TRI VALLEY CORP

Filed for Chapter 11 in Delaware on 7 August 2012 together with both operating subsidiaries and the TVC OPUS 1 drilling partnership, five days after drawing a final $294,000 of emergency credit from the Gamble trust. The filing itself was another event of default, making the full $7.2 million owed to the trust immediately payable. Ends a company that had drilled in Bakersfield since 1963; the trigger was a demand-loan structure and unresolved partner and SEC claims, not the oil price, which was around $90 a barrel that week.

bankruptcy or receivership

TRI VALLEY CORP's securities were notified for removal from listing and registration on its exchange.

listing compliance notice

Chose to leave the exchange rather than fight: with an SEC inquiry into possible securities-law violations under way and the OPUS partner claims unresolved, the board judged a compliance plan impracticable and voted to delist from NYSE Amex, trading ending around 25 June. It also took a new $1.35 million line from the Gamble trust, drawable only at the trust's discretion, and hired restructuring advisers FTI Consulting. The first public disclosure of the SEC inquiry, and the point at which insolvency became the working assumption.

listing compliance notice

Papered the April loan as a second secured note with a warrant struck at $0.10, and in the same filing admitted it was already in default on the March note for missing one month's interest and for being unable to pay its debts as they fell due. The Gamble trust, owed $4.98 million, reserved every remedy including immediate acceleration; a separate newsletter went to the OPUS drilling partners about settling their claims.

debt default or forbearance

NYSE Amex issued a third deficiency notice and, for the first time, cited not just the $6 million equity shortfall but the rule covering losses so large relative to resources that the exchange doubts a company can continue. Equity was $4.4 million; the objection had moved from a number to the viability of the business.

listing compliance notice

Borrowed another $1.5 million from the Gamble trust at 14% on the same collateral, and spent all of it settling the Hansen lawsuit in Ventura County. New money was no longer buying wells, it was paying off litigation.

debt financing

Converted the chairman's three demand loans into a $3.3 million senior secured note due April 2013, plus a warrant over 3 million shares at $0.19 and, permanently, 2% of the oil revenue from Claflin and 1% from every other lease. Gamble had by then stepped down as chairman in November 2011, so the company's largest creditor was no longer even at the board table, and it had signed away a slice of its best asset's revenue for good.

debt financing

Gamble lent a further $2 million through his family trust at 14%, on condition all $3.15 million be rolled into a secured senior note backed by pledges of both operating subsidiaries, a lien over Claflin and royalty rights on top. An unsecured board member had become a secured creditor with a claim on the company's core asset; the Oxnard leases were deliberately kept out of the collateral.

debt financing

Second restatement in seven years, this time voiding the 2010 annual accounts and four quarters. The April 2010 offering had been valued $6.5 million too high, its reset warrants should have been carried as liabilities costing another $1.8 million of losses, and $1.7 million of steam generators taken from the TVC OPUS 1 drilling partnership had never been recorded, inflating what partners appeared to owe. The last item is the accounting trace of the partner dispute that helps force the company into bankruptcy.

financial restatement

Chairman G. Thomas Gamble lent the company $150,000 in August and $1 million in October, both repayable the moment he asked and the second at 14% interest. Two at-the-market programmes and a $5 million placement earlier in the year had not been enough; working capital now came from the boardroom on demand terms.

debt financing

Signed the definitive Richardson agreement with US Gold and banked the first $200,000 option payment, with $100,000 due on each anniversary. Confirms the May letter of intent and brings in the company's first outside project money in over a year.

material agreement

Select Resources agreed in principle to let US Gold spend up to $5 million and drill 30,000 feet at the Richardson gold project in Alaska to earn 60% of it. Someone else would pay to test the ground, and Tri-Valley kept 100% if US Gold walked away, which was the right structure for a company that could not fund exploration itself.

material agreement

Raised $5.0 million gross, $4.7 million after fees, placing 10.1 million shares at $0.50. It matched the April 2010 raise in dollars but cost nearly three times as many shares, and came with penalty payments of 1% a month if the resale registration slipped.

capital raising announcement

Sold the Admiral Calder quarry in Alaska to Columbia River Carbonates for $2.5 million cash, five years after buying it for $3 million and never restarting production. With the Tri-Western sale in 2006 this ends the calcium carbonate business entirely.

