Notice Regarding Forward-Looking Statements

This report contains forward-looking statements. The words, "anticipate," "believe," "expect," "plan," "intend," "estimate," "project," "could," "may," "foresee," and similar expressions are intended to identify forward-looking statements. These statements include information regarding expected development of Tri-Valley's business, lending activities, relationship with customers, and development in the oil and gas industry. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated.

Results of Operations

Three months ended June 30, 2008 Compared to three months ended June 30, 2007

For the quarter ended June 30, 2008, revenue was $2.3 million, compared to $1.4 million in the second quarter of 2007, an increase of $0.9 million. We had an operating loss of about $2.7 million in the second quarter of 2008, compared to a loss of $2.8 million in the second quarter of 2007.

Revenues

The Company identifies reportable segments by products and services. The Company
includes revenues from both external customers and revenues from transactions
with other operating segments in its measure of segment profit or loss. The
Company also allocates interest revenue and expense, DD&A, and other operating
expenses in its measure of segment profit or loss. The following table sets
forth our revenues by segment for the second quarter of 2008 and 2007, in
thousands.

                                        Three Months
                                        Ended June 30         Increase/       Percentage
                                      2008        2007       (decrease)         Change
                                                                                  %
     Oil and gas                     $ 1,508     $   302     $     1,206              399
     Rig & refurbishing operations       611         631             (20 )             (3 )
     Minerals                            143         473            (330 )            (70 )

     Total revenues                  $ 2,262     $ 1,406     $       856               61

Oil and gas revenues in the second quarter of 2008 included approximately $1.25 million from the sale of oil and gas, compared to $168,000 in the second quarter of 2007. This also represents a quarter-over-quarter increase of 642%. The increase resulted from both significantly increased oil and gas production and increased commodity pricing.

The primary oil and gas activities during the second quarter of 2008 represented an ongoing rapid build-up of operations per our "Operation Catapult" initiative which is focused on rapidly accelerating production of oil and gas and resultant operating cash flow, and investment returns to our Partners and Shareholders. In summary, key activity included the completion of Phase I drilling for the TVOG Opus I Drilling Program LP, progressive cyclic steaming of heavy oil wells, ongoing conversion of temporary to permanent facilities, installation of a fuel gas line and test headers, a variety of remedial work on existing wellbores, additional new perforated zones on existing wells, additional field-level staffing to handle our uplift, and continued, prudent progression of the existing asset exploitation programs. The Company expects that the oil and gas production will continue to grow increasing revenues and that the operating income of this segment will be improved by year-end 2008.

Operating Income (Loss)

The following table sets forth our operating income (loss) by segment in the
second quarter of 2008 and 2007, in thousands.

                                       Three Months        Three Months
                                      Ended June 30,      Ended June 30,        Increase          Percentage
                                           2008                2007            (Decrease)         Change (%)

Total operating income
Oil & Gas                             $        (1,508 )   $        (2,343 )             835                 36
Rig & refurbishing operations                    (933 )              (512 )            (421 )              (82 )
Minerals                                          (31 )               179              (210 )             (117 )
Non-segmented                                    (273 )              (113 )            (160 )             (141 )
Total income                          $        (2,745 )   $        (2,789 )   $          44                 (2 )

Income for the quarter ended June 30, 2008 was a loss of $2.7 million, compared to $2.8 million loss in the second quarter of 2007, a decrease in the loss of $0.1 million.

Second quarter operations results continue to exceed targeted volumes, schedules and economic projections.

Six months ended June 30, 2008 Compared to six months ended June 30, 2007

For the six months ended June 30, 2008, revenue was $3.9 million, compared to $3.0 million in the first six months of 2007, an increase of $0.9 million. We had an operating loss of about $4.9 million in the first six months of 2008, compared to a loss of $5.0 million in the first six months of 2007.

General and administrative expenses were $6.2 million for the first six months ended June 30, 2008, compared to $5.2 million for the first six months of 2007, an increase of $1.0 million. $0.4 million of this increase was due to non-recurring expenses associated with the buy back of the minority interest of GVPS. The remaining $0.6 million increase was due to the increase in oil and gas and rig operations and refurbishing segments activity level and increased staff over the same period last year.

