Treaty Energy Corporation Acquires Four Oil & Gas Leases in Shelby County, Texas

NEW ORLEANS, July 9, 2012 /PRNewswire/ -- Treaty Energy Corporation (OTCQB: TECO) (www.treatyenergy.com), a growth-oriented international energy company, today announced the acquisition of four new Oil & Gas Leases in Eastern Texas, and its plan to re-enter and re-complete the MADELEY F1H well in Shelby County, Texas.

Today Treaty Energy Chairman, Andrew V. Reid, is pleased to announce that a major multi-stage acquisition has been signed by Treaty Energy.  Mr. Reid believes that this acquisition, upon completion of the multiple stages, will position the company for tremendous growth and allow Treaty to move to a whole new level in the oil industry.  (An 8-K will be filed on this acquisition.)

This acquisition involves three parties: Jimmy Jones, seller of the CHUMLEY LEASE; 3K Oil Trust, seller of the ISAIAH HILL, MADELEY, and ELLORA LEASES; and Treaty Energy, the purchaser.  Total acreage of the four Leases is 580 Acres.

Treaty Energy will start to re-enter the MADELEY F1H (API#42-419-31028) well on Monday, July 9th.  This well is drilled vertically to the Fredericksburg Zone and initially had a 16ft lateral extension drilled.  The driller on this well was permitted by the RRC to go much farther laterally, but due to unexpected increases in well pressure for which they were unprepared lateral drilling was stopped far short of the potential that this well held.

Production of this well was 161 BBLS of oil per day at that point.  Treaty Energy is permitted by the RRC to laterally drill this well to 1770 ft, but will not necessarily drill that entire length.  Treaty currently is planning to drill to 1000 ft, but may drill farther if deemed prudent to do so.  The well planners and geologists involved with this well estimate production to be up to 400 BOPD.  Re-completion is estimated to take one week.  Update will be provided to shareholders upon re-completion.

There will be at least two more wells drilled to the Fredricksburg Zone with similar laterals on the 3K Leases with estimated production by the well planners of up to 500 BOPD each based on well logs of similar wells close to the areas to be drilled.

The CHUMLEY LEASE contains one well that is producing at a current rate of about 45 BOPD.  This well was originally drilled to 3380 ft at which time the well blew out causing complete destruction of the drilling rig.  The well was brought under control by pumping cement down the hole up to the 1900 ft Saratoga Zone.  At that point the well started flowing and production equipment was set in place to produce the well. 

During the drilling and logging of the well four Pay Zones were found: the Saratoga Zone at 1900 ft; the Annona Zone at 2185 ft; the Tokio//Blossom Zone at 2500 ft; and the Fredricksburg Zone at 3380 ft.

The plan for the CHUMLEY LEASE, as per the Purchase Contract, is to drill and produce each Zone separately.  Initially, Treaty will 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 1500 BOPD or up to 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. 

Treaty will pay for these wells from a combination of revenues from oil sales and investments by some of the substantial new investors that have taken equity positions in the Company during the last six months.  At least one of these groups will be offered, and will likely accept, a seat on the Company's Board of Directors in the near future.  This will be a great moment for the long holding supporters of the Company.  Once the sites for the Two-Acre Pads are selected and permitted Treaty expects to complete the drilling program in 18 to 20 weeks. 

The purchase price of these four new Leases is $7,375,000, and is structured follows: $175,000 for the re-entry and re-completion of the MADELEY F1H Well that will start on July 9, 2012; $1,200,000 that will be paid within 75 days; and the balance of $6,000,000 to be paid in shares of Convertible Preferred Stock that will convert at several different share price levels as the levels are achieved and maintained for a required time as per the contract. 

Mr. Reid stated, "I am overjoyed at the progress that is occurring at Treaty Energy.  There have been many programs implemented in Texas and Belize and all are coming to fruition at the same time.  To remind our shareholders, we have drilling programs in West Central Texas for 12 shallow wells (500 – 600 ft); we are moving forward to drill 9 wells (2300 – 3000 ft); and we are currently drilling a well to (1700 – 1900 ft) on the MC COMAS A LEASE."

Mr. Reid added, "We have drilled our first well in Belize, the San Juan #2 well, which is showing promising results.  We are already in preparation of the site to start drilling our second well in Belize and are seeking to permit an additional six wells to properly outline and define our oil play in the Stann Creek District of Belize.  In addition, we will soon outline our plans for the 1.4 Million Acre Paradise Concession." 

Mr. Reid concluded, "I am grateful to all Treaty Energy shareholders and stakeholders for their abundant support over the last couple years.  I believe that we are all soon to benefit from all our efforts and be richly rewarded for our success."

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
[email protected]

SOURCE Treaty Energy Corporation