On July 5, 1998, at 1120 hours Pacific daylight time, a Taylorcraft BL-65, N23670, experienced a loss of engine power during cruise and came to rest inverted after colliding with trees near the San Antonio Reservoir, Livermore, California. The aircraft, operated under the provisions of 14 CFR Part 91, sustained substantial damage. The private pilot and one passenger were not injured. Visual meteorological conditions existed for the personal flight and no flight plan was filed. The pilot reported that after departing the Livermore airport he flew to Pleasanton so that his passenger could take some photographs, and then flew to the reservoir to take some more photographs. He stated that the area they were flying in was hilly terrain. The pilot reported that he applied full power but was unable to establish a positive rate of climb. He further reported that the engine did not seem to be generating normal horsepower and he was unable to clear the hilly terrain. He made a forced landing in a tree and both he and his passenger were able to egress without further incident and hiked to the nearest road. In the pilot's report to the Safety Board he reported that there were no mechanical malfunctions noted with the engine. A Federal Aviation Administration inspector from the Oakland, California, Flight Standards District Office examined the engine. He reported that an engine run was conducted with no abnormalities noted.