Revenues

The Company identifies reportable segments by products and services. The Company
includes revenues from both external customers and revenues from transactions
with other operating segments in its measure of segment profit or loss. The
Company also allocates interest revenue and expense, DD&A, and other operating
expenses in its measure of segment profit or loss. The following table sets
forth our revenues by segment for the first six months of 2008 and 2007, in
thousands.

                                         Six Months
                                        Ended June 30         Increase/       Percentage
                                      2008        2007       (decrease)         Change
                                                                                  %
     Oil and gas                     $ 2,531     $   594     $     1,937              326
     Rig & refurbishing operations     1,267       1,944            (677 )            (35 )
     Minerals                            143         478            (335 )            (70 )

     Total revenues                  $ 3,941     $ 3,016     $       925               31

Operating Income (Loss)

The following table sets forth our operating income (loss) by segment for the
first six months of 2008 and 2007, in thousands.

                                       Six Months Ended       Six Months Ended        Increase         Percentage
                                        June 30, 2008          June 30, 2007         (Decrease)          Change

Total operating income
Oil & Gas                             $           (3,064 )   $           (3,825 )             761                20
Rig & refurbishing operations                     (1,081 )                 (323 )            (758 )            (235 )
Minerals                                            (168 )                 (151 )             (17 )             (11 )
Non-segmented                                       (540 )                 (750 )             210                28
Total operating income                $           (4,853 )   $           (5,049 )   $        (196 )              (4 )

Income for the six months ended June 30, 2008 was a loss of $4.85 million, compared to $5.05 million loss in the first six months of 2007, a decrease in the loss of $0.2 million.

Oil and Gas

Pleasant Valley Field, Ventura County, CA: The initial, Phase I horizontal drilling campaign on the "Hunsucker Lease" was completed in mid-April with the drilling and completion of the PV-8 well, representing the seventh horizontal well drilled and completed to date. Cyclic steaming operations continued effectively with two of our 12.5 mmbtu/hr refurbished steam generators with all horizontal wells experiencing at least one steam cycle, and others experiencing up to three complete steam cycles with significantly increasing oil rates observed per successive cycle and improving cumulative Steam-Oil Ratios. PV-1, the initial horizontal drill well and most mature steamed well has experienced an outstanding cumulative Steam-Oil ratio near unity through three steam cycles. Another quarterly high point was the successful Ventura County APCD source testing of both aforementioned steam generators which beat strict County emission standards.

Consistent with our ongoing efforts to convert from temporary to permanent facilities and further optimize lifting costs and cost structure, a fuel gas line to support steam generation was commissioned and fully operating this quarter. Although trucking of our oil has proven to be problem-free, an oil sales line is also currently being accelerated to simplify our operations, reduce risk, and mitigate potential sales interruptions.

Based on initial field performance over six months, a revised, detailed field operations philosophy was established and has resulted in, among other key decisions, alternating steaming and production of geographical regions of the field to accelerate heating of the thick, continuous Vaca Tar Sand. In addition, to also accelerate reservoir heating and production, limited pumping cycles have been employed early on in deference to re-steaming after post-steaming flow periods cease. The field development plan and performance to date was reviewed and validated by Dr. S. M. Farouq Ali, a globally renowned industry thermal development expert. This review resulted in confirmation of existing operating and provided insight into future expectations in the field.

PV2, the single deep vertical well, continues to produce with favorable results on rod pump after adding additional uphole intervals in this well. As part of our ongoing lease expansion plans, TVOG executed lease development agreements with the DOGGR and the Lessor to develop and re-exploit an offset Lenox Ranch lease which also contains twenty existing idle wellbores that were previously on short term cyclic steam injection. It is noteworthy that our reservoir mapping on this lease indicates a better reservoir structure than the existing Hunsucker lease development. These wells will be re-entered and returned to production with steam injection as appropriate and a drilling location will be constructed to accommodate horizontal drill wells commensurate with the Hunsucker Lease development. We are progressing on acquiring additional offset lease acquisitions.

