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 September 30, 2008 Compared to three months ended September 30, 2007

For the quarter ended September 30, 2008, revenue was $1.4 million, compared to $4.0 million in the third quarter of 2007, a decrease of $2.6 million. We had an operating loss of about $1.2 million in the third quarter of 2008, compared to a loss of $1.3 million in the third 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 third quarter of 2008 and 2007, in
thousands.

                                     Three Months
                                  Ended September 30         Increase/      Percentage
                                   2008          2007       (Decrease)      Change (%)

Oil and gas                     $    1,425      $   300     $     1,125             375
Rig & refurbishing operations            -          269            (267 )          (100 )
Minerals                                 -          120            (120 )          (100 )
Drilling & development                   -        3,285          (3,285 )          (100 )

Total revenues                  $    1,425      $ 3,974     $    (2,549 )           (64 )

Oil and gas revenues in the third quarter of 2008 included approximately $1.4 million from the sale of oil and gas, compared to $300 thousand in the third quarter of 2007. This also represents a quarter-over-quarter increase of 375%. The increase resulted from both significantly increased oil and gas production and increased commodity pricing.

The primary oil and gas activities during the third 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
                                  Ended September 30         Increase/      Percentage
                                   2008          2007       (Decrease)      Change (%)

Total operating income
Oil & Gas                       $     (644 )   $ (1,474 )           830              56
Rig & refurbishing operations          (73 )       (984 )           911              93
Minerals                              (194 )       (159 )           (35 )           (22 )
Drilling and Development                 -        1,395          (1,395 )          (100 )
Non-segmented                         (286 )       (105 )          (181 )          (172 )
Total income                    $   (1,197 )   $ (1,327 )   $       130              10

Income for the quarter ended September 30, 2008 was a loss of $1.2 million, compared to $1.3 million loss in the third quarter of 2007, a decrease in the loss of $0.1 million.

Nine months ended September 30, 2008 Compared to nine months ended September 30, 2007

For the nine months ended September 30, 2008, revenue was $5.3 million, compared to $7.0 million in the first nine months of 2007, a decrease of $1.7 million. We had an operating loss of about $6.0 million in the first nine months of 2008, compared to a loss of $6.4 million in the first nine months of 2007.

General and administrative expenses were $8.3 million for the first nine months ended September 30, 2008, compared to $7.7 million for the first nine months of 2007, an increase of $0.6 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 $0.2 million increase was due to the addition of new staff.

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 nine months of 2008 and 2007, in
thousands.

                                      Nine Months
                                  Ended September 30         Increase/      Percentage
                                   2008          2007       (Decrease)      Change (%)

Oil and gas                     $    3,345      $   894     $     2,451             274
Rig & refurbishing operations        1,877        2,213            (336 )           (15 )
Minerals                               144          598            (454 )           (76 )
Drilling & development                            3,286          (3,286 )          (100 )

Total revenues                  $    5,366      $ 6,991     $    (1,625 )           (23 )

Operating Income (Loss)

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

                                      Nine Months
                                  Ended September 30         Increase/      Percentage
                                   2008          2007       (Decrease)      Change (%)

Total operating income
Oil & Gas                       $   (3,940 )   $ (4,581 )           641              14
Rig & refurbishing operations         (921 )     (1,083 )           162              15
Minerals                              (363 )       (310 )           (53 )           (17 )
Drilling and Development                 -        1,395          (1,395 )          (100 )
Non-segmented                         (826 )       (939 )           113              12
Total operating income          $   (6,050 )   $ (6,376 )   $       326               5

Income for the nine months ended September 30, 2008 was a loss of $6.0 million, compared to $6.3 million loss in the first nine months of 2007, a decrease in the loss of $0.3 million.

Oil and Gas

Work continued apace on facilities build up of the Company's primary development property in the Oxnard, California oilfields to support increase of production. Recovery of the heavy oil from the Upper Vaca Tar Sand formation requires drilling of wells with horizontal bores in the range of 1,200 - 1,500 feet, specialized completion techniques, extensive high pressure/high temperature steaming, addition of light gravity oil diluent, water separation and shipping by truck to a pipeline terminal. The steam generators are now supplied by natural gas, and an oil sales pipeline is being arranged.

Tri-Valley is presently steaming and producing from seven horizontal well bores and evaluating various zones on its Hunsucker Lease. It recently added the Lenox Ranch across the street with 20 idle vertical wells that are being systematically re-worked in preparation for steaming and production. New horizontal wells are planned for drilling in the fourth quarter since horizontal bores can produce at rates greater than what vertical wells can do.

On Tri-Valley's Moffat Ranch gas field west of Madera, California, the new 48-X well continues to be produced at a choked back rate to avoid sand/water build-up. At the Company's Temblor properties in the South Belridge and Edison oil fields, modest oil production continues as the pilot water flood project build up continues and new shallow wells are contemplated for the fourth quarter 2008 and first quarter 2009.

Tri-Valley is raising the last $15 million of the $100 million TVOG Opus I Drilling Program LP, primarily to attain some 20 horizontal wells at the Oxnard properties. When these well bores have continuous steam from injector wells, the Company believes sustained production in the 10,000 barrels of oil can be obtained according to a report by the late Canadian steam assisted gravity drainage of heavy oil expert, Dr. Ralph Butler. Other drilling programs, both exploratory and development are being considered for launch in 2009.

