Treaty Energy Corporation Newsletter for the Week of December 9, 2013
This newsletter is for the week of December 9, 2013 and contains current information on Company operations as of December 6, 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 Information contained in this newsletter may be outdated at the time of release.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 23 rd , December 30 th , 2013 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 16, 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.
This newsletter will be particularly lengthy due to two weeks of no newsletter communications.
Note about Company Operations (Treaty Energy Corporation):
As the financial year comes to a close, Treaty Energy Corporation is beginning to look over its financials and evaluate Company operations to determine what changes need to be made to further improve its financial standing and operations moving forward.
As the Company begins to move into a better position financially, management and staff members are able take a step back and evaluate what is working and what is not working for the Company as a whole. With the Company having undergone a large, yet successful, transition in 2013, this evaluation period is particularly important going forward. Management and the Company as a whole believe that the decisions made during 2013 will bring significant and notable progress in 2014 for every individual involved with the Company, with shareholders being the most important.
The Company’s primary objectives, in no specific order, are to reduce and eliminate a majority of the Company’s known and acknowledged debts, increase existing revenue streams, decrease operating expenses and to improve the PPS through these objectives. The Company feels that by decreasing operating expenses and improving the EPS, the PPS will follow.
These types of decisions are common place in every business. Treaty Energy Corporation is not unique in doing operational evaluations. However, the Company does feel that at this critical juncture to inform shareholders that the upcoming changes may cause confusion and may fuel speculation and is common amongst policy changes. It is imperative that should there be any questions that shareholders contact the Company’s Investor Relations Department directly at 504-301-4475 or via email at investors@treatyenergy.com . Our investor relations department is there to answer any and all questions that you may have regarding your investment.
The Company will formalize a large portion of these changes on January 16, 2013 in the previously announced prospectus.
Corporate Filings (Treaty Energy Corporation):
The Company has received numerous questions regarding the financial filing status of the Company. The third quarter (Q3) financial filings are currently on an accelerated filing track and are nearing completion. The Company fully expects to be current on its filings before the end of the year.
The Company does want to emphasize that the third quarter financial filings, while late, have only had three weeks of working time. This is consistent with the estimated working times of other Companies. If normal filing deadlines had been upheld, the 10-Q for the 2013 third quarter would have been filed on time. The Company is now playing catch-up more or less with filing dates.
The Company will be evaluating the auditing times once it becomes current so that it can speed up the auditing times of the 2013 10-K and hopefully file it before the required deadlines.
West Texas (C&C Petroleum Management, LLC):
Due to inclement weather in the Tuscola, Texas area some operations have been suspended temporarily. The weather in the area has been so severe the RRC offices in Abilene were shut down for a few days and halted much of the work being done in the area. While the Company understands the frustrations of weather delays, the lives of our employees and contractors come first before any operation. If a contractor or the national weather service deems it too dangerous to operate, our Company will make our operational decisions based on their information and expertise. Operational timelines may be adjusted based on weather and some project timelines can be extended based on inclement weather delays.
Mitchell #3 and #4
Through publicly recorded documents, several shareholders have begun to call in inquiring about the sale of the Mitchell #3 and #4. The Company is now confirming that it has sold its interest in the Mitchell #3 and #4 to TNC Energy, who had right of first refusal as part of being a partner in the project.
The decision to sell the well was a solid move by management and is in line with traditional oil and gas development companies, marking a large operational shift by the Company. The Company’s operations are now the primary source of income for the Company, meaning less and less reliance on the investment base going forward. This action shows that operations are improving significantly in a quick period of time.
Before undergoing an oil and gas development, the Company anticipates revenues over a 10 year period. By selling it’s less than preferable interest on the Mitchell #3 and #4, the Company received a large portion of its production revenues up front, rather than over a long period time. A vast majority of shareholders who have called in to the Company have asked that the Company demonstrate a quick cash flow positive turn around. This action is a result of those shareholder requests and has proven to be quite successful for the Company’s operations.
In addition, there has been growing concern regarding the production reports on the Mitchell lease by the operator. While the Company is not responsible for filing those reports, the operator’s reluctance to file production reports weighed negatively on the Company, despite not holding the responsibility to file. To improve investor sentiment and reduce any possible production interruptions by severance, the Company sold its interest in the wells. The Company is also making arrangements and evaluating multiple possibilities to improve operating transparency in this area.
Funds acquired during this sale were used to pay off large existing debts, which improve the Company’s future financial stability and standing, which has been another large investor concern.
As a large consequence of this sale, there will be less reliance on day to day production for the Company. Shareholders inquiring on the BOPD should not be focusing on BOPD targets, but should be looking at overall operational revenue to determine cash flow positive status. Cash flow positive status will only be announced after a financial report to the SEC and will not be announced any other way.
Stockton Lease
The Stockton #1 received a successful work over. The Company is still evaluating the well after the work over and will return to the well upon the completion of the Stockton #3 well as the Stockton #3 is the Company’s first priority.
