,921 |   |   | 11,812,920 |   |   | 6,006,975 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Cash                at End of Year**                                |   | **$**  | **15,598,215** |   | **$** | **4,876,921** |   | **$** | **11,812,920** |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                  |
| **SUPPLEMENTAL                DISCLOSURES OF CASH FLOW INFORMATION:** |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
| Interest                paid                                          |   | $      | 352,815 |   | $ | 377,943 |   | $ | 33,332 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
| Income                taxes paid                                      |   | $      | - |   | $ | - |   | $ | - |   |

| **SUPPLEMENTAL                NON-CASH ACTIVITIES:**           |
|----------------------------------------------------------------|
| Property                & services paid with common stocks |   | $ | 620,716 |   | $ | 2,662,075 |   | $ | 92,200 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |
| Stock                issued to exchange mining claims          |   | $ | - |   | $ | 3,004,500 |   | $ | 712,000 |   |

----

**TRI-VALLEY      CORPORATION**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      1 - GENERAL**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

*"Accounting      for Asset Retirement Obligations"*

----

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

*“Goodwill      and Other Intangible Assets”*

*Sale      of Oil and Gas*

*Drilling      and Development*

*Drilling      Agreements/Joint Ventures*

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

----

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

*“Accounting      for Suspended Well Costs.”*

*Accounting      for Conditional Asset Retirement Obligations*

----

|                                                      | December                31,  |   | December                31, |   | December                31, |
|-----------------------------------------------------------|------------------------------|--------|-----------------------------|--------|-----------------------------|
|                                                      | 2006                         |   | 2005                        |   | 2004                        |
|                                                      |                         |   |                        |   |                        |
| **Beginning                asset retirement obligations** | **$                92,108**  |   | **$                0**      |   | **$                0**      |
|                                                      |                         |   |                        |   |                        |
| Liabilities                assumed in acquisitions        | 111,364(2)                   |   | 92,108(1)                   |   | 0                           |
| Accretion                of discount                      | 13,242                       |   |                        |   |                        |
|                                                      |                         |   |                        |   |                        |
| **Ending                asset retirement obligations**    | **$                216,714** |   | **$                92,108** |   | **$                0**      |

| (1)   | The                Company’s portion of the liability for the plugging and abandonment of the                wells acquired from the Temblor Valley, Pleasant Valley and previous                acquisitions. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The                Company’s portion of the liability for the plugging and abandonment of the                wells acquired from the C & L/Crofton & Coffee lease, the Claflin                lease and the SP/Chevron lease. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Office                furniture and fixturesVehicle,                machinery & equipmentBuilding | 3                -                7 years5                -                10 years15                years |
|-------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|

----

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

*“Share-Based      Payment”*

|                                                                                                                                                      |                       | December                31,                |   | December                31,  |   | December                31,  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|--------------------------------------------|--------|------------------------------|--------|------------------------------|
|                                                                                                                                                      |                       | 2006                                       |   | 2005                         |   | 2004                         |
|                                                                                                                                                      |                       |                                       |   |                         |   |                         |
| Net                Income                                                                                                                                 | As                reported | $                (                940,512) |   | $                (9,730,071) |   | $                (1,171,005) |
| Add:                Stock-based compensation expense included in reported net income,                net of                tax benefit                    |                       | 1,262,404                                  |   | --                           |   | --                           |
| Deduct:                Stock-based compensation expense determined under fair value based                method                for all awards, net of tax |                       | (1,262,404)                                |   | (631,000)                    |   | --                           |
|                                                                                                                                                      | Pro                forma   | $                (940,512)                 |   | $(10,361,071)                |   | $                (1,171,005) |
|                                                                                                                                                      |                       |                                       |   |                         |   |                         |
| Earnings                per share                                                                                                                         | As                reported | (0.04)                                     |   | (0.43)                       |   | (0.06)                       |
|                                                                                                                                                      | Pro                forma   | (0.04)                                     |   | (0.46)                       |   | (0.06)                       |

*Accounting      for Convertible Debt and Debt issued with Stock Purchase Warrants (APB14)*
*Accounting      for Convertible Securities with Beneficial Conversion Features or Contingently      Adjustable Conversion Ratios, (EITF 98-5) *
*Application      of Issue No 98-5 to Certain Convertible Instruments and (EITF 00-27)*

* *

----

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

**Recently      Issued Accounting Pronouncements**

*“Accounting      for Conditional Asset Retirement Obligations.”*
*“Accounting      for Asset Retirement Obligations”, *

*Accounting      Changes and Error Corrections*

*Accounting      for Certain Hybrid Financial Instruments—an amendment of FASB Statements No. 133      and 140 *
*Application      of Statement 133 to Beneficial Interests in Securitized Financial      Assets*

*“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 - PROPERTY AND EQUIPMENT**

|                                                   |   | December                31, |           |
|--------------------------------------------------------|--------|-----------------------------|----------------|
|                                                   |   |                        | 2006           |   |   | 2005 |   |
| Oil                and gas - California                |   |                        |           |   |   |   |   |
| Proved                properties, gross                |   | $                           | 2,169,496      |   | $ | 1,795,653 |   |
| Accumulated                depletion                   |   |                        | (761,571       | ) |   | (649,550 | ) |
| Proved                properties, net                  |   |                        | 1,407,925      |   |   | 1,146,103 |   |
| Unproved                properties                     |   |                        | 2,792,340      |   |   | 3,009,564 |   |
| Total                oil and gas properties            |   |                        | 4,200,265      |   |   | 4,155,667 |   |
|                                                   |   |                        |           |   |   |   |   |
| Rigs                                                   |   |                        | 5,444,646      |   |   | 215,000 |   |
| Accumulated                depreciation                |   |                        | (73,053        | ) |   | - |   |
| Total                Rigs                              |   |                        | 5,371,593      |   |   | 215,000 |   |
|                                                   |   |                        |           |   |   |   |   |
| Other                property and equipment            |   |                        |           |   |   |   |   |
| Land                                                   |   |                        | 21,281         |   |   | 21,281 |   |
| Building                                               |   |                        | 45,124         |   |   | 2,739,442 |   |
| Leasehold                improvements                  |   |                        | -              |   |   | 577,619 |   |
| Machinery                and Equipment                 |   |                        | 2,414,824      |   |   | 4,881,271 |   |
| Vehicles                                               |   |                        | 407,739        |   |   | 1,414,416 |   |
| Transmission                tower                      |   |                        | 51,270         |   |   | 51,270 |   |
| Office                furniture and equipment          |   |                        | 159,241        |   |   | 202,587 |   |
|                                                   |   |                        | 3,099,479      |   |   | 9,887,886 |   |
| Accumulated                depreciation                |   |                        | (595,294       | ) |   | (622,572 | ) |
| Total                other property and equipment, net |   |                        | 2,504,185      |   |   | 9,265,314 |   |
|                                                   |   |                        |           |   |   |   |   |
| **Property                and equipment, net**         |   | **$**                       | **12,076,043** |   | **$** | **13,635,981** |   |

----

**NOTE      4 - NOTES PAYABLE**

|                                                                                                                                                                                                                                                                                                                                                                                                                              | December                31, |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                              | 2006                        |   | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Various                notes outstanding December 31, 2005 paid in full during 2006, with                interest rates ranging from 6.79% to 13.45% and remaining maturities                ranging from 1 to 9 years. Secured by equipment and an industrial                building                site.                                                                                                                       | -                           |   | $                3,691,262 |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to Rabobank dated October 5, 2005, secured by a vehicle,                interest                at 6.5%, payable in 60 monthly installments of $599.                                                                                                                                                                                                                                             | $                25,119     |   | 29,238 |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to Jim Burke Ford dated November 18,                                                                                                                                                                                                                                                                                                                                                             |                        |   |   |
| 2005;                secured by a vehicle; interest at 6.49%; payable                                                                                                                                                                                                                                                                                                                                                        |                        |   |   |
| in                60 monthly installments of $714.                                                                                                                                                                                                                                                                                                                                                                      | 30,520                      |   | 35,893 |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to Sealaska Corporation dated July 15,                                                                                                                                                                                                                                                                                                                                                           |                        |   |   |
| 2005;                secured by mining machines and equipment;                                                                                                                                                                                                                                                                                                                                                               |                        |   |   |
| imputed                interest at 7.5%; payable in 10 yearly                                                                                                                                                                                                                                                                                                                                                                |                        |   |   |
| installments                of $200,000. Face amount was $2,000,000 before the imputed interest                discount of $627,184 which resulted in a principal amount of                $1,372,816.                                                                                                                                                                                                                            | 1,275,777                   |   | 1,420,006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to Jim Burke Ford dated November 18,                                                                                                                                                                                                                                                                                                                                                             |                        |   |   |
| 2005;                secured by a vehicle; interest at 6.49%; payable                                                                                                                                                                                                                                                                                                                                                        |                        |   |   |
| in                60 monthly installments of $493.                                                                                                                                                                                                                                                                                                                                                                                | 20,351                      |   | 24,759 |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to Three Way Chevrolet dated April 03, 2006; secured by a                vehicle;                interest at 5.90%; payable in 60 monthly installments of                $577.                                                                                                                                                                                                                        | 27,356                      |   | - |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to Three Way Chevrolet dated February 24, 2006; secured by                a                vehicle; interest at 9.70%; payable in 60 monthly installments of                $1,324.                                                                                                                                                                                                                   | 56,864                      |   | - |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to Moss Family Trust dated February 14, 2006; secured by                100,000                shares of Tri Valley corporation unregistered restricted common stock;                interest at 12.00%; payable in 60 monthly installments of                $13,747.                                                                                                                                | 547,108                     |   | - |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to Moss Family Trust dated March 8, 2006; secured by 40,000                shares                of Tri Valley corporation unregistered restricted common stock; interest                at 12.00%; payable in 60 monthly installments of $5,728                                                                                                                                                      | 227,961                     |   | - |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |   |   |
| Note                payable to F. Lynn Blystone and Patricia L Blystone dated March 21,                2006;                secured by 6% overriding royalty interest in the Temblor Valley                Production; interest at 1.00% per month, payable on April 21,                2007.( also                see note 5 - related party transactions) This note was paid in full                in                2007 | 150,000                     |   | - |

----

**NOTE      4 - NOTES PAYABLE (continued)**

|   | December                31, |
|--------|-----------------------------|
|   | 2006                        |   | 2005 |

|                                                                                                                                                                                                           |    |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|--------|--------|
| Note                payable to Sun Valley Trust dated December 01, 2006; payable in 6                monthly                installments of $50,000. Unsecured                                                 | 300,000 |   | -      |
|                                                                                                                                                                                                           |    |   |   |
| Note                payable to Three Way Chevrolet dated September 11, 2006; secured                by a                vehicle; interest at 4.90%; payable in 60 monthly installments of                $927. | 46,994  |   | -      |
|                                                                                                                                                                                                           |    |   |   |
| Note                payable to Three Way Chevrolet dated September 11, 2006; secured                by a                vehicle; interest at 6.90%; payable in 60 monthly installments of                $633. | 30,631  |   | -      |
|                                                                                                                                                                                                           |    |   |   |
|                                                                                                                                                                                                           |    |   |   |

| Note                payable to Three Way Chevrolet dated October 31, 2006; secured by                a                vehicle; interest at 9.70%; payable in 60 monthly installments of                $1,679.43. | 78,272 |   | - |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---|

| Note                payable to Gary D, Borgna and Julie R. Borgna, and Equipment 2000                dated                December 30, 2006; secured by Rig Equipment; imputed interest at                8.00%;                payable in 120 monthly installments of $9,100 and a payment of $300,000                paid January 3, 2007. Face amount was $1,392,000 before the discount                of                $342,000 which resulted in a principal amount of $1,050,000. (also                see                note 5 - related party transactions) | 1,050,000                      |   | -                              |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                           |   |                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 3,866,953                      |   | 5,201,158                      |
| Less                current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 1,120,105                      |   | 966,649                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                           |   |                           |
| Long-term                portion of notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **$                2,746,848** |   | **$                4,234,509** |

| 2007      |   | $                1,120,105 |
|-----------|--------|----------------------------|
| 2008      |   | 401,213                    |
| 2009      |   | 440,720                    |
| 2010      |   | 481,970                    |
| 2011      |   | 304,293                    |
| 2012-2016 |   | 1,118,652                  |
|      |   |                       |
|      |   | $                3,866,953 |

