NEW ORLEANS, Jan. 17, 2012 /PRNewswire/ -- Treaty Energy Corporation (OTCQB: TECO) (www.treatyenergy.com), a growth-oriented international energy company, today reported progress on its projects to increase oil production on its Texas leases.
Treaty Energy's Co-CEO Bruce Gwyn and CIO Lee Schlesinger recently returned from Texas where they were evaluating the Company's operations there.
Mr. Gwyn stated, "Our goals were many: (1) view and analyze the fifteen Treaty oil leases in Texas; (2) Evaluate current production and revenue stream that all the leases are currently generating; (3) meet with Treaty Energy President, Stephen L. York, and review the time line for continuing lease work-overs; (4) schedule and co-ordinate the drilling projects that are coming on line; and (5) fully document the drilling equipment acquired by the Company's subsidiary, Treaty Energy Drilling, Ltd, over the last several months and to determine the market value of each piece of drilling equipment that was purchased." After completion of their stated goals Mr. Gwyn added, "We are pleased to say that the findings from the evaluation are very encouraging."
After struggling through one of the hottest summers in Texas history, the leases are now starting to respond to work-over and stimulation treatments and yielding results. Because of the summer conditions production schedules were pushed back by a few months. As of now over half of the leases are producing 25-40% more than the previous 12 months average.
Mr. Gwyn stated, "The Texas leases have now realized sufficient revenue stream from production that all leases are continually being reworked and upgraded without the need of second party financing, which will allow production to steadily grow on a self-contained basis. We have reached this current level of production after many months of well reworking orchestrated by Mr. York. This has allowed Treaty Energy to sell over 1000 Barrels of oil within the previous 30 days."
In addition, Mr. York commented, "Treaty remains on track to achieve our previously stated goal of 1000 BOPD by end of June 2012. Current production from existing wells has stabilized and with continuing work-overs we expect production to shortly increase to 1500-2000 barrels per month."
The Shotwell Leases will be coming online in the next 7-10 days. The wells have been re-worked with tubing, pressure tested, and down-hole pumps rebuilt. The increased fluid volume has resulted in the injection station not being able to inject the daily water volume back into the formations. The injection pump is currently being rebuilt and will be re-installed to bring the lease back online. The increase across the board has resulted in an increase in the water volume as well as the oil volume. The water handling capabilities on these old leases are not sufficient to keep pace with the oil production volume. Once all the water handling capabilities are increased to not only handle current production, but future production as well, then production will increase and drilling projects can be initiated on these leases.
Steve York and his crew recently completed their first Gel Frack, a process of well stimulation where highly pressurized "fracking fluid" is injected through the well bore into the reservoir, on the Mac #4 well on the new Mack Wooldridge lease. This process stimulates the zone and increases production. At present time the production on the Mac #4 well has tripled from previous numbers. Mr. York anticipates that production on this well should continue to increase over the next week or so when a final reading of the increased production will be determined. If the results are sufficient Mr. York plans to duplicate this process on the other wells on this lease.
The Mack and Eula Wooldridge leases will also be where Treaty Energy's first well drilling project will occur, for which funding is already in place. The two leases hold a combined 280 acres. There are numerous virgin drill sites available for Treaty to explore on these leases.
Treaty plans to drill a series of 12 new wells through a process of "Infield Drilling". This is a process of drilling new wells in a field of proven production on the perimeter of the field. This process dramatically increases the percentage of successful new wells. The geologist is scheduled to mark the planned new drilling sites on Wednesday, January 18th. The Texas RRC mandated survey depicting the exact locations defined by GPS, fence lines, etc., will follow immediately, thus allowing the Company to finalize the drilling permits with the Texas RRC to obtain approval for the drill sites and permission to drill.
Treaty has summarize two past well logs, showing the pay-zone being produced and the Initial Production (IP) of two of the older 11 wells located on the Wooldridge leases. As shown in the logs, these wells were drilled in 1985. The initial production of the Mac #6 well was 31 BOPD and the Mac #3 well was 30 BOPD. There was 17ft of pay zone for the Mac #6 and 13ft for the Mac #3 wells. Treaty will be drilling in between these older wells and would anticipate the same success.
You will find the "Woodridge Lease Well Logs" on the "Projects" page of Treaty's website: http://www.treatyenergy.com/flashsite/index-3
In the past Treaty has estimated its reserves to be around 900,000 barrels of recoverable oil on its leases, prior to the addition of the Wooldridge leases. Treaty has researched the Wooldridge lease and the data on the proposed 12 new wells would indicate that each well could contain as much as 35,000 barrels of oil in place. That would add an additional 400,000 barrels of oil to the "estimated reserves". The estimated reserves are based on a 25% recovery rate and only taking into consideration the shallow 500-600 ft pay-zone.
This new 12 well drilling program is expected to yield an additional 200-300 BOPD in oil production. Once drilling has started the process should take 6-8 weeks to complete. Based on other well data in this field these wells should have similar characteristics to the earlier wells. Treaty believes that it has the availability to drill up to 48 additional shallow wells on its various leases in Texas.
Treaty has several pay zones at various depths on its leases. We are currently planning to drill 9 new wells at a proposed depth of 2,600 Ft. As with the earlier 12 wells we will be Infield Drilling to minimize risk. Similar wells in the area have produced initial flow rates of between 30 - 100 BOPD. Treaty believes it has a substantial portion of the project financing committed at this time and will be able to finalize the structure over the next 30-45 days.
The equipment that Treaty Energy Drilling, Ltd has purchased over the past several months has added great value to its drilling assets. Treaty Energy Drilling has been able to add needed and important pieces of equipment that make it a more efficient company with minimal reliance on outside vendors. Most of this equipment had been purchased at auctions which resulted in reduced costs and allowed for the procurement of additional equipment which otherwise might not have been currently obtainable.
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.
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