Treaty Energy Corp. (OTC: TECO) has signed contracts to begin drilling two self-funded and already permitted wells in Tuscola, Texas.
Drilling is expected to begin as early as Sept. 21, but may begin as late as Sept. 25.
On June 28, Treaty Energy acquired a working interest on the Stockton lease from U.S. Fuels Inc. of Breckenridge, Texas. This working interest included a 75% net revenue interest and a 100% working interest. The remaining 25% net revenue interest is dedicated to existing overriding royalty interests.
On July 17, the company completed survey work and were solidifying plans to drill two offset wells from the Mitchell lease on the Stockton lease. Requests for drilling permits were filed approximately two weeks after survey work was completed. The company received permitted approval to drill the two wells on Aug. 6 from the Texas Railroad Commission (TRRC).
The company finalized and signed contracts on Sept. 11 to begin drilling the two planned wells on the Stockton lease. As previously announced, the company has sought no partners on the project and will be completely self-funded. The company's self-funding grants 100% of the 75% net revenue interest as revenue for the company.
Due to proximity and same field geology, initial production numbers and estimated production rates are expected to be similar to the Mitchell #4 well, which received an initial production rate of 61 barrels per day (bbl/d) of oil and an announced production rate of 45 to 50 bbl/d of oil. Both wells will be drilled to an approximate depth of 4800 feet and will be drilled sequentially. Based on the Mitchell's production rates, the Stockton wells combined are expected to bring in $205,000 in revenue within 30 days of completion.
As part of the Stockton lease development, the company recently purchased the Stockton #1 well. The strategic Stockton #1 purchase reduced the capital needed to begin work on the project by supplying an existing oil and gas infrastructure, namely the tank batteries and water separators. Both of these were recently repaired by the company in order to remove the Mitchell #1 from severance.
The company plans to complete site preparations by the end of this week and will begin drilling shortly thereafter. The exact start date is dependent on the completion of another scheduled drilling project and completion of the site preparations. Well operations and drilling oversight on the Stockton lease will be handled by David Jakobot of U.S. Fuels Inc.
"The company is excited to begin the Stockton project and shareholders should be excited as well. The Stockton project will continue to move the Company closer to cash flow positive status and will provide us with more capital to start new projects and revamp existing operations. Initial revenue from the Stockton wells will be used to return to the Madeley 'F', Lakeshore and Hill leases in East Texas," Andrew Reid, Treaty Energy CEO, said in the release.
Treaty Energy Corp. is an exploration stage company engaged in the acquisition, development, and production of crude oil and natural gas properties. The company is based in New Orleans.