----

**NOTE      5 - RELATED PARTY TRANSACTIONS**

| Year |   | Expected                Life |   | Expected                Dividends |   | Expected                Volatility |   | Risk-Free                Interest Rates |
|------|--------|------------------------------|--------|-----------------------------------|--------|------------------------------------|--------|-----------------------------------------|
| 2006 |   | 8.8                          |   | None                              |   | 71%                                |   | 5.10                                    |

|                                    |   |                                    |   |                                                |   |                                      |   |                          |                                                                            |
|-----------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------------------|--------|-------------------------------------------|--------|-------------------------------|---------------------------------------------------------------------------------|
|                                    |   | Number                Outstanding       |   | Number                Outstanding & exercisable |   | Weighted-Average                          |   | Weighted-Average              | Intrinsic                Value(1)                at                December 31, |
| Range                of Exercise Prices |   | at                December 31, **2006** |   | at                December 31, **2006**             |   | Remaining                Contractual Life |   | Exercise                Price | **2006**(in                thousands)                                           |
|                                    |   |                                    |   |                                                |   |                                      |   |                          |                                                                            |
| $.50                - $10.00            |   | 2,914,850                               |   | 2,674,850                                           |   | 3.6                years                  |   | $2.26                         | $19,340                                                                         |

|                                    |   |                                    |   |                                                |   |                                      |   |                          |                                                                            |
|-----------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------------------|--------|-------------------------------------------|--------|-------------------------------|---------------------------------------------------------------------------------|
|                                    |   | Number                Outstanding       |   | Number                Outstanding & exercisable |   | Weighted-Average                          |   | Weighted-Average              | Intrinsic                Value(2)                at                December 31, |
| Range                of Exercise Prices |   | at                December 31, **2005** |   | at                December 31, **2005**             |   | Remaining                Contractual Life |   | Exercise                Price | **2005**(in                thousands)                                           |
|                                    |   |                                    |   |                                                |   |                                      |   |                          |                                                                            |
| $.50                - $10.00            |   | 2,757,600                               |   | 2,647,600                                           |   | 4.2                years                  |   | $1.70                         | $16,097                                                                         |

----

**NOTE      5 - RELATED PARTY TRANSACTIONS (continued)**

|                                    |   |                                    |   |                                                |   |                                      |   |                          |                                                                            |
|-----------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------------------|--------|-------------------------------------------|--------|-------------------------------|---------------------------------------------------------------------------------|
|                                    |   | Number                Outstanding       |   | Number                Outstanding & exercisable |   | Weighted-Average                          |   | Weighted-Average              | Intrinsic                Value(3)                at                December 31, |
| Range                of Exercise Prices |   | at                December 31, **2004** |   | at                December 31, **2004**             |   | Remaining                Contractual Life |   | Exercise                Price | **2004**(in                thousands)                                           |
|                                    |   |                                    |   |                                                |   |                                      |   |                          |                                                                            |
| $.50                - $2.43             |   | 2,553,600                               |   | 2,553,600                                           |   | 5.2                years                  |   | $1.28                         | $27,960                                                                         |

*Unrecognized      Compensation Expense*

|                                                                          | 2006                  |   | 2005                  |   | 2004                  |
|-------------------------------------------------------------------------------|-----------------------|--------|-----------------------|--------|-----------------------|
|                                                                          |                  |   | Weighted-             |   |                  |   | Weighted- |   |   |   | Weighted- |
|                                                                          |                  |   | Average               |   |                  |   | Average |   |   |   | Average |
|                                                                          |                  |   | Exercise              |   |                  |   | Exercise |   |   |   | Exercise |
|                                                                          | Shares                |   | Price                 |   | Shares                |   | Price |   | Shares |   | Price |
| Fixed                Options                                                  |                  |   |                  |   |                  |   |   |   |   |   |   |
| Outstanding                at beginning of year                               | 2,757,600             |   | $                2.03 |   | 2,553,600             |   | $                1.28 |   | 3,018,600 |   | $                1.27 |
| Granted                                                                       | 445,000               |   | $                6.19 |   | 271,000               |   | $                5.82 |   | - |   | $                - |
| Exercised                                                                     | (287,750)             |   | $                2.03 |   | (67,000)              |   | $                1.94 |   | (465,000) |   | $                1.20 |
| Cancelled                                                                     | -                     |   | -                     |   | -                     |   | - |   | - |   | - |
|                                                                          |                  |   |                  |   |                  |   |   |   |   |   |   |
| Outstanding                at end of year                                     | 2,914,850             |   | $                2.67 |   | 2,757,600             |   | $                2.03 |   | 2,553,600 |   | $                1.28 |
|                                                                          |                  |   |                  |   |                  |   |   |   |   |   |   |
| Options                exercisable at year-end                                | 2,674,850             |   | $                2.26 |   | 2,647,600             |   | $                1.70 |   | 2,553,600 |   | $                1.28 |
|                                                                          |                  |   |                  |   |                  |   |   |   |   |   |   |
| Weighted-average                fair value of options granted during the year |                  |   |
|                                                                          | $                4.78 |   |                  |   | $                3.32 |   |   |   | n/a |   |   |
|                                                                          |                  |   |                  |   |                  |   |   |   |   |   |   |
| Available                for issuance                                         | 824,000               |   |                  |   |  119,000         |   |   |   |  390,000 |   |   |
|                                                                          |                  |   |                  |   |                  |   |   |   |   |   |   |

----

**NOTE      5 - RELATED PARTY TRANSACTIONS (continued)**

|                                          |                            |   |                                                  |
|-----------------------------------------------|---------------------------------|--------|-------------------------------------------------------|
|                                          | Number                of Shares |   | Weighted-Average                Grant-Date Fair Value |
|                                          |                            |   |                                                  |
| Nonvested                at December 31, 2005 | 115,000                         |   | $                8.59                                 |
|                                          |                            |   |                                                  |
| Granted                                       | 445,000                         |   | $                6.19                                 |
| Vested                                        | (315,000)                       |   | $                6.99                                 |
|                                          |                            |   |                                                  |
| Nonvested                at December 31, 2006 | 245,000                         |   | $                6.95                                 |

|                                                                                                                                                                                                                |                       |   | December                31,   |   |                       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|--------|-------------------------------|--------|----------------------------|
|                                                                                                                                                                                                                | 2006                       |   | 2005                          |   | 2004                       |
|                                                                                                                                                                                                                |                       |   |                          |   |                       |
| Drilling                and development revenue                                                                                                                                                                     | $                2,497,256 |   | $                11,422,234   |   | $                3,559,500 |
|                                                                                                                                                                                                                |                       |   |                          |   |                       |
| Drilling                and development costs                                                                                                                                                                       | $                1,799,792 |   | $                9,267,621    |   | $                2,224,793 |
|                                                                                                                                                                                                                |                       |   |                          |   |                       |
| Advances                from joint ventureparticipants,                net                                                                                                                                          | $                5,408,909 |   | $                5,318,645    |   | $                6,321,676 |
|                                                                                                                                                                                                                |                       |   |                          |   |                       |
|                                                                                                                                                                                                                |
| Oil                and gas income from the Tri-Valley Oil & Gas Exploration Programs                1971-1 for fiscal year ended December 31, 2006, 2005 and 2004 are                as                follows: |
|                                                                                                                                                                                                                |
|                                                                                                                                                                                                                |                       |   | December                  31, |   |                       |
|                                                                                                                                                                                                                | 2006                       |   | 2005                          |   | 2004                       |
|                                                                                                                                                                                                                |                       |   |                          |   |                       |
| Partnership                income, net of expenses                                                                                                                                                                  | $                45,000    |   | $                30,000       |   | $                30,000    |

----

**NOTE      6 - EARNINGS PER SHARE**

| Year |   | Full                Year Basic Earnings (Loss) Per Share |   | Weighted-Average                Shares Outstanding |   | Weighted-Average                Potentially Dilutive Shares Outstanding |
|------|--------|----------------------------------------------------------|--------|----------------------------------------------------|--------|-------------------------------------------------------------------------|
| 2006 |   | $                (0.04)                                  |   | 23,374,205                                         |   | 26,377,537                                                              |
| 2005 |   | $                (0.43)                                  |   | 22,426,580                                         |   | 25,030,468                                                              |
| 2004 |   | $                (0.06)                                  |   | 20,507,342                                         |   | 23,060,942                                                              |

**NOTE      7 - INCOME TAXES**

|                                             | December                31, |   | December                31, |   | December                31, |
|--------------------------------------------------|-----------------------------|--------|-----------------------------|--------|-----------------------------|
|                                             | 2006                        |   | 2005                        |   | 2004                        |
|                                             |                        |   |                        |   |                        |
| Deferred                tax assets:              |                        |   |                        |   |                        |
| Net                operating loss carryforwards  | $                7,352,000  |   | $                5,184,000  |   | $                776,000    |
| Statutory                depletion carryforwards | 496,000                     |   | 384,000                     |   | 356,000                     |
|                                             |                        |   |                        |   |                        |
| Total                deferred tax assets         | 7,848,000                   |   | 5,568,000                   |   | 1,132,000                   |
| Valuation                allowance               | (7,848,000)                 |   | (5,568,000)                 |   | (1,132,000)                 |
|                                             |                        |   |                        |   |                        |
| **Net                deferred tax assets**       | **$                -**      |   | **$                -**      |   | **$                -**      |

|                                                                     | December                31,  |   | December                31,  |   | December                31,  |
|--------------------------------------------------------------------------|------------------------------|--------|------------------------------|--------|------------------------------|
|                                                                     | 2006                         |   | 2005                         |   | 2004                         |
| Income                (loss) before tax                                  | $                (5,823,881) |   | $                (9,730,071) |   | $                (1,171,005) |
|                                                                     |                         |   |                         |   |                         |
| Computed                "expected" tax (benefit)                         | $                (2,330,000) |   | $                (3,892,000) |   | $                (468,000)   |
| State                tax liability                                       | -                            |   | -                            |   | -                            |
|                                                                     |                         |   |                         |   |                         |
| Utilization                (non-utilization) of operating loss carryover | 2,330,000                    |   | 3,892,000                    |   | 468,000                      |
| **Total                income tax provision**                            | **$                -**       |   | **$                -**       |   | **$                -**       |

----

**NOTE      8 - MAJOR CUSTOMERS**

**NOTE      9 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS**

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

|                                                                                                                                                                                                                                                   | Oil                and Gas  |   |                                   |   |                        |   | Drilling                and |   |                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|--------|----------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|-----------------------------|
|                                                                                                                                                                                                                                                   | Production                  |   | Rig                                    |   | Minerals                    |   | Development                 |   | Total                       |
| Year                ended December 31, 2006                                                                                                                                                                                                            |                        |   |                                   |   |                        |   |                        |   |                        |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Revenues                from external customers                                                                                                                                                                                                        | $                1,212,116  |   |   $                1,033,539 |   | $                178,500    |   | $                2,497,256  |   | $                4,921,411  |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Interest                revenue                                                                                                                                                                                                                        | $                72,707     |   | $                -                     |   | $                -          |   | $                -          |   | $                72,707     |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Interest                expense                                                                                                                                                                                                                        | $                26,834     |   | $                2,373                 |   | $                267,465    |   | $                -          |   | $                396,672    |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Operating                income (loss)                                                                                                                                                                                                                 | $                640,475    |   |  $                306,719         |   | $                (465,153)  |   | $                697,465    |   | $                1,179,506  |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Expenditures                for segment assets                                                                                                                                                                                                         | $                1,146,146  |   |  $                5,444,646       |   | $                15,000     |   | $                -          |   | $                6,605,792  |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Depreciation,                depletion, and amortization                                                                                                                                                                                               | $                159,289    |   |   $                81,530    |   | $                344,620    |   | $                -          |   | $                585,439    |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Total                assets                                                                                                                                                                                                                            | $                18,517,488 |   | $                7,853,046             |   | $                2,283,591  |   | $                -          |   | $                28,654,125 |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Estimated                income tax benefit(expense)                                                                                                                                                                                                   | $                -          |   |   $                -         |   | $                -          |   | $                -          |   | $                -          |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| Net                income (loss)                                                                                                                                                                                                                       | $(4,638,280)                |   | $                (51,343)              |   | $                3,051,646* |   | $                697,465    |   | $                (940,512)  |
|                                                                                                                                                                                                                                                   |                        |   |                                   |   |                        |   |                        |   |                        |
| *                In the fourth quarter we sold our interest in Tri-Western Resources                and an                associated industrial site for a net gain of $4,940,764. See note                12 for a                pro forma schedule. |

