SOURCE: Treaty Energy Corporation

April 15, 2010 09:45 ET

Treaty Energy Acquires Tennessee Oil and Gas Wells

Acquisition Concluded on April 13, 2010 Includes Five Oil and Gas Leases Encompassing 246 Acres

HOUSTON, TX--(Marketwire - April 15, 2010) -  Treaty Energy Corporation (OTCBB: TECO), a growth-oriented energy company in the oil and gas industry, today announced that it concluded the acquisition of five oil and gas leases in Tennessee on April 13, 2010. The leases encompass 246 acres and include two shut in wells that will be re-entered and 25 new drilling locations.

The leases are: Byron Hill #1, H. Groce #1, H. Groce #2, Coleman Crouch #4, and Wilburn Hill.

The purchase decision was based on the following geological reports provided by a highly respected Tennessee licensed geologist.

GENERAL GEOLOGY -- This area of Tennessee is part of the Eastern Highland Rim Physiographic province, near the western most margin of the Cumberland Plateau. Geologically it is within the Appalachian Basin, and on the southeastern edge of the Cumberland Saddle, a low structure between the Lexington and Nashville Domes. Regional Dip is to the east-southeast at 20 to 40 feet per mile. Approximately two miles to the east of the lease area Regional Dip increases to 100 to 200 feet per mile, creating a geologic hinge line parallel to the Cumberland Plateau. The closest large, known, surface geologic structure is the Sunnybrook Anticline. This feature is a northeast to southwest elongated fold, the southern end of which is located just across the state line in Wayne County, Kentucky. Numerous small dome and fold structures are located in this general area, and these often play important roles in oil and gas accumulations. No major surface faults are present in the area. The nearest major surface fault zones are located 40 miles to the east in the Ridge and Valley areas of East Tennessee. Rocks exposed at the surface here, range from Pennsylvanian to Mississippian in age, and are all sedimentary. The sub-surface sedimentary rock column in this region is thought to exist to a depth of 6000 feet or more.

AREA OIL AND GAS GEOLOGY -- The area of Tennessee made up by Clay, Fentress, Overton, and Pickett Counties, has led the State in oil production for the past several years, surpassing the traditional oil production region of the Cumberland Plateau a few miles to the east. Oil in this area can be found in multiple horizons at depths from 200 to 2200 feet. Initial production rates vary greatly, from 1 to as much as 2000 BOPD. Cumulative oil production from an individual well can exceed 240,000+ barrels. The oil is paraffin based and of generally good quality, with API gravity ranges from 34 to 42. Oil is produced from rocks of Mississippian age, (Fort Payne Formation), and Ordovician age (Nashville Group, i.e. Sunnybrook), Stones River-Murfreesboro Group, Wells Creek, and Knox Formations. All of the productive zones are in carbonate rocks. Reservoir types include biohermal reef zones in the Fort Payne, occasional intergranular porosity zones, fractures, and combinations there of. The best production comes from wells with a combination of fracturing and porosity. This combination occurs due to tectonic folding and faulting, and by solution collapse structures. Solutions collapse structures occur when subterranean fluids dissolve rock to the point it fractures and collapses. In some cases cavernous areas are created which can fill with oil or gas. The complexity of these fracture systems and their seemingly random occurrence makes them difficult to find, but the amount of oil they can produce from a small area is simply amazing. Wells 100 or 200 feet apart may produce thousands of barrels of oil from separate fracture zones. In many cases the fracture zones are nearly vertical and highly compartmentalized. New wells, often with virgin pressures and large reserves can sometimes be found in old fields.

OIL AND GAS HISTORY -- Oil exploration in the Moodyville Quadrangle area began as long as 100 years ago, when scattered oil discoveries were made in the Travisville area. A well drilled by Alvin C. York (Sergeant York) in the 1940's, near Moodyville, blew out and flowed several hundred barrels of oil into the Wolf River. Most of this early production was from the Fort Payne and Sunnybrook Formations at relatively shallow depths. Only a few wells were drilled as deep as the Knox Formation. The oil price increases of the 1980's led to much more drilling and establishment of new production trends. The Parker-Etter Oil and Gas Field was found in the mid to late 1980's. The Cedar Grove portion of the Red Hill Oil Field was found in the late 1990's, and is still being developed. 

In the early 1990s a series of large oil discoveries were made in Clinton County, Kentucky, about seven miles north of the Moodyville area. Two of these wells, the Ferguson Brothers #9372, reported an initial productions rate of over 3000 BOPD, and the Jones #1 reported an initial production rate of over 2000 BOPD. These two wells produced from the Stones River-Murfreesboro Group, at depths between 100 and 1500 feet. Cumulative production from the Ferguson well was over 130,000 barrels. It and a few other wells on that small farm were said to have produced over 700,000 barrels of oil. The Jones well has been said to have produced over 200,000 barrels of oil.

A few miles to the west in Overton County, Tennessee, several large discovery wells have been found in the Livingston and Alpine areas. Some of these wells have had initial production rates as high as 2400 BOPD, and cumulative production of over 240,000 barrels. These wells include Stones River and Sunnybrook Formations production.