The Stockton #2 well has been put into full production. However, due the inclement weather the production period has been sporadic and the Company is unable to project or determine the consistent production rate. Production is still undergoing surges and has not leveled off.
Kubacak Lease
A rig is being brought into the Kubacak lease within the next two weeks. While the Company anticipated bringing in a rig this week, the Company was unable to due to the weather. The Company has lost approximately 1-2 weeks due to inclement weather and holidays (and expects to lose another). As such, the Company will be re-evaluating our timeline to determine when the next three wells will be drilled on this lease and if it can be met by the end of the year. If possible, the Company will work with its drilling contractors to bring in additional rigs to drill the wells simultaneously to meet the goal. Should the Company’s timeline change, it will inform investors next week on its plan of operations.
P.H. Barnes and McComas Lease
In a positive development, the RRC has approved the Company’s plan to plug the P.H. Barnes Well #1 on Tuesday, December 3, 2013. The Company is now moving forward to plug the remaining wells on the P.H. Barnes lease and bring C&C Petroleum Management, LLC. back into full operating compliance. As a point of clarification and to correct previous information on the subject, the P.H. Barnes lease has three remaining wells to be plugged: Well 1, Well 13A and Well 12CB. There was a question previously on the ownership of 12CB which was clarified by the RRC in discussions related towards the plugging operation. The well was also drilled in early 1990s instead of the 1960s as previously mentioned. The No. 1 well is still classified as an experimental “Oil Mine” well.
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. The Company does not believe McComas lease will not hinder the Company’s efforts to bring C&C Petroleum Management, LLC. back into compliance after discussions with the RRC on the subject.
TNC Energy Activities in the Tuscola, Texas Area
Several concerned shareholders have contacted the Company regarding it former drilling partner TNC Energy’s activities in the area. TNC Energy and its associated companies have no direct affiliation with Treaty Energy at this point in time. TNC Energy can purchase, acquire or sell leases at any point in time without interference from the Company unless otherwise noted.
If anything, the continued activity by TNC Energy in the general vicinity shows the viability and profitability of the Company’s current operations.
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. Management believes that following the success in west Texas, international operations should be restructured to better improve general overall performance and be changed to improve operating efficiency.
Concerns have been raised on the status of Max Mohammed’s employment and the future of Belize operations. Currently at this time, Mr. Mohammed is still working with Treaty Energy Corporation and is assisting with operations in Belize to improve future operating efficiency.
With regards to the status of San Juan #3, the well is being evaluated as part of the overall restructuring. When the Company has fully evaluated its international operations, it will make a larger and more formal announcement on the matter.
Please note: Due to the upcoming holidays, there will not be a newsletter published on the following dates: December 23 rd , December 30 th , 2013 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 16, 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.
This newsletter will be particularly lengthy due to two weeks of no newsletter communications.
Note about Company Operations (Treaty Energy Corporation):
As the financial year comes to a close, Treaty Energy Corporation is beginning to look over its financials and evaluate Company operations to determine what changes need to be made to further improve its financial standing and operations moving forward.
As the Company begins to move into a better position financially, management and staff members are able take a step back and evaluate what is working and what is not working for the Company as a whole. With the Company having undergone a large, yet successful, transition in 2013, this evaluation period is particularly important going forward. Management and the Company as a whole believe that the decisions made during 2013 will bring significant and notable progress in 2014 for every individual involved with the Company, with shareholders being the most important.
The Company’s primary objectives, in no specific order, are to reduce and eliminate a majority of the Company’s known and acknowledged debts, increase existing revenue streams, decrease operating expenses and to improve the PPS through these objectives. The Company feels that by decreasing operating expenses and improving the EPS, the PPS will follow.
These types of decisions are common place in every business. Treaty Energy Corporation is not unique in doing operational evaluations. However, the Company does feel that at this critical juncture to inform shareholders that the upcoming changes may cause confusion and may fuel speculation and is common amongst policy changes. It is imperative that should there be any questions that shareholders contact the Company’s Investor Relations Department directly at 504-301-4475 or via email at investors@treatyenergy.com . Our investor relations department is there to answer any and all questions that you may have regarding your investment.
The Company will formalize a large portion of these changes on January 16, 2013 in the previously announced prospectus.
Corporate Filings (Treaty Energy Corporation):
The Company has received numerous questions regarding the financial filing status of the Company. The third quarter (Q3) financial filings are currently on an accelerated filing track and are nearing completion. The Company fully expects to be current on its filings before the end of the year.
The Company does want to emphasize that the third quarter financial filings, while late, have only had three weeks of working time. This is consistent with the estimated working times of other Companies. If normal filing deadlines had been upheld, the 10-Q for the 2013 third quarter would have been filed on time. The Company is now playing catch-up more or less with filing dates.
The Company will be evaluating the auditing times once it becomes current so that it can speed up the auditing times of the 2013 10-K and hopefully file it before the required deadlines.