----

**NOTE      9- FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS      (Continued)**

|                                                     | Oil                and Gas   |   |                         |   | Drilling                and |   |                         |
|----------------------------------------------------------|------------------------------|--------|------------------------------|--------|-----------------------------|--------|------------------------------|
|                                                     | Production                   |   | Minerals                     |   | Development                 |   | Total                        |
| Year                ended December 31, 2005              |                         |   |                         |   |                        |   |                         |
|                                                     |                         |   |                         |   |                        |   |                         |
| Revenues                from external customers          | $                932,042     |   | $                200         |   | $                11,422,234 |   | $                12,354,476  |
|                                                     |                         |   |                         |   |                        |   |                         |
| Interest                revenue                          | $                118,609     |   | $                2,295       |   | $                -          |   | $                120,904     |
|                                                     |                         |   |                         |   |                        |   |                         |
| Interest                expense                          | $                2,115       |   | $                375,829     |   | $                -          |   | $                377,944     |
|                                                     |                         |   |                         |   |                        |   |                         |
| Operating                income (loss)                   | $                (2,248,486) |   | $                (3,610,142) |   | $                2,154,613  |   | (3,704,015)                  |
|                                                     |                         |   |                         |   |                        |   |                         |
| Expenditures                for segment assets           | $                1,260,884   |   | $                9,490,540   |   | $                -          |   | $                10,751,424  |
|                                                     |                         |   |                         |   |                        |   |                         |
| Depreciation,                depletion, and amortization | $                58,319      |   | $                442,134     |   | $                -          |   | $                500,453     |
|                                                     |                         |   |                         |   |                        |   |                         |
| Total                assets                              | $                8,427,037   |   | $                9,614,726   |   | $                1,696,967  |   | $                19,738,730  |
|                                                     |                         |   |                         |   |                        |   |                         |
| Estimated                income tax benefit(expense)     | $                -           |   | $                -           |   | $                -          |   | $                -           |
|                                                     |                         |   |                         |   |                        |   |                         |
| Net                income (loss)                         | $                (5,615,595) |   | $                (6,269,089) |   | $                2,154,613  |   | $                (9,730,071) |
|                                                     |                         |   |                         |   |                        |   |                         |
| Year                ended December 31, 2004              |                         |   |                         |   |                        |   |                         |
|                                                     |                         |   |                         |   |                        |   |                         |
| Revenues                from external customers          | $                830,148     |   | $                -           |   | $                3,559,500  |   | $                4,389,648   |
|                                                     |                         |   |                         |   |                        |   |                         |
| Interest                revenue                          | $                45,990      |   | $                -           |   | $                -          |   | $                45,990      |
|                                                     |                         |   |                         |   |                        |   |                         |
| Interest                expense                          | $                33,332      |   | $                -           |   | $                -          |   | $                33,332      |
|                                                     |                         |   |                         |   |                        |   |                         |
| Operating                income (loss)                   | $                1,761,815   |   | $                (1,029,898) |   | $                258,939    |   | $                990,856     |
|                                                     |                         |   |                         |   |                        |   |                         |
| Expenditures                for segment assets           | $                369,181     |   | $                -           |   | $                -          |   | $                369,181     |
|                                                     |                         |   |                         |   |                        |   |                         |
| Depreciation,                depletion, and amortization | $                21,699      |   | $                -           |   | $                -          |   | $                21,699      |
|                                                     |                         |   |                         |   |                        |   |                         |
| Total                assets                              | $                14,473,326  |   | $                -           |   | $                -          |   | $                14,473,326  |
|                                                     |                         |   |                         |   |                        |   |                         |
| Estimated                income tax benefit (expense)    | $                -           |   | $                -           |   | $                -          |   | $                -           |
|                                                     |                         |   |                         |   |                        |   |                         |
| Net                income (loss)                         | $                (400,046)   |   | $                (1,029,898) |   | $                258,939    |   | $                (1,171,005) |
|                                                     |                         |   |                         |   |                        |   |                         |

----

**NOTE      10 - COMMON STOCK and WARRANTS**

| -   | During                the year various directors and employees of the Company exercised                stock                options previously granted. The new shares issued pursuant to the                stock                option plan amounted to 202,593 shares. Cash consideration received                totaled to $280,875. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | The                Company pledged 140,000 common shares as security of two notes payable. |
|---------------|--------------------------------------------------------------------------------------------|

| -   | The                Company issued 16,261 shares as a deposit to Sun Valley Trust. The                stock                was valued at $6.15 per share. The deposit was subsequently applied                to the                purchase price of three leases at the date of                closing. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | The                Company issued 5,280 shares to a consultant for $43,042 in services                at an                agreed price of $8.15 per share. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | The                Company issued 54,870 shares as partial payment to purchase a drilling                rig                for Great Valley Drilling Company, LLC valued at $9.49 per share                for a                consideration of $520,716. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | The                Company issued 35,000 shares to a director who exercised warrants                at                $10.00 per share, for total cash consideration of $350,000. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | The                remaining 281,475 shares were issued in private placements at prices                of                $7.00 to $8.60 per share for a total consideration of $2,054,719,                or a                weighted average price of $7.30. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | During                the year the common stock issuance cost amounted to approximately                $310,740. |
|---------------|------------------------------------------------------------------------------------------------------------------|

*Accounting      for Convertible Debt and Debt issued with Stock Purchase Warrants (APB14)*
*Accounting      for Convertible Securities with Beneficial Conversion Features or Contingently      Adjustable Conversion Ratios, (EITF 98-5) *
*Application      of Issue No 98-5 to Certain Convertible Instruments and (EITF 00-27.*
      convertible instruments using the Black Scholes valuation method, using the      same      assumptions used for valuing employee options for purposes of SFAS No. 123R,      except that the expected life of the warrant is used. * *Under      these guidelines, the Company allocates the value of the proceeds received.      The      price allocated for the warrants is calculated by subtracting the current market      price of the stock from the total proceeds of the sale of the restricted stock      with the warrant attached. The allocated fair value is recorded as capital      paid      in - warrants. This allocated fair value of the proceeds from the sale of      warrants is subtracted from the value of the warrants using the Black-Scholes      valuation method to calculate the stock issuance expense. 

----

**NOTE      11 - COMMITMENTS AND CONTINGENCIES**

***Opus***

| Total                Opus Contributions | $                48,791,688 |
|-----------------------------------------|-----------------------------|
| Total                Opus Expenditures  | $                44,075,092 |
| Remaining                advances       | $                4,716,596  |

| Interest                credited to joint account | $                388,814 |
|---------------------------------------------------|--------------------------|

----

**NOTE      12 - ACQUISITIONS AND DISPOSITIONS**

**The      C & L/Crofton & Coffee lease.**

**SP/Chevron      acquisition. **

**Claflin      acquisition. **

----

**TRI-VALLEY      CORPORATION**

**UNAUDITED      PROFORMA CONDENSED CONSOLIDATED STATEMENT OF LOSSES**

**DECEMBER      31, 2006**

|                                                             | For                the year ended December 31, 2006 |
|------------------------------------------------------------------|-----------------------------------------------------|
|                                                             | As                                                  |   | Pro                Forma |   |   |
|                                                             | Presented                                           |   | Adjustment |   | Pro                Forma |
| Total                Revenue                                     | $                4,936,723                          |   | $                - |   | $                4,936,723 |
| Total                Costs and Expenses                          | $                10,817,999                         |   | $                - |   | $                10,817,999 |
| Net                loss from continued operations                | $                (5,881,276)                        |   | $                - |   | $                (5,881,276) |
| Gain                from sell of discontinued operations         | $                4,940,764                          |   | $                4,940,764 |   | $                - |
| Net                loss                                          | $                (940,512)                          |   | $                4,940,764 |   | $                (5,881,276) |
| Continued                operations loss per common share        | $                (0.25)                             |   | $                - |   | $                (0.25) |
| Discontinued                operations earnings per common share | $                0.21                               |   | $                0.21 |   | $                0.00 |
| Basic                loss per common share                       | $                (0.04)                             |   | $                (                0.21) |   | $                (0.25) |
| Weighted                average number of shares outstanding     | 23,374,205                                          |   | - |   | 23,374,205 |
| Potentially                dilutive shares outstanding           | 26,377,537                                          |   | - |   | 26,377,537 |
|                                                             |                                                |   |   |   |   |
|                                                             |                                                |   |   |   |   |
|                                                             |                                                |   |   |   |   |
|                                                             | For                the year ended December 31, 2005 |
|                                                             | As                                                  |   | Pro                Forma |   |   |
|                                                             | Presented                                           |   | Adjustment |   | Pro                Forma |
| Total                Revenue                                     | $                12,528,606                         |   | $                (2,495) |   | $                12,526,111 |
| Total                Costs and Expenses                          | $                22,258,677                         |   | $                (4,812,860) |   | $                17,445,817 |
| Net                loss from continued operations                | $                (9,730,071)                        |   | $                4,810,365 |   | $                (4,919,706) |
| Net                loss                                          | $                (9,730,071)                        |   | $                4,810,365 |   | $                (4,919,706) |
| Continued                operations loss per common share        | $                (0.43)                             |   | $                0.21 |   | $                (0.22) |
| Basic                loss per common share                       | $                (0.43)                             |   | $                0.21 |   | $                (0.22) |
| Weighted                average number of shares outstanding     | 22,426,580                                          |   | - |   | 22,426,580 |
| Potentially                dilutive shares outstanding           | 25,030,468                                          |   | - |   | 25,030,468 |
|                                                             |                                                |   |   |   |   |
|                                                             |                                                |   |   |   |   |
|                                                             |                                                |   |   |   |   |
|                                                             | For                the year ended December 31, 2004 |
|                                                             | As                                                  |   | Pro                Forma |   |   |
|                                                             | Presented                                           |   | Adjustment |   | Pro                Forma |
| Total                Revenue                                     | $                4,498,670                          |   | $                - |   | $                4,498,670 |
| Total                Costs and Expenses                          | $                5,669,675                          |   | $                (73,006) |   | $                5,596,669 |
| Net                loss from continued operations                | $                (1,171,005)                        |   | $                73,006 |   | $                (1,097,999) |
| Net                loss                                          | $                (1,171,005)                        |   | $                73,006 |   | $                (1,097,999) |
| Continued                operations loss per common share        | $                (0.06)                             |   | $                0.01 |   | $                (0.05) |
| Basic                loss per common share                       | $                (0.06)                             |   | $                0.01 |   | $                (0.05) |
| Weighted                average number of shares outstanding     | 20,507,342                                          |   | - |   | 20,507,342 |
| Potentially                dilutive shares outstanding           | 23,060,942                                          |   | - |   | 23,060,942 |

