Bettencourt, the 2010 Reno-Tahoe Open winner, and Thompson were at 11-under 205.
"I'm just hitting the ball well and making putts," Bettencourt said, "Overall, my ball-striking has been pretty good this week."
Thompson, set to return to the PGA Tour full-time next season after four years on the Nationwide Tour, had 71 at Spyglass with an eagle, six birdies, three bogeys and two double bogeys.
Hunter Haas, 89th this year on the PGA Tour money list, was a stroke back after a 65 at Del Monte.
"I scraped it around today, but I hit some good wedges in there," Haas said. "Bottom line, I made putts when I need to."
Frazar, the St. Jude Classic winner this year, had a 70 at Del Monte. Tringale shot a 71 at Spyglass, and Horschel had a 68 at Pebble Beach.
Defending champion John Mallinger shot a 72 at Spyglass to finish 4 over and missed the cut in a tournament that featured a starting field of 83 pros from the PGA, LPGA, Champions and Nationwide tours.
Olin Browne, the U.S. Senior Open winner, had a 68 at Pebble Beach and joined Champions Tour vetaran Russ Cochran at 5 under, the top score among a dozen Champions Tour entrants. Cochran had a 69 at Del Monte.
Leta Lindley shot a 70 at Pebble Beach and was 1 under. She was the only player among eight LPGA entrants to make the cut.
The final round of the 40th annual event, featuring the top-40 scores and ties from an original pro field of 83, will be held Sunday at Pebble Beach. The winner will earn $60,000 of the $300,000 purse.