As of the date of this quarterly report, all of the above horizontal wells remain on confidential status with the California Division of Oil, Gas and Geothermal Resources as to public disclosure of production rates and volumes.

Moffat Ranch, Madera County, CA: Our first newly drilled well, 48X-7, remains on high, sustained, low watercut gas production from a single gas zone which represents only one of fourteen identified potentially commercial zones in the well. To mitigate any production interruptions, a gas compressor was mobilized to the field in anticipation of gas compression needs due to higher, and fluctuating line pressures in the area, but has not yet been required to be placed in full time service. Remedial well work to restore existing idle wells to production continued, and one gas well was converted to plunger lift. An additional offset, idle wellbore and associated facilities was acquired during the quarter and will be returned to production in the near term from a previously produced interval. This well also contains the producing zone of 48X-7 and will be completed after evaluating the existing interval for productive capacity.

As of the date of this quarterly report, the production rates and volumes of the 48X-7, as reported to the California Division of Oil, Gas and Geothermal Resources, remain confidential.

Belridge Field, Kern County, CA: The waterflood pilot project continued in the quarter, has proven to be effective, and is responding as expected. A new water injector is being permitted and will be drilled in the near term to expand the waterflood pilot. Cyclic steaming operations on the D-352 well with our third refurbished steam generator continued with favorable results. Uphole Etchegoin perforations added in D-188 well in the first quarter continue to produce at a high oil rate with low watercut, however, offset perforations in D-540 were unsuccessful in matching the D-188 results. Similar perforations will be added in D-24 in the near term to assess its productive potential. All well test headers have been installed and commissioned which has resulted in improved understanding of field production and the development of a detailed field operations philosophy to increase off take and improve well reliability and uptime time forward. Individual well test results, available for the first time since we acquired the field, indicates a large potential production uplift in the field.

Edison Field, Shields & Arms Lease, Kern County, CA: Well work performed on existing producers and the single injection well in the first quarter has continued to yield a robust increase in daily production from this lease. Plans to enhance production from our other Edison Field leases will occur in 2008.

Rio Vista, Solano County, CA: The Hanson well #2, which was converted to plunger lift in the first quarter, continues to produce at high gas rates thus indicating a successful long term application of the technology. Other Rio Vista area long term, proved-developed-producing gas reserves continued at customary levels. This long term, sustained production from our Rio Vista gas fields continues to add sustained, low lifting cost production, and increasing cash flow in response to recent higher gas prices.

Rig & refurbishing operations

Revenues from rig operations totaled $0.6 million in the second quarter of 2008, which was all from drilling contracts and completion operations, which was the same as the revenue from rig operations in the second quarter of 2007. GVPS did not realize operating revenue in the second quarter of 2008 due to taking our rigs out of service to conduct comprehensive inspections and API certifications to enable universal industry utilization of our fleet for third party revenue generation. The operating loss in the second quarter of 2008 was $0.9 million, compared to an operating loss of $0.5 million in the second quarter of 2007, or an increase in the loss of $0.4 million. $0.3 million of this loss was due to the write down of the rig and rig related equipment that was sold.

GVPS was established in 2006 in response to a then acute shortage of contractor supplied production rig services in California. GVPS enabled TVOG to significantly accelerate production via well work and newly drilled wells than afforded by existing rig contractor rig availability. However, since 2006 the California rig supply has caught up to market demand. GVPS began to consider alliances with various production service firms to increase rig availability for an increasing number of TVOG active and idle wells. In June 2008, GVPS agreed to sell all of its production and drilling rigs and down hole tools to Excalibur Well Services, Inc. in exchange for cash and a highly attractive, preferred client status for well servicing. The sale was completed in July 2008 for a price of $4.8 million. GVPS recognized an impairment loss of $0.3 million in the second quarter to write down the value of the assets being sold to the sales price. GVPS retained its fleet of 17 steam generators.