----

**NOTE      13 - SUBSEQUENT EVENTS**

----

**SUPPLEMENTAL      INFORMATION (unaudited)**

|                                                                | December                31, |   | December                31, | December                31, |
|---------------------------------------------------------------------|-----------------------------|--------|-----------------------------|-----------------------------|
|                                                                | 2006                        |   | 2005                        | 2004                        |
|                                                                |                        |   |                        |                        |
| Aggregate                capitalized costs:                         |                        |   |                        |                        |
| Proved                properties                                    | $                2,169,496  |   | $                1,795,653  | $                752,705    |
| Unproved                properties                                  | 2,792,340                   |   | 3,009,564                   | 1,381,667                   |
| Accumulated                depletion, depreciation and amortization | (761,571)                   |   | (649,550)                   | (621,323)                   |
|                                                                |                        |   |                        |                        |
| Net                capitalized assets                               | $                4,200,265  |   | $                4,155,667  | $                1,513,049  |

----

|                                                                                                        | December                31, |   | December                31, | December                31, |
|-------------------------------------------------------------------------------------------------------------|-----------------------------|--------|-----------------------------|-----------------------------|
|                                                                                                        | 2006                        |   | 2005                        | 2004                        |
|                                                                                                        |                        |   |                        |                        |
| Acquisition                of producing properties and productive and non-productive                acreage | $                400,000    |   | $                1,736,625  | $                -          |
|                                                                                                        |                        |   |                        |                        |
| Exploration                costs and development activities                                                 | $                -          |   | $                -          | $                -          |

|                                                        | December                31, |   | December                31, | December                31, |
|-------------------------------------------------------------|-----------------------------|--------|-----------------------------|-----------------------------|
|                                                        | 2006                        |   | 2005                        | 2004                        |
|                                                        |                        |   |                        |                        |
| Sales                to unaffiliated parties                | $                1,074,606  |   | $                932,042    | $                830,148    |
| Production                costs                             | (388,700)                   |   | (93,429)                    | (144,101)                   |
| Depletion,                depreciation and amortization     | (159,289)                   |   | (28,226)                    | (17,100)                    |
|                                                        | 526,617                     |   | 810,387                     | 668,947                     |
| Income                tax expense                           | (189,582)                   |   | (291,739)                   | (240,820)                   |
|                                                        |                        |   |                        |                        |
| Results                of operations from activities before |                        |   |                        |                        |
| extraordinary                items (excluding corporate     |                        |   |                        |                        |
| Overhead                and interest costs)                 | $                337,035    |   | $                518,648    | $                161,096    |

----

|                                                                                                      | December                31, 2006 |   | December                31, 2005 |   | December                31, 2004 |
|-----------------------------------------------------------------------------------------------------------|----------------------------------|--------|----------------------------------|--------|----------------------------------|
|                                                                                                      |                             |   |                             |   |                             |   |   |
|                                                                                                      | Oil                              |   | Gas                              |   | Oil                              |   | Gas |   | Oil |   | Gas |
|                                                                                                      | (BBL)                            |   | (MCF)                            |   | (BBL)                            |   | (MCF) |   | (BBL) |   | (MCF) |
|                                                                                                      |                             |   |                             |   |                             |   |   |   |   |   |   |
| Proved                developed and undeveloped reserves:                                                 |                             |   |                             |   |                             |   |   |   |   |   |   |
| Beginning                of year                                                                          | 218,030                          |   | 779,598                          |   | 162                              |   | 742,401 |   | 162 |   | 1,251,548 |
| Revisions                of previous estimates extensions, discoveries and other                additions | (61,391)                         |   | 93,596                           |   | -                                |   | 165,799 |   | - |   | (374,408) |
| Net                reserve additions                                                                      | 125,413                          |   | -                                |   | 217,885                          |   | - |   | - |   | - |
| Production                                                                                                | (6,600)                          |   | (86,177)                         |   | (17)                             |   | (128,602) |   | - |   | (134,739) |
|                                                                                                      |                             |   |                             |   |                             |   |   |   |   |   |   |
| End                of year                                                                                | 275,452                          |   | 787,017                          |   | 218,030                          |   | 779,598 |   | 162 |   | 742,401 |
|                                                                                                      |                             |   |                             |   |                             |   |   |   |   |   |   |
| Proved                developed reserves:                                                                 |                             |   |                             |   |                             |   |   |   |   |   |   |
| Beginning                of year                                                                          | 90,555                           |   | 779,598                          |   | 162                              |   | 742,401 |   | 162 |   | 1,251,548 |
|                                                                                                      |                             |   |                             |   |                             |   |   |   |   |   |   |
| End                of year                                                                                | 89,301                           |   | 787,017                          |   | 90,555                           |   | 779,598 |   | 162 |   | 742,401 |

|   | (1) | Estimates                are made of quantities of proved reserves and the future periods                during                which they are expected to be produced based on year-end economic                conditions. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The                estimated future production of proved reserves is priced on the basis                of                year-end prices. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | The                resulting future gross revenue streams are reduced by estimated future                costs to develop and to produce proved reserves, based on year end                cost                estimates. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                   | December                31, |   | December                31, |   | December                31, |
|------------------------------------------------------------------------|-----------------------------|--------|-----------------------------|--------|-----------------------------|
|                                                                   | 2006                        |   | 2005                        |   | 2004                        |
|                                                                   |                        |   |                        |   |                        |
|                                                                   |                        |   |                        |   |                        |
| Future                cash in flows                                    | $                19,415,065 |   | $                19,154,814 |   | $                5,248,091  |
| Future                production and development costs                 | (5,858,187)                 |   | (4,292,152)                 |   | (989,549)                   |
| Future                income tax expenses                              | (722,868)                   |   | (659,464)                   |   | (1,357,948)                 |
| Future                net cash flows                                   | 12,834,010                  |   | 14,203,198                  |   | 2,900,595                   |
| 10%                annual discount for estimated timing of cash flows  | 6,712,715                   |   | 7,147,126                   |   | 942,358                     |
| Standardized                measure of discounted future net cash flow | $                6,121,295  |   | $                7,056,072  |   | $                1,958,238  |

----

|                                                                       | December                31,    |   | December                31,    |   | December                31,    |
|----------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|
|                                                                       | 2006                           |   | 2005                           |   | 2004                           |
|                                                                       |                           |   |                           |   |                           |
| Standardized                measure - beginning of period                  | $                7,056,072     |   | $                1,958,238     |   | $                2,270,632     |
|                                                                       |                           |   |                           |   |                           |
| Sales                of oil and gas produced, net of production costs      | (640,515)                      |   | (807,930)                      |   | (655,373)                      |
| Revisions                of estimates of reserves provided in prior years: |                           |   |                           |   |                           |
| Net                changes in prices                                       | (2,215,972)                    |   | 1,412,965                      |   | 1,705,515                      |
| Revisions                of previous quantity estimates                    | (2,512,220)                    |   | 1,630,965                      |   | -                              |
| Extensions                and discoveries                                  | -                              |   | 11,345,272                     |   | 270,891                        |
| Property                acquisition                                        | 2,370,080                      |   | -                              |   | -                              |
| Accretion                of discount                                       | 434,411                        |   | (6,204,768)                    |   | 248,494                        |
| Changes                in production and development costs.                | 1,566,035                      |   | (1,580,186)                    |   | (1,658,785)                    |
| Net                change in income taxes                                  | 63,404                         |   | (698,484)                      |   | 223,137                        |
|                                                                       |                           |   |                           |   |                           |
| Net                increase (decrease)                                     | (934,777)                      |   | 5,097,834                      |   | (312,394)                      |
|                                                                       |                           |   |                           |   |                           |
| **Standardized                measure - end of period**                    | **$                6,121,295** |   | **$                7,056,072** |   | **$                1,958,238** |

----

|                                                                                                                                         | 2006                         |
|----------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|
|                                                                                                                                         | First                        |   | Second |   | Third |   | Fourth |
|                                                                                                                                         | Quarter                      |   | Quarter |   | Quarter |   | Quarter |
|                                                                                                                                         |                         |   |   |   |   |   |   |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Operating                Revenues                                                                                                            | $                69,765      |   | $                978,340 |   | $                1,356,311 |   | $                2,532,307 |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Net                Income (Loss)                                                                                                             | $                (3,064,107) |   | $                (3,240,179) |   | $                (2,673,198) |   | $                8,036,972* |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Net                Income per Common Share - Basic                                                                                           | $                (0.13)      |   | $                (0.14) |   | $                (0.11) |   | $                0.34 |
|                                                                                                                                         |                         |
| *                In the fourth quarter we sold Tri-Western Resources and an associated                building for a net gain of $4,940,764. |
| See                note 12 to the Consolidated Financial Statements for a pro forma                schedule.                                 |
|                                                                                                                                         |                         |
|                                                                                                                                         | 2005                         |
|                                                                                                                                         | First                        |   | Second |   | Third |   | Fourth |
|                                                                                                                                         | Quarter                      |   | Quarter |   | Quarter |   | Quarter |
|                                                                                                                                         |                         |   |   |   |   |   |   |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Operating                Revenues                                                                                                            | $                202,108     |   | $                1,846,630 |   | $                6,781,574 |   | $                3,698,294 |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Net                Income (Loss)                                                                                                             | $                (3,375,111) |   | $                (717,680) |   | $                (345,932) |   | $                (5,291,348) |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Net                Income (Loss) per Common Share                                                                                            | $                (0.15)      |   | $                (0.03) |   | $                (0.02) |   | $                (0.23) |
|                                                                                                                                         |                         |   |   |   |   |   |   |
|                                                                                                                                         | 2004                         |
|                                                                                                                                         | First                        |   | Second |   | Third |   | Fourth |
|                                                                                                                                         | Quarter                      |   | Quarter |   | Quarter |   | Quarter |
|                                                                                                                                         |                         |   |   |   | (restated) |   | (restated) |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Operating                Revenues                                                                                                            | $                1,386,281   |   | $                1,134,910 |   | $                223,006 |   | $                1,754,473 |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Net                Income (Loss)                                                                                                             | $                255,258     |   | $                (940,409) |   | $                (479,104) |   | $                (6,750) |
|                                                                                                                                         |                         |   |   |   |   |   |   |
| Net                Income (Loss) per Common Share                                                                                            | $                0.01        |   | $                (0.05) |   | $                (0.02) |   | $                (0.00) |
|                                                                                                                                         |                         |
|                                                                                                                                         |                         |

----

**ITEM      9A Controls and Procedures**

**Evaluation      of Disclosure Controls**

**Management’s      Report on Internal Control over Financial Reporting**

| o   | Proved                and unproved properties |
|---------------|-----------------------------------------------|

| o   | Loans                guaranteed with restricted common                stock; |
|---------------|------------------------------------------------------------------------------|

| o   | Deferred                income taxes; |
|---------------|---------------------------------------|

| o   | Discontinued                operations from the sale of our interest in Tri-Western Resources;                and |
|---------------|-------------------------------------------------------------------------------------------------------------------|

| o   | Share-based                payment arrangements |
|---------------|-------------------------------------------------|

**Report      of Independent Registered Public Accounting Firm**

*Internal      Control—Integrated Framework*
*Internal      Control—Integrated Framework*

| BROWN                ARMSTRONG PAULDEN McCOWNSTARBUCK                THORNBURGH & KEETERACCOUNTANCY                CORPORATIONBakersfield,                CAMarch                29, 2007 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PART      III**

