Treaty Energy Corporation Newsletter for the Week of December 16, 2013
This newsletter is for the week of December 16, 2013 and contains current information on Company operations as of December 13, 2013. Information contained in this newsletter may be outdated at the time of release. Prior issues of the newsletter may be found on the Company’s website located at http://www.treatyenergy.com/investors/news .
Please note: Due to the upcoming holidays, there will not be a newsletter published on the following dates: December 2 nd , December 23 rd , December 30 th or January 6 th , 2014 due to the short operating weeks and holiday schedule. Full un-interrupted weekly scheduled newsletters will re-begin on January 13, 2014.
Investors that have questions or concerns during this time are strongly encouraged to call/email the Company’s investor relations line at 504-301-4475 or investors@treatyenergy.com.
To make up for the lack of information during this time, the Company will be publishing an investment packet for the year that summarizes all of the year’s events and a six month investment prospectus on January 16, 2014.
Corporate Filings (Treaty Energy Corporation):
The Company continues to work on the Q3 10-K filings and has an ETA sometime before the end of this year, if not this week.
West Texas (C&C Petroleum Management, LLC):
Further Discussions on Mitchell #3 and #4
Several shareholders have begun to question the decision to sell the Mitchell #3 and #4. Our Company hopes to further clarify its position and the decision calculus to sell off its NRI interest on the Mitchell #3 and #4.
In simple terms, the Company opted to take the present value of the well. As previously explained to investors it is generally understood that all wells have a declining production curve. In the history of oil and gas there has never been and will never be a renewable oil and gas well. Oil and gas wells extract a non-renewable resource and as such when the resources are extracted, production thins simultaneously. So, while each well individually has different decline curves, it is an unavoidable fact that production will decline over time.. As time goes on, oil and gas revenues become more and more spread out between pick-ups. However, the initial production surges always front loads production so that a large return on investment is collected within the first six months.
The Company collected roughly five months of production before opting to sell its NRI interest on the Mitchell #3 and #4, collecting a large portion of its return on investment. To determine the present value of the well, the Company estimated that it would take several years for the Company to receive the same amount of money that it received in the sale of the wells. The actual price of the sale will be released in Q4 financials and cannot be released until the numbers are audited and adjusted. Per previous announcements, this policy is in line with normal oil and gas field development operations and is considered normal operating activity for companies within the same industry.
Again, the sale of the Mitchell #3 and #4 went to funding new operations and paying off existing debts, which is a positive indicator of improving operations.
Stockton & Kubacak Lease
The Stockton 1, 2 and 3 are all undergoing reservoir and geological studies. At this time, production on the Stockton 2 has been fluctuating under different varying production timer schedules, so the Company is uncomfortable putting out a verifiable production rate at this time. To ease investors minds, the production on the Stockton #2 and predicted production on the Stockton #3 are both healthy. The Company is however, taking extra precautions to ensure a long healthy well life span. Please see video on our website at www.treatyenergy.com to see the production from the Stockton 2 well as verification of healthy production.
The reservoir study will enable us to make more accurate production projections on the Kubacak lease and be able to give investors a better prospective into the future project, as well as determine the best areas to set future wells beyond the Kubacak 1, 2 and 3.
The Stockton 1 well’s work over was completed; however alternative plans are being looked at to repurpose the well to better facilitate production on the Stockton #2 and 3. A cost evaluation study is being done to determine the cost-benefit trade off.
With regards to future drilling, the Company estimates that weather and holiday scheduling will delay its additional three wells on the Kubacak lease by three-four weeks, making the five well estimate by the end of January 2014.
P.H. Barnes and McComas Lease
The P.H. Barnes lease will be evaluated by our contractors on Monday, December 16, 2013. Once the evaluation is complete, a logistics plan will be created to determine the best course of action. When the logistics plan is created, the plan will be forwarded to the RRC and the landowner for evaluation before proceeding. Once approved by all parties, the plugging operation will begin.
As stated previously, the Company has requested a hearing date on the McComas lease and is waiting to be notified of a hearing date. However, the Company is making progress on another front to resolve the issue before a hearing is necessary. To the best of our knowledge, the McComas lease will not hinder the Company’s efforts to bring C&C Petroleum Management, LLC. back into compliance.
