NEW ORLEANS, Nov. 8, 2013 /PRNewswire/ -- Treaty Energy Corporation (OTCQB: TECO) (www.treatyenergy.com), an international energy company, today reported results for second quarter ended June 30, 2013. The second quarter highlights an internal restructuring and transitionary period from marginal well operations to new oil and gas field development operations.
The second quarter was marked as an internal restructuring and transition period for Treaty Energy (the "Company"). During the three months starting April 1, 2013 to June 30, 2013, the Company transitioned from operating marginal/stripper wells to new drills. Just prior to April 1, 2013, Treaty Energy shut down marginal well operations and sold a majority of its well inventory ("Great 8 Leases") to Heritage Oil and Gas on April 19, 2013 for a total of $550,000. With no operating inventory during this time, the Company acknowledges an operating loss and a very limited revenue stream of $4,045. Despite low revenues during this period, revenue for the first six months of 2013 was up 50.8% compared to the same period of the prior year.
The sale of the "Great 8 Leases" has resulted in a write off of $455,777. After adjustments, the sale of the "Great 8 Leases" is still recognized as a net gain of $130,661 to the Company. Any subsequent payments on the Great 8 Leases will be recognized as a gain.
One concern of note to several shareholders may be the lack of revenue from the Company's newly drilled Mitchell wells. As reported in item 2 (page 22) of the second quarter financials, due to oil being collected but funds not dispersed during this period, revenues from this lease have been deferred to the third quarter financials.
Total oil sold during the month of October 2013 is still being calculated, however the total quantity of oil sold during the months of June through September is 3,895 barrels, or $380,484 before overriding royalties. This number is not reflective of total lease production, but rather total oil collected and sold during the months of June through September.
For more information, including particulars of this transition period in Texas, please download our Texas operations packet that the Company released approximately one month ago: http://www.treatyenergy.com/sites/default/files/TECO_Texas_Investor_Packet.pdf.
As part of the Company's internal reorganization, the Company has begun to cut costs significantly. Compared to the same period last year (for the three months ended June 30) total operating expenses were cut to $694,254, down from $944,262, resulting in a 36% cut $259,050. A major on-going shareholder concern, general and administrative costs, has decreased from $653,045 for the three months ending June 30, 2012 to $495,969 for the three months ending June 30, 2013. These cuts were in large part due directly to greater managerial oversight and tighter operational controls instituted during this period.
Directly tied to this discussion, no managerial parties in the Company received a direct stock issuance during this period, calming investor concerns on the matter.
One large area of note pertains directly to the large recorded net loss of $3,659,221 during this quarter and merits greater explanation. A large portion of this loss is directly attributed to a gain (loss) on derivative liability valued at $2,942,956. As noted on page 18, this is directly attributed to non-issued shares and the differentials in price and "perceived fair market value" (i.e. current market value). With these shares being issued in November the loss will be recaptured by the end of the year and the liability will be eliminated. Excluding this derivative liability, total losses should be at $716,255 for the quarter, which is $277,431 less than the previous year.
To reassure shareholders, Chief Executive Officer of Treaty Energy, Andrew V. Reid stated, "While the current financials look troubling, the Company underwent a large successful transition during this period, and actually shows a lot of change and promise upon closer inspection. It is unfortunate, but the Company had to record a loss this quarter in order to show positive gains in the third and fourth quarters. The Company has told shareholders over the last few months in communications that the second quarter would represent a transitionary period, whereas the third quarter and beyond would represent the successes of management's changes."
The second quarter financials, along with all other filed financials, can be found on Treaty Energy's SEC filings page located at http://www.treatyenergy.com/investors/SEC-Filings.
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