GVDC drilled one petroleum well in Nevada for another operator during the second quarter. The rig is presently idle and is looking for its next jobs. More than 120 petroleum and geothermal wells have been staked or permitted for future drilling in Nevada. We believe that GVDC's experience in Nevada provides a profitable opportunity for the business line in 2008 and beyond, and the Company has stepped up its marketing activity in Nevada, Idaho and eastern Washington. With engine modifications to accommodate stricter air quality rules, the rig can also operate in California.

Minerals Activities

Revenues from minerals activities in the second quarter of 2008 were $0.14 million compared to $0.47 million in 2007, due to a decrease in consulting revenue. With the primary emphasis of the Company to boost oil and gas production, the properties of Select Resources have been in a care and maintenance status. However, Jim Bush, formerly Vice President of exploration for Tri-Valley Oil and Gas Co., has been named President of Select Resources. His charge is to activate and monetize the properties through finding joint venture partners, spin-off or outright sale.

For the second quarter, mineral programs consisted largely of assessing and compiling geologic information collected in previous work programs associated with the Calder, Richardson, and Shorty Creek properties in Alaska. Select also continued to pursue candidates for management and officer levels in the company and consultants to assist in property development. Select has retained a nationally recognized consultant to assist in 1) the development of the Admiral Calder mine in general, and 2) a business assessment for its products. Select continues to pursue returning the Admiral Calder mine to a profitable undertaking, continues to explore adding uranium as a new commodity of interest, and has reduced efforts directed towards acquiring new base metals and industrial minerals properties. More specific information is provided in the following sections.

Industrial Minerals

During the second quarter, Select continued low-cost monitoring and security at the Admiral Calder calcium carbonate mine in Alaska. Select also worked (and is still working) with consultants to provide independent confirmation of the extent of and distribution of high-quality material in the deposit for upcoming financial and/or operational decisions. In addition to the ground calcium carbonate (GCC) market, Select is further evaluating the site's potential to produce new product types that can competitively participate in new (i.e. first-time for Calder) market categories. These include gray limestone, dimension stone, and ways to minimize and exploit mine waste (such as using it for acid mine control at other mines). Select continues to pursue end users and calcium carbonate mining and processing companies as potential partners to fund larger scale development and operations on the Admiral Calder mine, or acquire the property altogether. Putting the mine into a revenue-generating status remains a Select priority. In parallel with the above, Select is reviewing candidates for a long-term position to head up the development of this property.

Select continues to maintain a number of industrial mineral projects in six western states in a hold status, pending further review. Commodities in these projects include barite, sand & gravel, aggregate, limestone, dolomite, calcium carbonate, cinder, and other industrial mineral commodities.

Precious Metals

Select continues to solicit mining interests for the larger scale exploration on both the Richardson and Shorty Creek properties, as well as identifying a field site manager for both properties. Select has contacted, and continues to solicit, candidates for these positions.

Shorty Creek has been described by the State Geologist of Alaska as perhaps the best un-drilled gold exploration project in Alaska.

The Richardson District is arguably the most prospective gold exploration district in Alaska and it remains under-explored. Tri-Valley has found native gold at 60 locations along a 20 mile swath suggesting the possibility of a huge system.

Uranium

Select Resources has begun soliciting and reviewing uranium opportunities in a very targeted and selective manner. Select is adhering rigorously to strict high-end criteria for these properties.

Base Metals

Base Metals operations continue to be on hold.

Non-segmented items

The non-segmented items consist of stock option expense and interest expense. Non-segmented items decreased from $0.7 million in the first six months of 2007, to $0.5 million in the first six months of 2008. Stock option expense for the first six months of 2008 was $0.4 million, compared to $0.6 million for the first six months of 2007, a decrease of $0.2 million. Interest expense for the first six months of 2008 was $0.1 million, unchanged from the first six months of 2007.

Capital Resources and Liquidity

In 2002 through the second quarter of 2008, our drilling activities have been largely funded by selling interests in our OPUS I drilling partnership. We do not borrow in order to fund drilling activities. Our continued drilling activity relies on our ability to raise money for projects through drilling partnerships or other joint ventures.