Belize (Treaty Belize Energy, Ltd):
The Company is currently undergoing a large internal evaluation of Treaty Belize Energy, Ltd. and its future operations as a result of the stuck packer on San Juan #3. Shareholders should not be concerned on this matter as any and all major changes to operations will be announced in due time as provided under SEC regulations. Management believes that following the success in west Texas, international operations should be restructured and re-evaluated to better improve general overall performance and be changed to improve operating efficiency.
At this time, the Company has reached an agreement with Princess Petroleum to continue operating in Belize until January 31, 2014. During this time, the Company will be working with Princess Petroleum and the Belize Government to resolve any outstanding issues and strengthen our existing relationship. Based on discussions during this evaluation period, the Company will make a decision on how best to proceed in Belize. During the evaluation period, all options are on the table, including abandonment. However, it appears unseen at this moment in time if full abandonment will be considered. The Company still believes in the prospect of oil in Southern Belize, independent of current results, and is working with Princess Petroleum daily.
One point of concern amongst shareholders has been the status of Mr. Mohammed’s employment. Mr. Mohammed is currently assisting the Company with its international operations. However, he is currently not in Belize, but back at home with his family for the holidays. As with all employees at the Company, contracts are individually negotiated and can be terminated or put under suspension by either party at any point in time. During this evaluation period, all contracts affiliated with Treaty Belize Energy, LTD. are being re-evaluated, including Mr. Mohammed’s.
Should Mr. Mohammed wish to continue his employment at the Company, he may do so at any time, however the rumors regarding his employment at Princess Petroleum are currently untrue. He is however, working on behalf of the Company through Princess. Treaty Energy is the driller for Princess Petroleum, which means that rumors regarding him working at Princess were misinterpreted based on short conversations and has resulted in significant and unnecessary confusion on the matter. The Company has formally asked that these unaffiliated parties cease posting personal information by request of those parties. Personal information has been posted by third parties without consent and without authority from either managerial team and does not reflect actual operations or discussions and should be considered rumor and/or speculation.
Until the Company makes an official status change announcement regarding Belize Operations in conjunction with Princess Petroleum the Company is still classified as being engaged in a hydrocarbon exploration program in Belize. This status will remain unchanged until the Company announces a change in operation formally or until the contract termination date is reached on January 31, 2014. However, the Company plans to make changes to its international operations before the January 31, 2014 date and will announce any and all changes in compliance with SEC regulations (particularly form 8-K section 1 and section 2).
Please note: Due to the upcoming holidays, there will not be a newsletter published on the following dates: December 2 nd , December 23 rd , December 30 th or January 6 th , 2014 due to the short operating weeks and holiday schedule. Full un-interrupted weekly scheduled newsletters will re-begin on January 13, 2014.
Investors that have questions or concerns during this time are strongly encouraged to call/email the Company’s investor relations line at 504-301-4475 or investors@treatyenergy.com.
To make up for the lack of information during this time, the Company will be publishing an investment packet for the year that summarizes all of the year’s events and a six month investment prospectus on January 16, 2014.
Corporate Filings (Treaty Energy Corporation):
The Company continues to work on the Q3 10-K filings and has an ETA sometime before the end of this year, if not this week.
West Texas (C&C Petroleum Management, LLC):
Further Discussions on Mitchell #3 and #4
Several shareholders have begun to question the decision to sell the Mitchell #3 and #4. Our Company hopes to further clarify its position and the decision calculus to sell off its NRI interest on the Mitchell #3 and #4.
In simple terms, the Company opted to take the present value of the well. As previously explained to investors it is generally understood that all wells have a declining production curve. In the history of oil and gas there has never been and will never be a renewable oil and gas well. Oil and gas wells extract a non-renewable resource and as such when the resources are extracted, production thins simultaneously. So, while each well individually has different decline curves, it is an unavoidable fact that production will decline over time.. As time goes on, oil and gas revenues become more and more spread out between pick-ups. However, the initial production surges always front loads production so that a large return on investment is collected within the first six months.
The Company collected roughly five months of production before opting to sell its NRI interest on the Mitchell #3 and #4, collecting a large portion of its return on investment. To determine the present value of the well, the Company estimated that it would take several years for the Company to receive the same amount of money that it received in the sale of the wells. The actual price of the sale will be released in Q4 financials and cannot be released until the numbers are audited and adjusted. Per previous announcements, this policy is in line with normal oil and gas field development operations and is considered normal operating activity for companies within the same industry.
Again, the sale of the Mitchell #3 and #4 went to funding new operations and paying off existing debts, which is a positive indicator of improving operations.