West Texas (C&C Petroleum Management, LLC):
Due to inclement weather in the Tuscola, Texas area some operations have been suspended temporarily. The weather in the area has been so severe the RRC offices in Abilene were shut down for a few days and halted much of the work being done in the area. While the Company understands the frustrations of weather delays, the lives of our employees and contractors come first before any operation. If a contractor or the national weather service deems it too dangerous to operate, our Company will make our operational decisions based on their information and expertise. Operational timelines may be adjusted based on weather and some project timelines can be extended based on inclement weather delays.
Mitchell #3 and #4
Through publicly recorded documents, several shareholders have begun to call in inquiring about the sale of the Mitchell #3 and #4. The Company is now confirming that it has sold its interest in the Mitchell #3 and #4 to TNC Energy, who had right of first refusal as part of being a partner in the project.
The decision to sell the well was a solid move by management and is in line with traditional oil and gas development companies, marking a large operational shift by the Company. The Company’s operations are now the primary source of income for the Company, meaning less and less reliance on the investment base going forward. This action shows that operations are improving significantly in a quick period of time.
Before undergoing an oil and gas development, the Company anticipates revenues over a 10 year period. By selling it’s less than preferable interest on the Mitchell #3 and #4, the Company received a large portion of its production revenues up front, rather than over a long period time. A vast majority of shareholders who have called in to the Company have asked that the Company demonstrate a quick cash flow positive turn around. This action is a result of those shareholder requests and has proven to be quite successful for the Company’s operations.
In addition, there has been growing concern regarding the production reports on the Mitchell lease by the operator. While the Company is not responsible for filing those reports, the operator’s reluctance to file production reports weighed negatively on the Company, despite not holding the responsibility to file. To improve investor sentiment and reduce any possible production interruptions by severance, the Company sold its interest in the wells. The Company is also making arrangements and evaluating multiple possibilities to improve operating transparency in this area.
Funds acquired during this sale were used to pay off large existing debts, which improve the Company’s future financial stability and standing, which has been another large investor concern.
As a large consequence of this sale, there will be less reliance on day to day production for the Company. Shareholders inquiring on the BOPD should not be focusing on BOPD targets, but should be looking at overall operational revenue to determine cash flow positive status. Cash flow positive status will only be announced after a financial report to the SEC and will not be announced any other way.
Stockton Lease
The Stockton #1 received a successful work over. The Company is still evaluating the well after the work over and will return to the well upon the completion of the Stockton #3 well as the Stockton #3 is the Company’s first priority.
The Stockton #2 well has been put into full production. However, due the inclement weather the production period has been sporadic and the Company is unable to project or determine the consistent production rate. Production is still undergoing surges and has not leveled off.
Kubacak Lease
A rig is being brought into the Kubacak lease within the next two weeks. While the Company anticipated bringing in a rig this week, the Company was unable to due to the weather. The Company has lost approximately 1-2 weeks due to inclement weather and holidays (and expects to lose another). As such, the Company will be re-evaluating our timeline to determine when the next three wells will be drilled on this lease and if it can be met by the end of the year. If possible, the Company will work with its drilling contractors to bring in additional rigs to drill the wells simultaneously to meet the goal. Should the Company’s timeline change, it will inform investors next week on its plan of operations.
P.H. Barnes and McComas Lease
In a positive development, the RRC has approved the Company’s plan to plug the P.H. Barnes Well #1 on Tuesday, December 3, 2013. The Company is now moving forward to plug the remaining wells on the P.H. Barnes lease and bring C&C Petroleum Management, LLC. back into full operating compliance. As a point of clarification and to correct previous information on the subject, the P.H. Barnes lease has three remaining wells to be plugged: Well 1, Well 13A and Well 12CB. There was a question previously on the ownership of 12CB which was clarified by the RRC in discussions related towards the plugging operation. The well was also drilled in early 1990s instead of the 1960s as previously mentioned. The No. 1 well is still classified as an experimental “Oil Mine” well.
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. The Company does not believe McComas lease will not hinder the Company’s efforts to bring C&C Petroleum Management, LLC. back into compliance after discussions with the RRC on the subject.
TNC Energy Activities in the Tuscola, Texas Area
Several concerned shareholders have contacted the Company regarding it former drilling partner TNC Energy’s activities in the area. TNC Energy and its associated companies have no direct affiliation with Treaty Energy at this point in time. TNC Energy can purchase, acquire or sell leases at any point in time without interference from the Company unless otherwise noted.
If anything, the continued activity by TNC Energy in the general vicinity shows the viability and profitability of the Company’s current operations.
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. Management believes that following the success in west Texas, international operations should be restructured to better improve general overall performance and be changed to improve operating efficiency.
Concerns have been raised on the status of Max Mohammed’s employment and the future of Belize operations. Currently at this time, Mr. Mohammed is still working with Treaty Energy Corporation and is assisting with operations in Belize to improve future operating efficiency.
With regards to the status of San Juan #3, the well is being evaluated as part of the overall restructuring. When the Company has fully evaluated its international operations, it will make a larger and more formal announcement on the matter.
Treaty Energy Corporation
Investor Relations
investors@treatyenergy.com
Tel: 504-301-4475
Fax: 504-324-0844