Current assets were about $13.1 million at June 30, 2008, up from $8.0 million at year end 2007, an increase of $5.1 million. Cash on hand was increased from $7.7 million at year end 2007 compared to $7.8 million at June 30, 2008. Current liabilities increased to about $15.2 million at June 30, 2008, compared to $10.3 million at year end 2007, due primarily to an increase of $5.3 million in accounts payable and accrued expenses which was caused by our recent increase in drilling activity and a decrease of about $3.7 million in advances from joint venture participants and an increase of $0.5 million in deferred revenue caused mainly by the deposit on the sale of rigs and rig related equipment which closed in the third quarter of 2008.

Operating Activities

We had a negative cash flow of $4.0 million for the six months ended June 30, 2008 compared to a negative cash flow of $1.5 million for the same period in 2007, the cash flow in the current period is due mainly to our loss from operations being offset by our increase in accounts payable, deferred revenue and a increase in advances from joint venture participants and an increase in our accounts receivable. Our loss from operations was approximately $4.8 million for the six months ended June 30, 2008 compared to a $5.0 million loss for the same period in 2007.

The largest component of cash flow in the first six months of 2008 was an increase in accounts payable, deferred revenue and accrued expenses of $5.8 million caused by the increase in our activity level,. Accounts receivable increased by $3.8 million. Advances from joint venture participants increased by $4.8 million and accounts payable to joint venture participants decreased by $2.7 million. The increase from advances from joint venture participants was due to oil and gas sales payable from May and June which had been accrued but not received by the company until July. The loss on impairment of fixed assets was $0.3 million. Gain on the sale of fixed assets was $0.7 million and depreciation, depletion and amortization was $0.7 million and stock option expense was $0.4 million.

Investing Activities

Cash used in investing activities was $2.2 million for the first six months of 2008 compared to $4.4 million for the first six months of 2007. $4.5 million was used towards capital expenditures, primarily the drilling of new wells. We also received $2.6 million for the sale of three steam generators and a heater treater. We used $0.4 million to buy back membership units in GVPS.

Financing Activities

Net cash provided by financing activities was $6.3 million for the first six months of 2008 compared to $5.9 million for the same period of 2007. We received $7.1 million from sales of restricted shares of common stock in privately negotiated transactions including the exercise of stock options by employees. We used $68,000 to pay down principal on long-term debt. We have not planned any private placement of equity securities for the remainder of 2007, but we may continue to receive funds from privately negotiated transactions. We do not have a targeted or budgeted amount of equity financing activities.

Liquidity

The recoverability of our oil and gas reserves depends on future events, including obtaining adequate financing for our exploration and development program, successfully completing our planned drilling program, and achieving a level of operating revenues that is sufficient to support our cost structure. At various times in our history, it has been necessary for us to raise additional capital through private placements of equity financing. When such a need has arisen, we have met it successfully. It is management's belief that we will continue to be able to meet our needs for additional capital as such needs arise in the future. We may need additional capital to pay for our share of costs relating to the drilling prospects and development of those that are successful, and to acquire additional oil and gas leases, drilling equipment and other assets. The total amount of our capital needs will be determined in part by the number of prospects generated within our exploration program and by the working interest that we retain in those prospects.

During the remainder of 2008, we expect to expend approximately $11 million on drilling activities. Funds for the majority of these activities will be provided by sales of partnership interests in the Opus-I drilling partnership, which will still be raising funds for development purposes. Tri-Valley's portion is expected to be approximately $2 million. We are evaluating and finalizing results of recently drilled Pleasant Valley and Moffat Ranch in order to design the optimum development plan for the property. We expect to drill additional wells there in 2008. Our ability to complete our planned drilling activities in 2008 depends on some factors beyond our control, such as availability of equipment and personnel. Our actual capital commitments for fiscal year 2008 are less than $3 million, but to expend $11 million we will require additional capital from the OPUS partnership or other outside parties.

During the remainder of 2008, we expect expenditures of approximately $ 0.2 million on mining activities, including mining lease and exploration expenses.

Should we choose to make an acquisition of producing oil and gas properties, such an acquisition would likely require that some portion of the purchase price be paid in cash, and thus would create the need for additional capital. Additional capital could be obtained from a combination of funding sources. The potential funding sources include:

· Cash flow from operating activities,

. . .