Stockton & Kubacak Lease
The Stockton 1, 2 and 3 are all undergoing reservoir and geological studies. At this time, production on the Stockton 2 has been fluctuating under different varying production timer schedules, so the Company is uncomfortable putting out a verifiable production rate at this time. To ease investors minds, the production on the Stockton #2 and predicted production on the Stockton #3 are both healthy. The Company is however, taking extra precautions to ensure a long healthy well life span. Please see video on our website at www.treatyenergy.com to see the production from the Stockton 2 well as verification of healthy production.
The reservoir study will enable us to make more accurate production projections on the Kubacak lease and be able to give investors a better prospective into the future project, as well as determine the best areas to set future wells beyond the Kubacak 1, 2 and 3.
The Stockton 1 well’s work over was completed; however alternative plans are being looked at to repurpose the well to better facilitate production on the Stockton #2 and 3. A cost evaluation study is being done to determine the cost-benefit trade off.
With regards to future drilling, the Company estimates that weather and holiday scheduling will delay its additional three wells on the Kubacak lease by three-four weeks, making the five well estimate by the end of January 2014.
P.H. Barnes and McComas Lease
The P.H. Barnes lease will be evaluated by our contractors on Monday, December 16, 2013. Once the evaluation is complete, a logistics plan will be created to determine the best course of action. When the logistics plan is created, the plan will be forwarded to the RRC and the landowner for evaluation before proceeding. Once approved by all parties, the plugging operation will begin.
As stated previously, the Company has requested a hearing date on the McComas lease and is waiting to be notified of a hearing date. However, the Company is making progress on another front to resolve the issue before a hearing is necessary. To the best of our knowledge, the McComas lease will not hinder the Company’s efforts to bring C&C Petroleum Management, LLC. back into compliance.
Belize (Treaty Belize Energy, Ltd):
The Company is currently undergoing a large internal evaluation of Treaty Belize Energy, Ltd. and its future operations as a result of the stuck packer on San Juan #3. Shareholders should not be concerned on this matter as any and all major changes to operations will be announced in due time as provided under SEC regulations. Management believes that following the success in west Texas, international operations should be restructured and re-evaluated to better improve general overall performance and be changed to improve operating efficiency.
At this time, the Company has reached an agreement with Princess Petroleum to continue operating in Belize until January 31, 2014. During this time, the Company will be working with Princess Petroleum and the Belize Government to resolve any outstanding issues and strengthen our existing relationship. Based on discussions during this evaluation period, the Company will make a decision on how best to proceed in Belize. During the evaluation period, all options are on the table, including abandonment. However, it appears unseen at this moment in time if full abandonment will be considered. The Company still believes in the prospect of oil in Southern Belize, independent of current results, and is working with Princess Petroleum daily.
One point of concern amongst shareholders has been the status of Mr. Mohammed’s employment. Mr. Mohammed is currently assisting the Company with its international operations. However, he is currently not in Belize, but back at home with his family for the holidays. As with all employees at the Company, contracts are individually negotiated and can be terminated or put under suspension by either party at any point in time. During this evaluation period, all contracts affiliated with Treaty Belize Energy, LTD. are being re-evaluated, including Mr. Mohammed’s.
Should Mr. Mohammed wish to continue his employment at the Company, he may do so at any time, however the rumors regarding his employment at Princess Petroleum are currently untrue. He is however, working on behalf of the Company through Princess. Treaty Energy is the driller for Princess Petroleum, which means that rumors regarding him working at Princess were misinterpreted based on short conversations and has resulted in significant and unnecessary confusion on the matter. The Company has formally asked that these unaffiliated parties cease posting personal information by request of those parties. Personal information has been posted by third parties without consent and without authority from either managerial team and does not reflect actual operations or discussions and should be considered rumor and/or speculation.
Until the Company makes an official status change announcement regarding Belize Operations in conjunction with Princess Petroleum the Company is still classified as being engaged in a hydrocarbon exploration program in Belize. This status will remain unchanged until the Company announces a change in operation formally or until the contract termination date is reached on January 31, 2014. However, the Company plans to make changes to its international operations before the January 31, 2014 date and will announce any and all changes in compliance with SEC regulations (particularly form 8-K section 1 and section 2).
Treaty Energy Corporation
Investor Relations
investors@treatyenergy.com
Tel: 504-301-4475
Fax: 504-324-0844