**ITEM      10 Directors and Executive Officers of the Registrant**

|                                                    |   |   |   | Year                First         |   |                                          |
|---------------------------------------------------------|--------|--------|--------|-----------------------------------|--------|-----------------------------------------------|
|                                                    |   |   |   | Became                Director or |   | Position                With                  |
| Name                of Director                         |   | Age    |   | Executive                Officer  |   | Company                                       |
|                                                    |   |   |   |                              |   |                                          |
| F.                Lynn Blystone                         |   | 71     |   | 1974                              |   | President,                CEO, Director, TVC  |
|                                                    |   |   |   |                              |   | CEO                and Director, TVOG         |
|                                                    |   |   |   |                              |   | President,                CEO, Director, TVPC |
|                                                    |   |   |   |                              |   | CHOB,                CEO, Director Select     |
|                                                    |   |   |   |                              |   |                                          |
| Dennis                P. Lockhart(1)                    |   | 59     |   | 1982                              |   | Director                                      |
|                                                    |   |   |   |                              |   |                                          |
| Milton                J. Carlson(1)                (3)  |   | 76     |   | 1985                              |   | Director                                      |
|                                                    |   |   |   |                              |   |                                          |
| Loren                J. Miller(1)                       |   | 61     |   | 1992                              |   | Director                                      |
|                                                    |   |   |   |                              |   |                                          |
| Henry                Lowenstein, Ph.D(2)           |   | 52     |   | 2005                              |   | Director                                      |
|                                                    |   |   |   |                              |   |                                          |
| William                H.“Mo”Marumoto(2)(3) |   | 71     |   | 2005                              |   | Director                                      |
|                                                    |   |   |   |                              |   |                                          |
| G.                Thomas Gamble(2)                      |   | 45     |   | 2006                              |   | Director                                      |
|                                                    |   |   |   |                              |   |                                          |
| Thomas                J. Cunningham                     |   | 64     |   | 1997                              |   | VP,                CAO, Treasurer and         |
|                                                    |   |   |   |                              |   | Secretary,                TVC, TVOG, and TVPC |
|                                                    |   |   |   |                              |   | Director                Select                |
|                                                    |   |   |   |                              |   |                                          |
| Arthur                M. Evans                          |   | 58     |   | 2005                              |   | Chief                Financial Officer        |
|                                                    |   |   |   |                              |   |                                          |
| Joseph                R. Kandle                         |   | 64     |   | 1999                              |   | President,                TVOG                |
|                                                    |   |   |   |                              |   |                                          |
| Henry                J. “Rick” Sandri       |   | 54     |   | 2005                              |   | President,                Select              |

----

| **F.                Lynn Blystone****-                71**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | President                and Chief Executive Officer of Tri-Valley Corporation and Tri-Valley                Power                Corporation, CEO of Tri-Valley Oil & Gas Company and Select Resources                Corporation, which are three wholly owned subsidiaries of Tri-Valley                Corporation - Bakersfield, California | 1974   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| Mr.                Blystone became president of Tri-Valley Corporation in October, 1981,                and                was nominally vice president from July to October, 1981. His background                includes institution management, venture capital and various management                functions for a mainline pipeline contractor including the Trans                Alaska                Pipeline Project. He has founded, run and sold companies in several                fields                including Learjet charter, commercial construction, municipal finance                and                land development. He is also president of a family corporation, Bandera                Land Company, Inc., with real estate interests in Orange County                California. A graduate of Whittier College, California, he did graduate                work at George Williams College, Illinois in organization management.                He                gives full time to Tri-Valley and its subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Dennis                P. Lockhart - 59**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Director                                                                                                                                                                                                                                                                                                                                             | 1982   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| Mr.                Lockhart is a professor of International Business at Georgetown                University. He was previously Managing Partner of Zephyr Management                L.P.,                an international private equity investment fund sponsor/manager                headquartered in New York. He remains a partner in this firm. He                is also                (non-executive) Chairman of the Small Enterprise Assistance Funds                (SEAF),                a not-for-profit operator of emerging markets venture capital funds                focused on the small and mid-sized company sector. He is a director                of                CapitalSource Inc. (NYSE) and SMELoan Asia/Maveo Systems (private,                Hong                Kong based). In 2002 and 2003 he was an Adjunct Professor at the                Johns                Hopkins University School of Advanced International Studies. From                1988 to                2001, he was President of Heller International Group Inc., a non-bank                corporate and commercial finance company operating in 20 countries,                and a                director of the group’s parent, Heller Financial Inc. From 1971 to 1988 he                held a variety of international and domestic positions at                Citibank/Citicorp (now Citigroup) including assignments in Lebanon,                Saudi                Arabia, Greece, Iran and the bank’s Latin American group in New York. In                1999, he was Chairman of the Advisory Committee of the U.S. Export                Import                Bank. He is a graduate of Stanford University and The John Hopkins                University School of Advanced International Studies. He also attended                the                Senior Executive Program at the Sloan School of Management, Massachusetts                Institute of Technology. Mr. Lockhart is an independent member of                our                Board of Directors. Mr. Lockhart                submitted his resignation from the board of directors effective March                1,                2007. Mr. Lockhart has been appointed the president and chief executive                officer of the Federal Reserve Bank of Atlanta. As part of his new                assignment, he was required to resign from his Board positions, including                that of Tri-Valley, where he served for 25 years. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Milton                J. Carlson - 76**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Director                                                                                                                                                                                                                                                                                                                                             | 1985   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| Since                1989, Mr. Carlson has been a principal in Earthsong Corporation,                which, in                part, consults on environmental matters and performs environmental                audits                for government agencies and public and private concerns. Mr. Carlson                attended the University of Colorado at Boulder and the University                of                Denver. Mr. Carlson is an independent member of our Board of Directors.                His former career experience included being corporate secretary of                Union                Sugar, a unit of Sara Lee Corporation and chairman of the Energy                End Users                Committee of the California Manufacturers Association.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| **Loren                J. Miller, CPA - 61**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Director                                                                                                                                                                                                                                                                                                                                             | 1992   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| Mr.                Miller has served in a treasury and other senior financial capacities                at                the Jankovich Company since 1994. Prior to that he served successively                as                vice president and chief financial officer of Hershey Oil Corporation                from                1987 to 1990 and Mock Resources from 1991 to 1992. Prior to that                he was                vice president and general manager of Tosco Production Finance Corporation                from 1975 to 1986 and was a senior auditor for the accounting firm                of                Touche Ross & Company from 1968 to 1973. He is experienced in                exploration, production, product trading, refining and distribution                as                well as corporate finance. He holds a B.S. in accounting and a M.B.A.                in                finance from the University of Southern California. Mr. Miller is                an                independent member of our Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Henry                Lowenstein, Ph.D - 52**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Director                                                                                                                                                                                                                                                                                                                                             | 2005   |
| Dr.                Lowenstein is Dean of the School of Business and Public Administration                and                Professor of Management at California State University                Bakersfield.   Dr. Lowenstein has broad background in                management within business, academic, government and public service                organizations.   He is 2006 Chair of the California State                Universities Association of Business Deans, a director of the Western                Association of Collegiate Schools of Business, and serves on the                2005-06 World Nominating Committee for AACSB International. He previously                served as professor, department and division chairperson at universities                in Illinois, Virginia and West Virginia and is published in fields                of                human resource management, public policy and transportation.  In                business he served as Director of Education for Kemper                Group- Insurance and Financial Services, Director of Education for                Dominion Bankshares Corporation, and Vice President of Americana                Furniture, Inc.  Dr. Lowenstein previously served as a management                analyst for the Executive Office of the President of the United                States-Office of Management and Budget under the Gerald Ford                Administration.   He was a principal consultant to the Illinois                General Assembly in the 1980's on the restructuring of the                Chicago-area Mass Transit System, and, to the West Virginia                Legislature and Governor on higher education financing in the 1990's.                In                Bakersfield, he serves on the boards of the Historic Fox Theater                Foundation, and, the Minter Field Air Museum.  Dr. Lowenstein                received his Ph.D. in Labor and Industrial Relations from the University                of Illinois; an M.B.A. from George Washington University; and B.S.                in                Business Administration from Virginia Commonwealth University.  He                serves on Tri-Valley's Personnel Committee.  Dr. Lowenstein is an                independent member of our Board of Directors.                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| **William                H. “Mo” Marumoto - 71**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Director                                                                                                                                                                                                                                                                                                                                             | 2005   |
| Mr.                Marumoto has over 30 years experience in the executive and personnel                search profession as chairman and chief executive officer of his                own                retained search firm, The Interface Group Ltd. Here he was named                to the                Global Top 200 Executive Recruiters and several other worldwide                professional awards and recognitions, according to the company. He                has 40                years experience in public, private and academic sectors. He worked                for                three years as presidential aide in the Nixon White House. Earlier                he was                assistant to the secretary of health, education and welfare. Mr.                Marumoto                has been part of boards of numerous organizations, colleges, public                agencies and businesses. In 2002 he was appointed by President George                W.                Bush to the advisory committee of the John F. Kennedy Center for                the                Performing Arts. Mr. Marumoto serves as Chair of our Compensation                committee and is an independent member of our Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| **G.                Thomas Gamble - 45**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Director                                                                                                                                                                                                                                                                                                                                             | 2006   |
| A                graduate of UCLA, Mr. Gamble is a successful rancher and businessman                with                current active investments in agriculture, food processing, educational                services, oil, gas and minerals. In 2003, the California State Senate                proclaimed privately owned Davies and Gamble, which produces critically                acclaimed wines in California’s Napa Valley, its Green Entrepreneur Of The                Year, and in 2005, Mozzarella Fresca, the nation’s premier producer of                fresh Italian cheeses, of which he is a director and original investor,                received the Certificate of Special Congressional Recognition as                business                of the year. He is also a director and original investor in Boston                Reed                College which provides educational opportunities to busy adults seeking                stable and growing careers in the California health care industry.                Mr.                Gamble is an independent member of our Board of                Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| **Thomas                J. Cunningham - 64**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Secretary,                Treasurer and Chief Administrative Officer of Tri-Valley Corporation,                and                its wholly owned subsidiaries, Tri-Valley Oil & Gas Company,                Tri-Valley Power Corporation and Select Resources Corporation,                Bakersfield,                California               | 1997   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                 |   |
| Named                as Tri-Valley Corporation’s treasurer and chief financial officer in                February 1997, and as corporate secretary on December 1998, promoted                to                Chief Administrative Officer in November 2005. From 1987 to 1997                he was a                self employed management consultant in finance, marketing and human                resources. Prior to that he was executive vice president, chief financial                officer and director for Star Resources from 1977 to 1987. He was                the                controller for Tucker Drilling Company from 1974 to 1977. He has                over 25                years experience in corporate finance, Securities Exchange Commission                public company reporting, shareholder relations and employee benefits.                He                received his education from Angelo State University,                Texas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Arthur                M. Evans, CPA, CMA, CFM - 58**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Chief                Financial Officer of Tri-Valley Corporation, and its wholly owned                subsidiaries, Tri-Valley Oil & Gas Company, Tri-Valley Power                Corporation, Select Resources Corporation and Great Valley Production                Services, Inc.Bakersfield,                California | 2005 |
|  Named                as Tri-Valley Corporation’s chief financial officer in November 2005. Mr.                Evans has a full range of accounting, mergers and acquisitions and                financial management experience in several industries as well as                oil, gas                and mining and with Fortune 500 companies as well as independents                like                Tri-Valley. He held several senior financial management positions                with                Getty Oil and Texaco. He holds a B.S. in accounting from Weber State                University, a M.B.A. in finance from Golden State University and                a M.S. in                systems management from the University of Southern California. His                professional designations include Certified Public Accountant, Certified                Management Accountant and Certified Financial Manager.                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |
| **Joseph                R. Kandle - 64**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | President                and Chief Operating Officer Tri-Valley Oil & Gas Company, wholly owned                subsidiary of Tri-Valley Corporation Bakersfield,                California | 1998 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Mr.                Kandle was named as president of Tri-Valley Oil & Gas Co. February                1999 after joining the Company June 1998 as vice president - engineering.                From 1995 to 1998 he was employed as a petroleum engineer for R & R                Resources, self-employed as a consulting petroleum engineer from                1994 to                1995. He was vice president - engineering for Atlantic Oil Company                from                1983 to 1994. From 1981 to 1983 he was vice president for Star Resources.                He was vice president and chief engineer for Great Basins Petroleum                from                1973 to 1981. He began his career with Mobil Oil (from 1965 to 1973)                after                graduating from the Montana School of Mines in 1965.                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |
| **Henry                J. Sandri - 54**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | President,                Select Resources Corporation, wholly owned subsidiary of Tri-Valley                Corporation Bakersfield,                California | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Henry                J. "Rick" Sandri, Ph.D was promoted to president of Select Resources                Corporation in December 2005 after joining the company in November                2004 as                the executive vice president. Dr. Sandri has held mid- and senior-level                positions in major mining and transportation companies as well as                independent and consulting firms active in mining, transportation                and                utility operations in numerous countries. Dr. Sandri is a broadly                seasoned                mining industry executive with international experience in precious                and                base metals, gems and industrial minerals. Dr. Sandri holds a doctorate                in                mineral/energy economics and engineering minor from the Colorado                School of                Mines and undergraduate degrees in economics from American University                and                Georgetown University, both in Washington,                D.C. |

