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

Stocks in this article: TECO

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. 

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