Rig & refurbishing operations

There were no revenues from rig operations in the third quarter compared to $0.27 million in the third quarter of 2007. GVPS did not realize operating revenue in the third quarter of 2008 due to the sale of rig assets in July. The operating loss in the third quarter of 2008 was $73 thousand, compared to an operating loss of $0.9 million in the third quarter of 2007, or a decrease in the loss of $0.8 million.

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

There were no revenues from minerals activities in the third quarter of 2008 compared to $120 thousand in the third quarter of 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 largely have been in a care and maintenance status. However, Jim Bush, formerly Vice President of exploration for Tri-Valley Oil and Gas Co. and now President of Select Resources, has assumed the charge of activating and monetizing the properties through finding joint venture partners, spin-off or outright sale.

For the third quarter, mineral programs continued the assessment and compilation of geologic information as was done in the previous quarter for the Calder, Richardson, and Shorty Creek properties in Alaska, but made significant advances in understanding the Admiral Calder calcium carbonate deposit (see below). Select also continued to pursue candidates for management and officer levels in the company and consultants to assist in property development. Select continues to be devoted to returning the Admiral Calder mine to a profitable undertaking, continues to explore precious metal opportunities, continues to include 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 third quarter, Select continued low-cost monitoring and security at the Admiral Calder calcium carbonate quarry in Alaska and undertook additional maintenance activity and equipment testing. Several sections of the crushing and material handling plant were operated as were various parts of the maintenance shop and the on-site analytical lab. As a result, we now have a much better grasp of what needs to be done prior to directing any effort towards restart and it is not overwhelming.

In addition to the above, Select made significant advances in understanding the Admiral Calder calcium carbonate deposit itself. This deposit is almost certainly in the top 10% of the globe's deposits and by some experts is considered to be in the top 1%. We believe it may well be one of the top 5 or 10 calcium carbonate deposits in the world. The chemical purity and high whiteness/brightness characteristics make the product suitable for high-end uses as in adhesives, plastics, rubber, paint products, paper, and possibly in high end paper applications (although we are currently investigating its characteristics when pulverized to the sub 10 micron size-range). Even more important, it appears as though the amount of the high quality product in the deposit is easily twice the estimates originally provided and perhaps triple or more. These findings significantly change the overall life and potential production rates of the operation, and along with that the potential profit. In short, our compilation of many different reports and reworking of the calculations of the in-ground resource are indicating that this deposit is much better than we had originally envisioned, and along with that so are the economics. To further enhance the value of these findings, the third quarter saw the beginning of inquiries about developing the property and meetings with potential joint venture partners. In addition to the ground calcium carbonate (GCC) market and chemical grade calcium carbonate 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 dimension stone, and ways to minimize and exploit mine waste (such as using low grade material for acid rock drainage control at other mines). Putting the quarry into a revenue-generating status remains a Select priority. In parallel with the above, Select is considering 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. It should be pointed out that Select's neighbor, International Tower Hill, located only a few miles northerly from Shorty Creek, has delineated in excess of 3 million in-the-ground ounces of gold via drilling.

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 large system.

Uranium

Select 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 $0.9 million in the first nine months of 2007, to $0.8 million in the first nine months of 2008. Stock option expense for the first nine months of 2008 was $0.6 million, compared to $0.7 million for the first nine months of 2007, a decrease of $0.1 million. Interest expense for the first nine months of 2008 was $0.2 million, unchanged from the first nine months of 2007.

Capital Resources and Liquidity

In 2002 through the third 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 $12.0 million at September 30, 2008, up from $8.0 million at year end 2007, an increase of $4.0 million. Cash on hand increased from $7.6 million at year end 2007 compared to $9.0 million at September 30, 2008. Trade accounts receivable increased to $2.9 million at September 30, 2008, compared to $0.3 million at year end 2007 due to increased oil and gas production. Current liabilities decreased to about $7.5 million at September 30, 2008, compared to $10.3 million at year end 2007.

Operating Activities

We had a negative cash flow of $10.3 million for the nine months ended September 30, 2008 compared to a negative cash flow of $1.7 million for the same period in 2007. The negative cash flow in the current period is due mainly to our loss from operations along with our decrease in advances from joint venture participants and an increase in accounts receivable. Our loss from operations was approximately $6.0 million for the nine months ended September 30, 2008 compared to a $6.3 million loss for the same period in 2007.

Investing Activities

Net cash provided by investing activities was $1.1 million for the first nine months of 2008 compared to $7.3 million used for the first nine months of 2007. During 2008, the company received $7.3 million from the sale of rig assets, three steam generators and a heater treater. $5.9 million was used towards capital expenditures, primarily the drilling of new wells and we used $0.4 million to buy back membership units in GVPS.

Financing Activities

Net cash provided by financing activities was $10.6 million for the first nine months of 2008 compared to $6.0 million for the same period of 2007. We received $9.0 million from sales of restricted shares of common stock in privately negotiated transactions including the exercise of stock options by employees. We used $459,000 to pay down principal on long-term debt. The company raised $2.9 million from the sale of partnership units in GVP. We have not planned any private placement of equity securities for the remainder of 2008, 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 $7 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 $1.5 million. 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 $2 million, but to expend $7 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,

· 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.

Our ability to raise additional capital will depend on the results of our operations and the status of various capital and industry markets at the time such additional capital is sought. Accordingly, there can be no assurances that capital will be available to us from any source or that, if available, it will be on terms acceptable to us. The Company has no off balance sheet arrangements.

New Accounting Pronouncements

See Note 3 to our unaudited consolidated financial statements.