Treaty Energy Corporation (OTCQB: TECO), a growth-oriented international energy company, today announced plans to expand its oil and gas field development operations in Tuscola, Texas and provided a material update on all other current operations in East Texas and in Belize.
Treaty Energy Corporation has acquired lease rights to drill thirteen (13) new wells on the 260 acre Kubacak lease. The Kubacak lease is located approximately three and a half miles southwest of the Company's current operations on the Stockton and Mitchell leases. The Company plans to develop the Kubacak lease in three phases. The first phase calls to develop three wells to determine the field's characteristics, the second phase will expand on the first three wells to include an additional 10 wells. The third phase will be announced at a later date, after the first two phases are completed and more lease assets are acquired.
Prior to this announcement, the Company applied and received approval to begin drilling the Kubacak #3 well and has already begun pre-drilling operation to minimize delays in drilling between the Stockton lease project and the Kubacak lease project.
The Company plans on applying for the other two permits once it receives confirmation of a final drilling schedule from its contractors. The Company anticipates that drilling of Kubacak #3 will begin before the end of the month.
The Kubacak lease is located on the Taylor County Regular, the same producing field as the Stockton and Mitchell leases. Unlike the Stockton and Mitchell leases, the Kubacak lease is considered underdeveloped. Most of the wells in the area were plugged in 1971 to 1973 after OPEC became the dominate price setter for crude oil prices around the world and oil production demand declined in the United States. Initial production rates for this field vary between 50-174 barrels of oil per day and show that new wells in the area may have up to five potential pay zones.
News of the Kubacak development comes on news that the Company reached total depth on the Stockton #3 well and completion work on the Stockton #2 well is nearing completion. Initial swabbing attempts on the Stockton #2 have pulled high yields for oil production and initial electrical and geological logs on the Stockton #3 show confirmation of oil production similar to the Stockton #2 well. Both wells are expected to produce similar to or exceed production on the Mitchell #4 well.
On June 17, 2013, the Company announced that the Mitchell #4 had an initial production rate of 61 barrels of oil per day (BOPD) and had a consistent production rate of 45-50 BOPD. Production rates as of November 11, 2013 show that the Mitchell #4 has reached the expected bottom of its production decline curve and is producing a consistent 15-25 BOPD (combined #3 and #4 production is between 30-50 BOPD). Based on historical levels, the Mitchell #4 is expected to remain at these levels for 1-2 more years before hitting another minor decline.
The Company recently acquired ownership rights to the Stockton #1 well. After completing the Stockton #2 well the completion rig will be moved to re-perforate and rework the Stockton #1 and Stockton #3 wells. This will complete the Stockton lease project and will allow for the Company to shift focus to the Kubacak lease.
East Texas and Belize Updates
The Company has made significant progress on its East Texas operations. After partnering with another Company in the area, production has been restored to the Hill lease in Shelby County, Texas. The Hill lease, which was shut in almost a decade ago, has been reworked and is now producing approximately 100 MCF per day. This gas well is now expected to gross approximately $9,000 per month ($108,000/yr) before ORRI splits.
The Lakeshore lease which received a work over and pumping schedule change earlier this month is now producing between 3-5 BOPD and is also expected to gross approximately $9,000 per month ($108,000/yr) before ORRI splits.
The Company is now working with its partner in the area to evaluate and possibly bring the Madeley "F" well back into production. This well was producing approximately 10 BOPD in oil condensate and approximately 600 MCF monthly before unexpectedly and suddenly ceasing production in October of 2012. The Company believes that one of the many laterals on the well is causing a loss of down hole pressure and may opt to plug and cement the lateral to try and restore pressure to produce the well.
In addition to East Texas operations, the Company has restarted operations on the San Juan #3 well in Belize. For the last few weeks, the Company was at an impasse with a stuck packer rod that had rotated half way up the well, preventing completion work from being done on the well. For the last three weeks, the Company has been manufacturing an overshoot tool that would bypass the stuck packer and pull it out of the well. Company engineers arrived in Belize on Thursday with the newly manufactured part and will begin attempting to remove the packer from the well on Monday afternoon. The Company will update investors on any new information via normal communication channels should any major developments occur.
About Treaty Energy Corporation
Treaty, an international energy company, is engaged in the acquisition, development and production of oil and natural gas. Treaty acquires and develops oil and gas leases which have "proven but undeveloped reserves" at the time of acquisition. These properties are not strategic to large exploration-oriented oil and gas companies. This strategy allows Treaty to develop and produce oil and natural gas with tremendously decreased risk, cost and time involved in traditional exploration.
