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Treaty Energy Corporation to Finalize the Shelby County Texas Lease Acquisitions This Week

Drilling of the Initial Four 'Two-Acre Pads' with Four Wells per Pad on the CHUMLEY LEASE will Bring Oil Production to More Than 7000 BOPD, or $14 Million per Month

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NEW ORLEANS, July 31, 2012 /PRNewswire/ -- Treaty Energy Corporation (OTCQB: TECO) (www.treatyenergy.com), a rapidly growing international energy company, today announced the  $1.2 million funding required to complete the two-part acquisition of four new Oil & Gas Leases in Shelby County, Texas is in escrow and this transaction will be finalized this week.

The acquisition of four new Oil & Gas Leases in Eastern Texas, and the plan to re-enter and re-complete the MADELEY F 1H well in Shelby County, Texas was first announced by news release on July 9, 2012 (See prior release:  http://www.treatyenergy.com/flashsite/index-5.php?fn_mode=fullnews&fn_incl=0&fn_id=119).

Since the start of this two-part acquisition Treaty Energy has re-opened the MADELEY F 1H well and it has been "Certified" production of 192 BOPD and 822 MCF of natural gas.  Treaty is now connected to the XTO pipeline and waiting for that company's representative to open the valve accepting Treaty's gas into their pipeline this week.  Division orders have just been signed with the Eastex Crude Co. located in Leesburg, Texas.

Andrew V. Reid, Chairman of Treaty Energy Corporation, stated, "In addition to re-opening the MADELEY F 1H well Treaty Energy has reworked the Lakeshore #1 well that is producing about 37 BOPD, and we put the MADELEY M 1H Injection well back into use for water disposal.  As stated in the July 9th news release, Treaty plans to extend the lateral on the MADELEY F 1H well after pressure abates and the current production rate diminishes.  The lateral, currently drilled only to 16 ft, will be extended up to 1770 ft which is permitted for this well."

Treaty engineers, well planners and Jimmy Jones, who will oversee drilling of all wells on the CHUMLEY LEASE and the 3K Oil Trust Leases, the ISAIAH HILL, MADELEY and ELLORA LEASES, are expecting a dramatic production increase from the MADELEY F 1H well when the lateral extension is completed. 

Mr. Reid added, "Upon closing of part-two of this acquisition this week a well that is producing 45 BOPD on the CHUMLEY LEASE will be transferred to Treaty, bringing the pre-drilling production on this four-lease acquisition to approximately 267 BOPD and 822 MCF of natural gas."

Mr. Reid added further, "We will re-enter the CHUMLEY well per the plan of Jimmy Jones and rework the well with an expected increase of production to about 200 BOPD.  With this re-work production should increase to approximately 420 BOPD and 822 MCF of natural gas, or $902,500 per month, net after royalties.  This well should be reworked within 30 days by Jimmy Jones and his drilling team."

Mr. Reid commented, "The following generally restates our plans for drilling on these four newly acquired Oil & Gas leases as first presented in our release of July 9, 2012.

During the earlier development of the CHUMLEY LEASE four Pay Zones were found: the Saratoga Zone at 1900 ft with a 240 ft thick zone; the Annona Zone at 2185 ft with a 290 ft thick zone; the Tokio/Blossom Zone at 2500 ft with a 130 ft thick zone; and the Fredricksburg Zone at 3380 ft with a 210 ft thick zone.

Treaty Energy, with the assistance of Jimmy Jones and Wayne Knappick, will initially build four Two-Acre Pads on which four wells will be drilled.  Each of the four wells per Pad will be drilled to one of the four Pay Zones previously mentioned.  Each of the Two-Acre Pads is estimated to have initial production of up to or exceeding 1500 BOPD or up to or exceeding 6000 BOPD for the group of four Pads.  The cost of drilling these wells is estimated at $165,000 for each of the Saratoga Zone wells, $190,000 for each of the Annona Zone wells, $215,000 for each of the Tokio/Blossom Zone wells, and $240,000 for each of the Fredricksburg Zone wells.  The Fredricksburg wells will have laterals drilled.

Jimmy Jones has indicated to Treaty that up to 25 Two-Acre Pads (with four wells per Pad) could be drilled on the approximately 580 acres of these combined leases.  If one were to extrapolate, the ultimate oil production could come to or exceed 37,500 BOPD from 25 such Two-Acre Pads, or about $76 million per month of revenues, net after royalties.

Expected drill up time on the first four Two-Acre Pads is estimated at 4-5 months.  Therefore, Treaty shareholders should be seeing dramatic increases in revenue during the coming months.

On other subjects, Mr. Reid stated, "I will be in Belize for a scheduled quarterly meeting with the GOB.  While there I will observe the on going activity of drilling and testing for production on the San Juan #1 and #2 wells." 

Mr. Reid added, "News will soon be released on our West Texas operations that we believe will be very exciting for our shareholders."

In closing, Mr. Reid stated, "Treaty is exceeding by far our projections for the near and long term development of our business.  Other possible acquisitions are on the table that can add thousands of barrels of oil per day to the already huge production projections that we see coming from our many active drilling programs in East and West Texas and Belize."

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. 

Forward-Looking Statements:

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.

Contact:
Osprey Partners
Tel: 732-292-0982
Fax: 732-528-9065
osprey57@optonline.net

SOURCE Treaty Energy Corporation



RELATED LINKS
http://www.treatyenergy.com

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