----

**ITEM      11 Executive Compensation**

| (a)                             | (b)                                     | (                c                ) | (d)               | (e)                                   | (f)                                    | (g)                                       |                                    |
|---------------------------------|-----------------------------------------|-------------------------------------|-------------------|---------------------------------------|----------------------------------------|-------------------------------------------|-----------------------------------------|
|                            |                                    |                                |              |                                  |                                   |                                      |                                    |
|   Name                |  Fiscal                Year Ending |   Salary                  |   Bonus |  Stock                Awards (1) |  Option                Awards (2) | Company                401-K Contribution |  Total                Compensation |
|                            |                                    |                                |              |                                  |                                   |                                      |                                    |
| F.                Lynn          | 12/31/06                                | $159,000                            | $0                | $47,450                               | $0                                     | $4,770                                    | $211,220                                |
| Blystone,                CEO    | 12/31/05                                | $159,000                            | $0                | $38,900                               | $0                                     | $2,782                                    | $200,682                                |
|                            | 12/31/04                                | $108,900                            | $25,000           | $61,150                               | $0                                     | $0                                        | $195,050                                |
|                            |                                    |                                |              |                                  |                                   |                                      |                                    |
| Thomas                          | 12/31/06                                | $130,833                            | $0                | $0                                    | $0                                     | 3,925                                     | $134,758                                |
| Cunningham,                CAO  | 12/31/05                                | $115,000                            | $0                | $0                                    | $0                                     | $2,012                                    | $117,012                                |
|                            | 12/31/04                                | $                99,000             | $0                | $0                                    | $0                                     | $0                                        | $                99,000                 |
|                            |                                    |                                |              |                                  |                                   |                                      |                                    |
| Arthur                M.        | 12/31/06                                | $120,000                            | $0                | $0                                    | $56,550                                | $3,600                                    | $180,150                                |
| Evans,                CFO       | 12/31/05                                | $                15,000             | $0                | $0                                    | $34,000                                | $450                                      | $                49,450                 |
|                            |                                    |                                |              |                                  |                                   |                                      |                                    |
| Joseph                Kandle,   | 12/31/06                                | $163,333                            | $0                | $0                                    | $0                                     | $5,875                                    | $169,208                                |
| Pres.                TVOG       | 12/31/05                                | $150,000                            | $0                | $0                                    | $0                                     | $2,625                                    | $152,625                                |
|                            | 12/31/04                                | $                99,000             | $0                | $0                                    | $0                                     | $0                                        | $                99,000                 |
|                            |                                    |                                |              |                                  |                                   |                                      |                                    |
| Henry                J. Sandri, | 12/31/06                                | $150,000                            | $0                | $0                                    | $22,550                                | $4,500                                    | $177,050                                |
| Pres.                SRC        | 12/31/05                                | $144,250                            | $0                | $0                                    | $0                                     | $2,625                                    | $146,875                                |
|                            | 12/31/04                                | $                30,000             | $0                | $0                                    | $0                                     | $0                                        | $                30,000                 |

| (1)   | Stock                awards are valued at the closing market price on the date of                issuance. |
|-----------------|------------------------------------------------------------------------------------------------------------|

----

**Employment      Agreement with Our President**

**Employee      Pension, Profit Sharing or Other Retirement Plans**

**REPORT      OF THE COMPENSATION COMMITTEE**

**ON      ANNUAL COMPENSATION OF EXECUTIVE OFFICERS**

*Overview*

|   | • |   | competitive                to attract and retain the best officer talent; |
|--------|---------|--------|---------------------------------------------------------------------------|

|   | • |   | affordable                to the Company and appropriately aligned with shareholder interests; |
|--------|---------|--------|------------------------------------------------------------------------------------------------|

|   | • |   | consistent                with the Company’s long-range business plans; |
|--------|---------|--------|-------------------------------------------------------------------------------|

|   | • |   | designed                to consider individual value and contribution to the Company’s success; |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------|

|   | • |   | sensitive                to, but not exclusively reliant upon, market benchmarks; |
|--------|---------|--------|-----------------------------------------------------------------------------------|

|   | • |   | reasonably                sensitive to the needs of the Company’s executive officers, as those needs                change over time; and flexible with regard to the Company’s succession                planning objectives. |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Base      Salaries*

*Section 162(m)*

----

**Aggregated      2006 Option Exercises and Year-End Values**

| **(                a )**                            | **(b)**                                                      | **(c)**                                 | **(d)**                                                                                                                            | **(e)**                                                                                                                         |
|-----------------------------------------------------|--------------------------------------------------------------|-----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
| Name                                           | Shares                AcquiredOn                Exercise (#) | Value                Realized ($)  | Number                of SecuritiesUnderlying                UnexercisedOptions                at FY End Exercisable/Unexercisable | Value                of Unexercised InThe                Money Options at FY End ($)Excercisable/                Unexercisable- |
|                                                |                                                         |                                    |                                                                                                                               |                                                                                                                            |
| F.                Lynn Blystone                     | 68,750                                                       | $509,420                                | 776,850/0                                                                                                                          | $6,338,381/0                                                                                                                    |
| Milton                Carlson                       | 23,000                                                       | $153,490                                | 240,000/0                                                                                                                          | $1,944,600/0                                                                                                                    |
| Thomas                J. Cunningham                 | 0                                                            | 0                                       | 523,000/0                                                                                                                          | $4,308,520/0                                                                                                                    |
| Arthur                M. Evans                      | 0                                                            | 0                                       | 45,000/0                                                                                                                           | $18,250/0                                                                                                                       |
| G.                Thomas Gamble                     | 20,000                                                       | 0                                       | 20,000/60,000                                                                                                                      | $62,800/                $188,400                                                                                                |
| Joseph                R. Kandle                     | 0                                                            | 0                                       | 475,000/0                                                                                                                          | $3,952,000/0                                                                                                                    |
| Dennis                P. Lockhart                   | 0                                                            | 0                                       | 270,000                                                                                                                            | $2,214,300/0                                                                                                                    |
| Henry                Lowenstein                     |                                                         |                                    | 40,000/60000                                                                                                                       | $125,600/                $188,400                                                                                               |
| Loren                J.Miller                       | 0                                                            | 0                                       | 0/0                                                                                                                                | $0/0                                                                                                                            |
| William                H. “Mo” Marumoto |                                                         |                                    | 40,000/60000                                                                                                                       | $125,600/                $188,400                                                                                               |
| Henry                J. Sandri                      | 0                                                            | 0                                       | 30,000/0                                                                                                                           | $76,750/0                                                                                                                       |
|                                                |                                                         |                                    |                                                                                                                               |                                                                                                                            |

**Option      Grants During the Fiscal Year Ended December 31, 2006 to Named Executive      Officers**

|                        |   |                                  |   |   |                                    |   |                              |   |   |                             |   |           |   |    |   |   |    |   |
|-----------------------------|--------|---------------------------------------|--------|--------|-----------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|----------------|--------|---------|--------|--------|---------|--------|
|                        |   |                                  |   |   | **%                of Total**           |   |                              |   |   | **Market                Value**  |   |           |   |
|                        |   | **Number                of Shares**   |   |   | **Options                Granted**      |   | **Exercise                Price** |   |   | **of                Securities** |   |           |   |
|                        |   | **Underlying                Options** |   |   | **to                Employees**         |   | **Per                Share**      |   |   | **Underlying**                   |   | **Expiration** |   |
| **Name**               |   | **Granted(1)**                   |   |   | **in                Fiscal Year**  |   | **($/Security)**             |   |   | **Options(2)**              |   | **Date**  |   |
|                        |   |                                  |   |   |                                    |   |                              |   |   |                             |   |           |   |    |   |   |    |   |
| Arthur                Evans |   |                                  | 5,000  |   |                                    |   | 4.2                               |   |   | $5.84                            |   |           |   | $18,250 |   |   | 10/2015 |   |

|   |   |                                                                                                                                                                      |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)    |   | The                options were granted August 15, 2006 and vested on December 31,                2006                                                                    |
|   |   |                                                                                                                                                                      |
| (2)    |   | Based                on the difference between the exercise price per share and the market                price of $9.49 per share as of December 31,                2006 |

----

**Compensation      of Directors **

| **(a)**                             | **(b)**                          | **(c)**                                          | **(d)**                                     |                                                    |
|-------------------------------------|----------------------------------|--------------------------------------------------|---------------------------------------------|---------------------------------------------------------|
| **Name**                            |  Fees                  |  Restricted                Shares (1)  |  Option                Awards(2)  |  Cost                to exercise Options (3)  |
|                                |                             |                                             |                                        |                                                    |
| Milton                Carlson       | $                9,600           | $18,740                                          | -                                           | -                                                       |
|                                |                             |                                             |                                        |                                                    |
| G.                Thomas Gamble     | $                6,000           | $18,740                                          | $122,500                                    | $127,000                                                |
|                                |                             |                                             |                                        |                                                    |
| Dennis                P. Lockhart   | $                9,100           | $18,740                                          | -                                           | -                                                       |
|                                |                             |                                             |                                        |                                                    |
| Dr.                Henry Lowenstein | $                6,000           | $18,740                                          | $221,000                                    | $254,000                                                |
|                                |                             |                                             |                                        |                                                    |
| Loren                J. Miller      | $                10,000          | $18,740                                          | -                                           | -                                                       |
|                                |                             |                                             |                                        |                                                    |
| William                Marumoto     | $                6,000           | $18,740                                          | $221,000                                    | $254,000                                                |