asset acquisition disposition

Chairman G. Thomas Gamble swapped $3.55 million the company owed him, an $850,000 loan and $2.7 million for Great Valley Production Services interests, for preferred shares paying a 10% cash dividend and ranking ahead of the common. It removed a cash debt but put its own chairman first in line ahead of ordinary shareholders in any wind-up.

capital raising announcement

The April placement's price-reset clause bit: two institutional investors, Capital Ventures International and Empery Asset Management, took 842,000 shares for a total of $842 because the stock had fallen below $1.30. Dilution handed over for nothing, and the first visible cost of the terms accepted three months earlier.

capital raising announcement

NYSE Amex issued a second equity deficiency notice: shareholders' equity had collapsed to $915,942 by March 2010, far worse than the $5.2 million that triggered the first warning in 2009. The company pointed to 305 barrels a day from Oxnard and a recovery to about $4.5 million of equity by June, still short of the $6 million minimum.

listing compliance notice

Raised $5 million from institutional investors at $1.30 a share, with warrants over 2.3 million more shares and, critically, a clause that reset the price if the company later sold stock more cheaply. Also sold a spare steam generator for $700,000 and put the South Belridge and Shields-Arms leases up for sale. The reset clause proves expensive: it triggers near-free share issues in July and forces a restatement in 2011.

material agreement

Bought a year's extension, to May 2010, on the Claflin lease at Edison Field near Bakersfield, which an independent engineer credited with 2.0 million barrels net of proved oil at only 650 to 750 feet depth. The lease had already expired once and will only be held if production starts in time, so this became the company's most urgent operational deadline; Claflin is also the asset later pledged to its chairman's trust.

material agreement

Raised $7.2 million by placing 5.2 million shares at $1.00 to $2.00 with 75 investors, by far the largest raise in the company's history and roughly a fifth of the enlarged share count. It restored the balance sheet the exchange had objected to and funded the Oxnard and Claflin projects; Maston Cunningham signed as president, with Blystone now chairman and chief executive.

capital raising announcement

NYSE Amex accepted the recovery plan and lifted the equity deficiency, ending the listing threat raised in September. The reprieve lasted seven months.

listing compliance notice

NYSE Amex warned that shareholders' equity of $5.2 million had fallen below the $6 million minimum required of a company with five straight years of losses, and gave it a month to submit a recovery plan. The first formal signal that the drilling programme had been consuming capital faster than it replaced it.

listing compliance notice

Vice chairman G. Thomas Gamble put $1 million into convertible preferred stock at $10 a share when the common was trading at $1.02, taking an 8% dividend and warrants over 200,000 shares. With outside placements no longer available at any useful price, a board member became the company's financier, the beginning of a dependence that ends in bankruptcy court three years later.

capital raising announcement

Cashed out of minerals in one week: sold its half of the Tri-Western quarry venture to partner Trans-Western Materials for $10.2 million net and a Bakersfield industrial property to Bakersfield Central Metal for $3.6 million, bringing in around $12 million. Ends the venture begun in 2004, which Select Resources had funded almost single-handedly, and came with a three-year non-compete in Californian carbonate and basalt.

asset acquisition disposition

Paid $2.85 million cash for two producing California leaseholds near Bakersfield, named Tremblor Valley, with seven wells making 40 to 50 barrels a day. The first purchase of production rather than exploration acreage, funded from cash reserves rather than a placement.

asset acquisition disposition

Mining subsidiary Select Resources bought the idled Admiral Calder calcium carbonate quarry in southeast Alaska from Alaska Native corporation Sealaska for $3 million, only $1 million of it cash with the rest paid at $200,000 a year for a decade. A second, non-oil business line alongside the California drilling.

asset acquisition disposition

Bought Pleasant Valley Energy from Petrawest for 200,000 shares (worth about $2.5 million) plus $500,000 cash for a net profits interest, gaining undeveloped California oil leases it was obliged to spend $5 million developing over two years. These become the Oxnard heavy-oil project that dominates the company's later story.

asset acquisition disposition

Told investors not to rely on its 2003 accounts or the first two quarters of 2004: internal-controls testing showed it had been booking turnkey drilling money before the wells were actually finished. About $704,000 of 2003 profit moved into 2004, and a $442,000 cost on the Ekho well had been charged twice; cash was unaffected and the auditor agreed with the change.

financial restatement

the American Stock Exchange certified TRI VALLEY CORP's securities for listing, clearing them to begin trading.

listing compliance notice