Treaty Energy Corporation reported on its progress on the project to increase production on its Texas oil leases.

Stephen L. York, President and COO of Treaty Energy Corporation, stated, "We want our shareholders to know that our team has faced the hottest and driest summer in Texas since 1980. The extreme heat and dry climate have considerably affected ground conditions. These conditions have caused failures of equipment and electrical transformers which have led to a decline in the overall production on our existing wells."

Mr. York added, "However, the good news is that Treaty Energy's aggressive work-over plan has been able to offset the decline in production and has even greatly increased the production of the re-worked wells."

"Production on the first eight wells that have been re-worked increased from 8 barrels of oil per day to 26.5 barrels per day," explained Mr. York. He explained further, "Treaty Energy has also recently finished re-working an additional eleven wells, and after about a week of steady production, we are expecting to increase production to about 55 barrels of oil per day."

Treaty Energy has four other leases that are currently not producing as they require a work-over on the injector wells and electrical power lines. Work-over of these leases should be completed by the end of September and is expected to increase overall Texas production to 65 to 70 barrels of oil per day by that time.

Beyond the previously mentioned work-overs, Treaty Energy has 15 shut in wells spread over the Great Eight Leases that have been shut in for more than 12 months. Upon completion of all scheduled work-overs, the Company will then be able to more accurately evaluate the additional shut in wells and re-work them as necessary to bring them back into production.

Mr. York added, "The best estimate of Texas production on the currently owned and paid for leases will be 75 to 90 barrels of oil per day after the rework of the 15 shut in wells. Our goal by the end of 2011 is to be at 200 to 350 barrels of oil per day. This production number can vary based on the number of new wells that are expected to be drilled and completed. We expect to exceed 1,000 barrels per day by the end of June 2012. At $80 per barrel, this will translate to about $29.2 million in gross revenues annually from our Texas oil production alone."

CEO of Treaty Energy Corporation, Andrew Reid, stated, "I am pleased with the current production in Texas and noted that all re-works are being done from the bottom of the well to the top, including pressure testing of the tubing prior to re-installation in the wells. This type of work-over may initially cost more and require more time, however Treaty expects to avoid the higher operational costs that can be associated with stripper wells when using the traditional band-aid methods. Treaty's wells, once worked-over, will require much less maintenance compared to the average stripper wells."

Finally, Mr. Reid said, "We plan to release an update in the week of September 12th on the progress in Belize regarding the first well that we are expecting to drill later this month."

Tags: Treaty Energy Corporation