NEW ORLEANS, Aug. 16, 2013 /PRNewswire/ -- Treaty Energy Corporation (OTCQB: TECO) (http://www.treatyenergy.com), a growth-oriented international energy company, today announced that it sold a large portion of its existing marginal oil well assets in West Texas for $550,000 as part of the Company's long term re-organization strategy to decrease expenses and improve operational efficiency. The Company also announced its plan to acquire a new well as part of its program to develop the Tuscola, Texas area.
Summary of Results in West Texas
As announced in February of 2013, management initiated several major actions to improve the Company's financial strength. The first major action announced by the Company included a full review of all leases in West and East Texas that were purchased in 2011 and 2012.
The internal review was immediately responded to by management, which reacted by restructuring Company operations and by moving away from marginal well operations into hydrocarbon exploration opportunities on underdeveloped leases. These moves were announced mid-2013 and should not be unexpected by shareholders. Results of these actions are being seen in the third quarter (Q3) 2013 with the acquisition of the Mitchell, Stockton, Standard and Murl/Stroebel leases.
Oil and gas development that occurred in late second quarter (Q2) on the Mitchell lease has produced more than 3,000 barrels of oil.
Sale of Marginal Well Assets in West Texas
As part of the Company's internal review of leases purchased in 2011 and 2012, cost effective and necessary work overs were performed on at least one well on each lease that was currently producing at least one barrel of oil per day (BOPD). A shallow well (Brown #22) was also drilled to determine the production potential of the Brown lease. Work over operations began in mid to late Q1 and early Q2. Actions taken during this time by the Company will be reflected in the Company's financial filings.
Data accumulated during this time revealed that the Company's marginal well operations would remain unprofitable for the Company and would not likely be successful in the long term. Work overs showed temporary profitable production increases but returned to previous unsustainable levels after a few weeks of production. These temporary increases resulted in overall net increases in production for Q1 and early Q2, but were not sustainable for the long term.
Profitability may have been obtainable using the Company's marginal well inventory, but only if the inventory was supplemented through the purchase of additional marginal wells in large quantities. By purchasing additional marginal wells, the economies of scale would have worked in favor of the Company, making marginal revenue larger than marginal cost. The internal review determined that the existing inventory would be suitable for a larger and more established operator of marginal wells, but were not in line with the Company's current goals and objectives.
Based on the results of the internal review, the Company began seeking buyers for the following leases:
- Loven-Compton – RRC ID: 26702
- Compton – RRC ID: 23901
- Brown – RRC ID: 27237
- Hobbs, B.F. – RRC ID: 06770
- Kennard (Mabel) – RRC ID: 09642
- Kennard (Fiscus) – RRC ID: 26077
- McComas 'A' – RRC ID: 16866
- Shotwell 'W.F.' – RRC ID: 03520
- Shotwell 'C' – RRC ID: 28384
- Willingham, A.J. – RRC ID: 26605
- Wooldridge, Mack H. – RRC ID: 18484
In late March 2013, the Willingham, A.J. was sold for $50,000 and the Wooldridge, Mack H. was returned to its previous owner due to its low performance.
In April 2013, the Company received an offer to purchase all remaining West Texas assets. Under this offer, the purchaser would operate the leases until the sale was completed. The deal fluctuated over time, with leases being rescinded and re-offered. One of the more contested leases was the Brown lease, which had a newly drilled shallow well on it. As mentioned in the Company's newsletter on July 27, 2013, the Brown lease was rescinded from the deal. This statement was true at the time of publication. However, a few days later the Brown #22 was placed back on the bargaining table as part of the sale.
On August 13, 2013, a deal was finalized with Heritage Oil & Gas of Flower Mound, Texas. Heritage Oil & Gas has purchased the remaining nine leases for $550,000. This payment will be made over next three months. The Company will be reinvesting this money to fund future oil and gas development in the Tuscola, Texas region and pay off some outstanding liabilities.
The Company maintains operations in Tuscola, Texas on the Mitchell, Standard, and Stockton leases. The Company also maintains operations in East Texas on the Lakeshore and Madeley leases.
Stockton #1 Well Acquisition
C&C Petroleum Management, LLC, the Company's Texas-based oil and gas operating subsidiary, began the process to acquire the Stockton #1 well from Tanglewood Productions in Breckenridge, Texas. The Company has made a down payment of $25,000 and is expected to complete the sale by the end of the month.
Following the full purchase and transfer of Stockton #1, the Company will announce its overall plans for future Texas development. This future announcement will occur within the first two weeks of September, but no definitive release date has been set. Drilling activities may or may not occur on the Stockton lease during the interim period. A news release and informational packet will be available for shareholders and potential investors once Stockton #1 has been acquired which will outline and detail the Company's strategy and actions taken so far in Texas.
Additional Updates for Shareholders and Potential Investors
Treaty Energy Corporation releases weekly newsletter updates to increase Company transparency and better inform investors on weekly operations at the Company. These newsletters are designed to summarize the previous week's operations and give operation time lines for the next week. To sign up for the weekly newsletter please visit: http://www.treatyenergy.com/investors/newsletter-sign.
This news release will also be filed as a material update with the United States Securities and Exchange Commission as an 8-K operational update.
Treaty Energy Corporation
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.
Treaty Energy Corporation (TECO) trades on the OTCQB, the marketplace for companies that are current in their SEC reporting requirements. Investors can find Real-Time quotes and market information for Treaty Energy at http://www.otcmarkets.com/stock/TECO/quote
Statements herein express management's beliefs and expectations regarding future performance and are forward-looking and involve risks and uncertainties, including, but not limited to, raising working capital and securing other financing; responding to competition and rapidly changing technology; and other risks. These risks are detailed in the Company's filings with the Securities and Exchange Commission, including Forms 10-KSB, 10-QSB and 8-K. Actual results may differ materially from such forward-looking statements.
SOURCE Treaty Energy Corporation