In February 1988, the Wilburn Hill #4 was drilled in sections 16-A-54E, and it had an initial production rate of 25 BOPD, and has averaged selling over 2200 barrels of oil per year for a total exceeding 45,000 barrels. This well produces oil from the Murfreesboro Formation at a depth of around 1570 feet. In March, 2004, a well, the Carl Huddleston #9, was drilled in section 8-A-54E of the Moodyville Quadrangle. This well flowed at an initial rate of over 800 BOPD, and sold over 24,587 barrels of oil in its' first nine months of production. Its' production zone was from the Stones River-Murfreesboro Group, at a depth of around 1365 feet. These two excellent wells produce from the same zone in the same general area, at similar depths, but have very different production characteristics.

The one thing all of these wells have in common is structure. Most of the better wells in this region produce from fractures, and the fracture related porosity on structural lows related to solution collapse features. The key to finding the large oil producers in this area is to drill in the vicinity of the collapse structures. There is a catch-22 problem to finding these structures. It requires either blind luck, or knowledge of the local structural and stratigraphic information. The best way to acquire stratigraphic and structural information is to analyze well data. This requires that wells be drilled on or near a prospect. So a dry hole or a marginal producer should not scare off a prospective driller. Such a well may be the key to finding a big well. This geologist has used a tried and true method, that is to find an area with enough drilled wells to provide useful geologic data, but that still has locations left to drill. If a company wants to step out, or explore leases away from production, they should look for geologic settings that match up with those from producing areas. Topographic features such as abrupt bends in streams, unusual karst features, mapable surface linaments, and sharp dips in exposed surface rocks, can be clues for subsurface structure. Surface oil or gas seeps are another indicator of oil prospects.

PROSPECT REVIEW -- The Byron Hill #1 Prospect is located on an 18 acre tract at the junction of State Highway 325 and Woody Road. This tract is located in section 15-A-54E of the Moodyville 7.5 minute U.S.G.S. Quadrangle, in Pickett County, Tennessee. This Lease is west of a group of wells drilled on the H. Groce tract, some of which produced oil from the Knox Formation. One of these wells had an initial production rate of 50 BOPD. Shows of oil were seen in the Sunnybrook and Stones River Formation also. A well drilled to the south of the Hill tract encountered oil in the Lower Murfreesboro, Wells Creek and Knox Formations. A well drilled just east of the Hill Prospect produced oil from the Knox Formation. An old well drilled 2000 feet to the northwest produced some oil from the Murfreesboro Formation. The Byron Hill lease is located approximately 4000 feet northeast of the highly productive Wilburn Hill #4 well, which has produced more than 45,000 barrels of oil since the 1980's.

A well drilled on this prospective site has potential for oil in the Sunnybrook, Stones River-Murfreesboro Group, Wells Creed, or Knox Formation. The Knox Formation is probably the most likely zone to produce on this lease.

The Coleman Crouch #4 Prospect is located on a large lease tract in section 20-A-53E of the Moodyville U.S.G.S. Quadrangle in Pickett County, Tennessee. This lease has had several wells drilled on it, and currently has at least one well which is production oil from the Knox Formation. It is thought that another well on this lease produced some oil from an unknown depth. The Wilburn Hill lease located adjacent to the Coleman Crouch lease on the east has produced oil since the 1980's. The Hill #4 well is the most productive well in Pickett County, with over 45,000 barrels of oil from the Murfreesboro Formation. Another well on the Hill lease reported some production from the Sunnybrook Formation for a short time. The Crouch #4 Prospect is located near the Wilburn Hill lease line, just west of the aforementioned Sunnybrook well. A well drilled on this site could find oil in the Sunnybrook, Stones River-Murfreesboro, or Knox Formation.

Treaty Energy plans to start re-entry of the two existing wells in May, 2010. Early results of production are expected to be high based on the accumulated pressure build up from being shut in. It is expected that up to 1000 barrels of oil could be recovered early on, prior to the wells settling in at expected pre shut in production of 8 to 10 BOPD.

Treaty Energy plans to drill the first new well in June, 2010. Other wells will be drilled as results are analyzed and drilling funds are available.

Andrew Reid, President and COO of Treaty Energy, commented, "I am pleased that we closed this acquisition and I look forward to the up coming re-entry and drilling operations on the new Tennessee leases."

About Treaty Energy Corporation
Treaty is engaged in the acquisition, development and production of oil and natural gas. Treaty acquires and develops oil and gas leases which have "proven but undeveloped reserves" at the time of acquisition... These properties are not strategic to large exploration-oriented oil and gas companies. This strategy allows Treaty to develop and produce oil and natural gas with tremendously decreased risk, cost and time involved in traditional exploration. Treaty's headquarters is located in Houston, Texas. For more information go to: www.treatyenergy.com

Forward-Looking Statements:
Statements herein express management's beliefs and expectations regarding future performance and are forward-looking and involve risks and uncertainties, including, but not limited to, raising working capital and securing other financing; responding to competition and rapidly changing technology; and other risks. These risks are detailed in the Company's filings with the Securities and Exchange Commission, including Forms SB-2, 10-KSB, 10-QSB and 8-K. Actual results may differ materially from such forward-looking statements.

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