**ITEM      12 Security Ownership of Certain Beneficial Owners and      Management**

|                                                                                                |   | Number                of |   | Percent                of |
|-----------------------------------------------------------------------------------------------------|--------|--------------------------|--------|---------------------------|
| Name                and Address                                                                     |   | Shares                   |   | Total                     |
|                                                                                                |   |                     |   |                      |
| F.                Lynn BlystoneP.O.                Box 1105Bakersfield,                CA 93302     |   | 1,268,853(1)             |   | 5.2%                      |
|                                                                                                |   |                     |   |                      |
| G.                Thomas Gamble1250                Church StreetSt.                Helena, CA 94574 |   | 1,601,667(2)             |   | 6.8%                      |

| (1)   | Includes                776,850 shares of stock Mr. Blystone has the right to acquire upon                the                exercise of options. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Includes                130,000 shares of stock Mr. Gamble has the right to acquire upon                the                exercise of warrants and                options. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM      12 Security Ownership of Certain Beneficial Owners and Management      (continued)**

|                                                         |   | Number                of |   | Percent                of |
|--------------------------------------------------------------|--------|--------------------------|--------|---------------------------|
| Directors                and Executive Officers              |   | Shares(1)                |   | Total(2)                  |
|                                                         |   |                     |   |                      |
| F.                Lynn Blystone                              |   | 1,268,853                |   | 5.2%                      |
|                                                         |   |                     |   |                      |
| Milton                J. Carlson                             |   | 345,000                  |   | 1.5%                      |
|                                                         |   |                     |   |                      |
| Thomas                J. Cunningham                          |   | 540,000                  |   | 2.2%                      |
|                                                         |   |                     |   |                      |
| Arthur                M. Evans                               |   | 45,000                   |   | 0.2%                      |
|                                                         |   |                     |   |                      |
| G.                Thomas Gamble                              |   | 1,601,667                |   | 6.8%                      |
|                                                         |   |                     |   |                      |
| Joseph                R. Kandle                              |   | 500,000                  |   | 2.1%                      |
|                                                         |   |                     |   |                      |
| Dennis                P. Lockhart (3)                        |   | 347,191                  |   | 1.5%                      |
|                                                         |   |                     |   |                      |
| Henry                Lowenstein, Ph.D.                       |   | 100,200                  |   | 0.4%                      |
|                                                         |   |                     |   |                      |
| William                H. “Mo” Marumoto          |   | 100,000                  |   | 0.4%                      |
|                                                         |   |                     |   |                      |
| Loren                J. Miller                               |   | 308,800                  |   | 1.3%                      |
|                                                         |   |                     |   |                      |
| Henry                J. Sandri                               |   | 59,392                   |   | 0.3%                      |
|                                                         |   |                     |   |                      |
| Total                group                (all directors and |   |                     |   |                      |
| Executive                officers - 11 persons)              |   | 5,211,103                |   | 19.9%                     |

| (1)   | Includes                shares which the listed shareholder has the right to acquire from                options                as follows: F. Lynn Blystone 776,850, Milton J. Carlson 240,000,                Thomas J.                Cunningham 523,000, Arthur M. Evans 45,000, G. Thomas Gamble 130,000,                Joseph R. Kandle 475,000; Dennis P. Lockhart 270,000; Dr. Henry Lowenstein                100,000, William H. ”Mo” Marumoto 100,000, Henry J. Sandri                30,000 |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Based                on total outstanding shares of 23,461,785 as of December 31, 2006.                The                persons named herein have sole voting and investment power with respect                to                all shares of common stock shown as beneficially owned by them, subject                to                community property laws where                applicable. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | In                connection with his new employment, (see Note 12 (Subsequent Events)                to                the Consolidated Financial Statements in Item 8) Mr. Lockhart elected                to                exercise all of his stock options on March 1, 2007. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM      13 Certain Relationships and Related Transactions **

**ITEM      14 Principal Accountant Fees and Services**

| YEAR | AUDIT                SERVICES | TAX                SERVICES | AUDIT                RELATED |
|------|-------------------------------|-----------------------------|------------------------------|
| 2006 | $                85,417       | $43,925                     | $28,177                      |
| 2005 | $106,082                      | $13,639                     | $12,986                      |

**Policy      on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services      of      Independent Auditors**

----

**ITEM      15 Exhibits and Financial Statement Schedules**

| Exhibit |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description                of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.1     |   | Amended                and Restated Certificate of Incorporation, incorporated by reference                to                Exhibit A of the Company’s 2000 Proxy Statement and Definitive Schedule                14A, filed with the SEC on July 26, 2000.                                                                                                                                                                                                                                                                                                                                                                 |
| 3.2     |   | Amended                and Restated Bylaws, incorporated by reference to Exhibit 3.3 of                the                Company's Form 10-KSB for the year ended December 31, 1999, filed                with the                SEC on March 24, 2000.                                                                                                                                                                                                                                                                                                                                                                           |
| 4.1     |   | Rights                Agreement, incorporated by reference to Exhibit 99.1 of the Company’s Form                10-KSB for the year ended December 31, 1999, filed with the SEC on                March                24, 2000.                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.1    |   | Employment                Agreement with F. Lynn Blystone, incorporated by reference to Exhibit                10.1                of the Company's Form 10-KSB/A, Amendment No. 3 to Form 10-KSB for                the                year ended December 31, 2000, filed with the SEC on December 14,                2001.                                                                                                                                                                                                                                                                                                       |
| 10.2    |   | Tri-Valley                Corporation 2005 Stock Option Plan, as amended, incorporated by reference                to Exhibit B of the Company’s 2005 Proxy Statement and Definitive Schedule                14A, filed with the SEC on August 29, 2005.                                                                                                                                                                                                                                                                                                                                                                      |
| 10.3    |   | Purchase                and Sale Agreement between Brea Oil Company, Brea Properties, Inc.,                Kurt                Sickles, Geraldine M. Barker, as Trustee of the Barker Bypass Trust                under                the Barker Trust, dated January 21, 1999, Geraldine M. Barker and                Alexander W. Barker, as Co-Trustees of the Barker Trust dated January                21,                1999, and Tri-Valley Oil and Gas Co., incorporated by reference to                Exhibit                2.1 of the Company’s Form 8-K filed with the SEC on January 10,                2006. |
| 10.10   |   | Purchase                and Sale Agreement between Trans-Western Materials, Inc. and Select                Resources Corporation, Inc. dated July 18, 2006 and amendment dated                October 13, 2006 and Closing Statement between Select Resources                Corporation, Inc. and Trans-Western Materials, Inc. dated November                15,                2006.                                                                                                                                                                                                                                             |
| 10.11   |   | Commercial                Property Purchase Agreement between Jung Uk Byum and Select Resources                Corporation, Inc. dated May 24, 2006 and amendment dated November                2,                2006.                                                                                                                                                                                                                                                                                                                                                                                                             |
| 14.1    |   | Code                of Business Conduct & Ethics, incorporated by reference to Exhibit14.1                of the Company’s Form 10-K filed with the SEC on March 31,                2005                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 21.1    |   | Subsidiaries                of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 31.1    |   | Certification                Pursuant to Rule 13a-14(a) / 15d-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 31.2    |   | Certification                Pursuant to Rule 13a-14(a) / 15d-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 32.1    |   | Certification                Pursuant to 18 U.S.C. §1350.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.2    |   | Certification                Pursuant to 18 U.S.C. §1350.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

**SIGNATURES**

|   | March                30, 2007 |   | By:/s/                F. Lynn Blystone                |
|--------|-------------------------------|--------|-------------------------------------------------------|
|   |                          |   | F.                Lynn Blystone                       |
|   |                          |   | President,                Chief Executive Officer and |
|   |                          |   | Director                                              |
|   |                          |   |                                                  |
|   |                          |   |                                                  |
|   | March                30, 2007 |   | By:/s/                Arthur M. Evans                 |
|   |                          |   | Arthur                M. Evans                        |
|   |                          |   | Chief                Financial Officer                |

|   | March                30, 2007 |   | By:/s/                Milton J. Carlson                       |
|--------|-------------------------------|--------|---------------------------------------------------------------|
|   |                          |   | Milton                J. Carlson, Director                    |
|   |                          |   |                                                          |
|   |                          |   |                                                          |
|   |                          |   |                                                          |
|   | March                30, 2007 |   | By:/s/                G. Thomas Gamble                        |
|   |                          |   | G.                Thomas Gamble, Director                     |
|   |                          |   |                                                          |
|   |                          |   |                                                          |
|   |                          |   |                                                          |
|   | March                30, 2007 |   | By:/s/                Henry Lowenstein                        |
|   |                          |   | Henry                Lowenstein, Ph.D,Director                |
|   |                          |   |                                                          |
|   |                          |   |                                                          |
|   |                          |   |                                                          |
|   | March                30, 2007 |   | By/s/                William H. “Mo” Marumoto     |
|   |                          |   | William                H. “Mo” Marumoto, Director |
|   |                          |   |                                                          |
|   |                          |   |                                                          |
|   |                          |   |                                                          |
|   | March                30, 2007 |   | By:/s/                Loren J. Miller                         |
|   |                          |   | Loren                J. Miller, Director                      |

----

**Exhibit      21.1**

**Tri-Valley      Corporation**

**Subsidiaries**

----

**Exhibit      31.1**

**Certification**

| Date:                March 30, 2007 |    | By:    |    | */s/F.                Lynn Blystone*                                                  |
|-------------------------------------|--------------|--------|--------------|---------------------------------------------------------------------------------------|
|                                |         |   |         | F.                Lynn Blystone, President and Chief Executive                Officer |

----

**Exhibit      31.2**

**Certification**

| Date:                March 30, 2007 |    | By:    |    | */s/Arthur                M. Evans*                     |
|-------------------------------------|--------------|--------|--------------|---------------------------------------------------------|
|                                |         |   |         | Arthur                M. Evans, Chief Financial Officer |

----

**Exhibit      32.1**

**Certification      Pursuant to 18 U.S.C. § 1350**

| Date:  |   | March                30, 2007                                                                   |
|-------------|--------|-------------------------------------------------------------------------------------------------|
| By:         |   | *F.                Lynn Blystone*                                                               |
|        |   | F.                Lynn Blystone, Chief Executive Officer,                Tri-Valley Corporation |

----

**Exhibit      32.2**

**Certification      Pursuant to 18 U.S.C. § 1350**

| Date:  |   | March                30, 2007                           |
|--------|--------|---------------------------------------------------------|
| By:    |   | *Arthur                M. Evans*                        |
|   |   | Arthur                M. Evans, Chief Financial Officer |

----

**Exhibit      10.10**

**PURCHASE      AND SALE AGREEMENT**

**Between**

**TRANS-WESTERN      MATERIALS, INC.**

**As      Buyer**

**And**

**SELECT      RESOURCES CORPORATION, INC.**

**As      Seller**

**Dated      as of July 18, 2006**

----

**PURCHASE      AND SALE AGREEMENT**

**RECITALS**

**ARTICLE      I**

**DEFINITIONS**

**Schedule      “A”**

***“Environmental      Laws” means all applicable laws, statutes, ordinances, rules, regulations,      orders and final determinations of any governmental authority and all common      law, pertaining to health or safety, pollution or protection of the environment,      including without limitation to the Clean Air Act, the Comprehensive      Environmental Response, Compensation, and Liability Act (“CERCLA”), the Federal      Water Pollution Control Act, the Resource Conservation and Recovery Act, the      Safe Drinking Water Act, the Toxic Substances Control Act, the Oil Pollution      Act, as amended, the National Environmental Policy Act, the California      Porter-Cologne Water Quality Act, the California Safe Drinking Water and Toxic      Enforcement Act of 1986 and any comparable or similar state or local laws,      as      all exist as of the time of the Closing and are thereafter      amended.***

***“Environmental      Matters” means all present and future claims, obligations or liabilities      (contingent or otherwise and including, without limitation, liability for      response costs, personal injury, property damage or natural resource damage)      and      matters arising from or relating to environmental, health and safety matters,      including but not limited to the presence or alleged presence, disposal, release      or threatened release of Hazardous Substances, all present or future violations      of Environmental Law and all matters arising under CERCLA or any other      Environmental Laws.***

**“Hazardous      Substances” means any substance, pollutant, material or waste regulated pursuant      to Environmental Laws.**

**ARTICLE      II**

**THE      ACQUISITION**

**ARTICLE      III**

**PURCHASE      PRICE**

**ARTICLE      IV**

**THE      CLOSING**

**Exhibit      “A”**
**Exhibit      “B”**
**Exhibit      “C”**

**Exhibit      “D”**

**Exhibit      “E”**

**Exhibit      “A”**
**Exhibit      “B”**
**Exhibit      “C”**

**Exhibit      “D”**

**Exhibit      “F”**

**ARTICLE      V**

**EFFECT      OF CLOSING**

**ARTICLE      VI**

**REPRESENTATIONS      AND WARRANTIES OF SELLER**

**ARTICLE      VII**

**REPRESENTATIONS      AND WARRANTIES OF BUYER**

**ARTICLE      VIII**

**ADDITIONAL      COVENANTS**

**AND**

**ADDITIONAL      REPRESENTATIONS AND WARRANTIES**

**8.05**
**Conduct      of Business Pending the **
**Closing      Date**
**.      From the date hereof until the Closing Date, TWR shall continue to operate      in      accordance with the JV Agreement and the LLC Operating      Agreement.**

**Exhibit      “G”**
**.      **

**Exhibit      “H”**
**,**
**Exhibit      “H”**

**Exhibit      “I”**

**ARTICLE      IX**

**CONDITIONS      PRECEDENT TO BUYER’S OBLIGATIONS**

**ARTICLE      X**

**CONDITIONS      PRECEDENT TO SELLER’S OBLIGATIONS**

**ARTICLE      XI**

**TAX      RETURN**

**ARTICLE      XII**

**INDEMNIFICATION**

**ARTICLE      XIII**

**TERMINATION**

**ARTICLE      XIV**

**EXCLUDED      ASSETS**

**ARTICLE      XV**

**MISCELLANEOUS**

**[Signatures      Follow]**

----

**SELLER:**

**SELECT      RESOURCES CORPORATION, INC.**

**BUYER:**

**TRANS-WESTERN      MATERIALS, INC.**

----

**LIST      OF SCHEDULE AND EXHIBITS**

**To**

**Purchase      and Sale Agreement**

**Schedule:**

**Schedule      “A”: **
**Disclosure      Schedule**

**Exhibits:**

**Exhibit      “A”: **
**Mutual      Release between Buyer, on the one hand, and Seller and Tri-Valley, on the other      hand**

**Exhibit      “C”:**
**Mutual      Release between TWR, on the one hand, and Seller and Tri-Valley, on the other      hand**

**Exhibit      “D”:**
**Assignment,      Conveyance and Bill of Sale**

**Exhibit      “E”**
**Non-Competition      Agreement**

**Exhibit      “F”**
**Form      of Resignation**

**Exhibit      “G”:**
**Financial      Statement**

**Exhibit      “H”:**
**Equipment      List**

**Exhibit      “I”:**
**Permit      List**

----

**Schedule      A**

**Disclosure      Schedule**

**Follows      This Page**

----

**Exhibit      “A”**

**Mutual      Release**

**Between**

**Buyer**

**and**

**Seller      and Tri-Valley**

**Follows      This Page**

----

**MUTUAL      RELEASE**

**R      E C I T A L S**

**A      general release does not extend to claims which the creditor does not know      or      suspect to exist in his or her favor at the time of executing the release,      which      if known by him or her must have materially affected his or her settlement      with      the debtor**

**[Signatures      Follow]**

----

**SELECT      ENTITIES:**

**SELECT      RESOURCES CORPORATION, INC.**

**TRI-VALLEY      CORPORATION**

**TWM:**

**TRANS-WESTERN      MATERIALS, INC.**

----

**Exhibit      “B”**

**Mutual      Release**

**Between**

**Buyer’s      Shareholders**

**And**

**Seller      and Tri-Valley**

**Follows      This Page**

----

**MUTUAL      RELEASE**

**R      E C I T A L S**

**A      general release does not extend to claims which the creditor does not know      or      suspect to exist in his or her favor at the time of executing the release,      which      if known by him or her must have materially affected his or her settlement      with      the debtor**

**[Signatures      Follow]**

----

**SELECT      ENTITIES:**

**SELECT      RESOURCES CORPORATION, INC.**

**TRI-VALLEY      CORPORATION**

**UNDERSIGNED      SHAREHOLDERS:**

----

**Exhibit      “C”**

**Mutual      Release**

**Between**

**Seller      and Tri-Valley**

**and      TWR**

**Follows      This Page**

----

**MUTUAL      RELEASE**

**R      E C I T A L S**

**A      general release does not extend to claims which the creditor does not know      or      suspect to exist in his or her favor at the time of executing the release,      which      if known by him or her must have materially affected his or her settlement      with      the debtor**

**[Signatures      Follow]**

----

**SELECT      ENTITIES:**

**SELECT      RESOURCES CORPORATION, INC.**

**TRI-VALLEY      CORPORATION**

**TRI-WESTERN:**

**TRI-WESTERN      RESOURCES, LLC**

----

**Exhibit      “D”**

**Bill      of Sale**

----

**ASSIGNMENT,      CONVEYANCE AND BILL OF SALE**

**[Signatures      Follow]**

----

**ASSIGNOR:**

|   | **By:** | **SELECT                RESOURCES CORPORATION, INC** |
|--------|---------|------------------------------------------------------|

|   |   | a                Delaware corporation |
|--------|--------|---------------------------------------|

**ASSIGNEE:**

|   | **By:** | **TRANS-WESTERN                MATERIALS, INC.,** |
|--------|---------|---------------------------------------------------|

----

**Exhibit      “E”**

**Non-Competition**

**Follows      This Page**

----

**NON-COMPETITION      AGREEMENT**

**,      **

**,      **

**1.**
**Confidentiality.**
**      At all times, the Selling Shareholder shall not, directly or indirectly, without      the prior written consent of the Company disclose any Confidential Information      (as defined below), in whole or in part, to any person or entity outside the      Company or Selling Shareholder or any affiliate of either, and shall take no      action that threatens to do so. “Confidential Information” means (i) sales      costs, profits or the financial condition of the Company; (ii) non-pubic      financial information, including, but not limited to, financial and/or      investment performance information, forecasts, budgets and data; and (iii)      information about the Company’s pending or proposed business transactions and      proposed and/or ongoing acquisitions, joint ventures, and strategic alliances.      The Selling Shareholder acknowledges that the Company has invested considerable      amounts of time and money in developing and maintaining this Confidential      Information, and any unauthorized use or disclosure of such Confidential      Information in any form or manner would irreparably harm the Company. Nothing      contained in this paragraph shall be construed to require either party to obtain      approval of the other party hereto to disclose information with respect to      the      transaction contemplated by this Agreement to any state or federal governmental      authority or agency to the extent required by applicable law or by any      applicable rules, regulations or orders of any governmental authority or agency      having jurisdiction or necessary to comply with disclosure requirements of      any      stock exchange having jurisdiction over the disclosing      party.**

**2.**
**Non-Competition      And Noninterference. To protect the Company’s legitimate business interests,      including its Confidential Information and business relationships, the Selling      Shareholder, for three (3) years from the date first written above, shall not,      directly or indirectly, on Selling Shareholder’s own behalf or on behalf of any      other person or entity (including without limitation, Tri-Valley Corporation,      its subsidiaries, divisions, partnerships, officers, employees, directors,      shareholders, or any other person, firm or entity which controls, is controlled      by, or is under common control with or by Tri-Valley Corporation and/or Selling      Shareholder), whether as an owner, director, officer, partner, employee, agent,      consultant, for pay or otherwise:**

**3.**
**Equitable      Remedies.**
**      The Selling Shareholder acknowledges that compliance with the covenants in      Section 1 or Section 2 of this Agreement is necessary to protect the good will      and other proprietary interests of the Company and that, in the event of any      violation by the Selling Shareholder of the provisions of Section 1 or      Section 2 of this Agreement, the Company will sustain serious, irreparable      and substantial harm to its business, the extent of which will be difficult      to      determine and impossible to remedy by an action at law for money damages.      Accordingly, the Company shall be entitled to seek an injunction before trial      from any court of competent jurisdiction in addition to all such other legal      and      equitable remedies as may be available to the Company. The Selling Shareholder      further agrees that, in the event any of the provisions of Section 1 and Section      2 of this Agreement are determined by a court of competent jurisdiction to      be      contrary to any applicable statute, law or rule, or for any reason to be      unenforceable as written, such court may modify any of such provisions so as      to      permit enforcement thereof as thus modified.**

|   | **4.** | **Miscellaneous.** |
|--------|--------|--------------------|

**5.**
**Representation      By Counsel.**
**      The parties hereto agree that they enter into this Agreement after having      received full advice from counsel of their choice with respect to this Agreement      and all other matters related thereto. **

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**SELECT      RESOURCES CORPORATION, INC.**

**TRI-WESTERN      RESOURCES, LLC**

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**Exhibit      “F”**

**Form      of Resignation**

**Follows      This Page**

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**Exhibit      “G”**

**Financial      Statement**

**Follows      This Page**

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**Exhibit      “H”**

**Equipment      List**

**Follows      This Page**

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**Exhibit      “I”**

**Permit      List**

**Follows      This Page**

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**FIRST      AMENDMENT**

**TO      PURCHASE AND SALE AGREEMENT**

**RECITALS**

**WHEREAS,      the Buyer and Seller are party to that certain Purchase and Sale Agreement      dated      as of July 18, 2006 (the "PSA").**

**WHEREAS,      the Buyer and Seller desire to amend the PSA in order to provide for: (a) an      extension of the Closing Date for a date after October 15, 2006 and (b)      adjustments to the Purchase Price to reflect the terms of the      extension.**

**NOW,      THEREFORE, in consideration of the covenants, conditions and agreements      hereinafter set forth, the receipt and adequacy of which are all hereby      acknowledged, the Parties agree as follows:**

***AMENDMENTS      TO PSA***
**.      The PSA is hereby amended as follows:**

**“3.02      Adjustments; Daily Price Increases. The Purchase Price shall be increased by      the      cash amount advanced by Seller to TWR for capital and operating expenditures      incurred and paid for in accordance with the terms of the LLC Agreement from      May      1, 2006 until the Closing Date, to support the operations of TWR, up to a      maximum amount (“Purchase Price Adjustment”) of Nine Hundred Seventy-Five      Thousand United States Dollars (US$975,000) so long as the Closing occurs on      or      before August 31, 2006, and if the Closing occurs after August 31, 2006, the      Purchase Price Adjustment will be increased by Ten Thousand United States      Dollars (US$10,000) for each day that the Closing occurs after August 31, 2006,      up to an including October 15, 2006. The Purchase Price Adjustment will be      further increased by an amount equal to the “Daily Price Increases” as set forth      below for each and every day that the Closing occurs after October 15, 2006.      **

***CONDITIONS      OF EFFECTIVENESS***
**.      This Amendment shall be effective, without any other action by the parties      hereto, immediately upon the last to occur of: (a) the execution hereof by      each      of the Parties hereto and (b) the payment to Seller in a timely manner (as      provided by Section 4.01 of the PSA as amended by this Amendment) of the Forty      Thousand United Stated Dollars (US$40,000) extension fee.**

**REFERENCE      TO PSA**
**.      Upon the effectiveness of this Amendment, each reference in the PSA to "this      Agreement," "hereunder," or words of like import shall mean and be a reference      to the PSA, as affected and amended by this Amendment.**

**COUNTERPARTS;      EXECUTION VIA FACSIMILE**
**.      This Amendment may be executed in one or more counterparts, each of which shall      be deemed an original, but all of which together shall constitute one and the      same instrument. This Amendment may be validly executed and delivered by      facsimile or other electronic transmission.**

**GOVERNING      LAW; BINDING EFFECT; ARBITRATION**
**.      This Amendment shall be governed by and construed in accordance with the      internal laws of the State of California and shall be subject to the arbitration      provisions set forth in Section 15.13 of the PSA.**

**HEADINGS**
**.      Section headings in this Amendment are included herein for convenience of      reference only and shall not constitute a part of this Amendment for any other      purpose.**

**FINAL      AGREEMENT; ENTIRE AGREEMENT**
**.      The PSA as amended by this Amendment is the final agreement between the Parties      and constitutes the entire agreement between them with respect to the subject      hereof. The PSA as amended by this Amendment supersedes all prior agreements      and      understandings, written or oral, whether signed or unsigned, with respect to      the      subject matter hereof, including, but not limited to, that certain letter dated      April 21, 2006 which discusses Buyer’s purchase of the SRC      Interest.**

***Remainder      of page intentionally blank.***

***Signature      pages follow.***

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**SELLER:**

**SELECT      RESOURCES CORPORATION, INC.**

**BUYER:**

**TRANS-WESTERN      MATERIALS, INC.**

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**CLOSING      STATEMENT**

**R      E C I T A L S**

**SELECT      RESOURCES CORPORATION, INC.**

**TRANS-WESTERN      MATERIALS, INC.**

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