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I talk with knowledge. I am a Chartered Petroleum Engineer with 30 years of international oil exploration and development experience.
I try to only post facts, so I will make it clear in my posts when I am stating an opinion.
My pictures are genuine. Taken at the time and date indicated. Interesting that the drill rig is in exactly the same place on the April 9th and May 12th photos, despite Treaty's reported activity in between.
The thought of Treaty fraccing in Belize scares me.
Treaty have not even proved that they can drill a straight hole in Belize to 1500ft and log it.
With regard to fracturing, a few facts that you (and Treaty) should be aware of:
(1) The Environmental Impact Assessment for the first two Princess / Treaty wells, including San Juan #2 dated July 2011 did not take into consideration the proximity of the 3 water supply wells for Placencia / Southern Belize which are just under 3 miles away and which draw their supply from an underground limestone aquifer
(2) The same EIA did not consider anything beyond the exploration phase of these wells, so I suspect that the well casing design for San Juan #2 did not take into account the requirement for fracturing
(3) There is no fracturing equipment available in Belize.
(4) Several states in the USA have banned fracturing because fraccing of tight gas wells has contaminated the water supply aquifers above, and a lot of others are tightly regulating it.
So given the above, I hope they don't plan to do it in this well and only consider doing it in future wells if it has been properly engineered beforehand.
Two photos from Belize wellsite visit on May 12th 2012 at 7.05 am.
The view of the wellsite from NW corner. Wireline truck is shon in left of picture.
The view of the wellsite from the NE corner. New office / accomdation unit on trailer is in the foreground, this has not been installed yet.
I apologise for poorer photos than normal, due to two main reasons:
(1) My dog bit a hole in my good camera (which is also my underwater camera) - a replacement is on its way from USA
(2) Princess / Treaty security at the wellsite has increased and I was chased away by a rather large security guard
(I am not sure of the reason that Princess/Treaty would want to chase away people who stop on a public road to look at the wellsite)
Bull. The wireline truck is still onsite in Belize.
I saw it there yesterday (May 12th 2012) when I visited the site.
But your comment about what is imprudent in the oil industry isn't right.
IMO it was imprudent - almost negligent - not to have a logging unit available when San Juan #2 well hit TD in January.
Treaty surprised me at that time by having no plans in place to log the well, despite electric logs being required in exploration wells in Belize.
Spending all that time buying and upgrading their own logging unit, rather than renting one of the available logging units in Belize, certainly cost Treaty a lot as the well colapsed blocking the potential payzone. So right now they don't really know if they have any oil reserves in Belize or not - whereas if Treaty had done it right, then they (and their shareholders) would know one way or the other by now.
There is still not place in this rig set up for a BOP. I am noot sure how Treaty are going to fit one in the string.
The rig was designed for mineral exploration and air drilling and it shows. IMO it is not the iddeal piece of equipment to use for oil drilling with mud.
Photo from Treaty Energy Belize wellsite on April 9th 2012 - just to prove the technology works.
I am passing the site again on Saturday May 12th on the way to go diving in the south of Belize.
Do you think it worth me having a look and reporting back, given that equipment to start drilling again is still likely to be enroute from USA?
I want Treaty to be successful - as you are right this has potential to be a big boost to Belize economy.
I don't normally visit the site at lunch time, I normally go in the early morning on the way from Belize City to diving in Placencia. And if there is no activity there I assumw there is no activity going on that day, as professional drill crews don't just leave a live well overnight and come back in the morning.
I cannot find a way to add photos to my IH posts, but I would like to. Grateful if you or Bull could advise me how.
Told you before no telescope.
And Treaty have blocked Facebook for everyone in Belize - not sure why.
I agree.
Thanks for posting (PM).
I will keep you advised of anything I hear in Belize on this.
I will send you Belize photos for your further info after my next visit to wellsite this weekend - but I can't pass in public or private message on IH - how can I get these to you?
Exactly right.
Article 3.2 of the option agreement between Princess Petroleum and Treaty Energy Corp states that only 80% of the production from the Princess Concession is applied for Contractor (Treaty) Cost recovery. Not 100% as you state.
The overiding Production Sharing Agreement between Princess Petroleum and the Government of Belize states 100% of Petroleum to be initially applied to cost recovery.
Think it'll be an accounting nightmare with these different cost recovery percentages. IMHO.
Trust me - I am never way off.
Treaty Energy Corporation acreage 'holding' in Belize is 1,560,000 acres.
Treaty Energy Corporation and partners have the right to drill 3,400,000 acres in Belize.
Hope this is clear.
[The original post that I attenpted to correct was about Treaty acreage 'holding'.]
Unfortunately you are wrong.
I applied no reasoning just quoted facts.
The reporting convention in the oilfield using rules set by the SEC is that reserves and acreage holding is reported on a net equity holding basis.
That is all I have done.
Just to correct you on the Treaty Energy Company acreage position in Belize.
Treaty Energy Corporation are the holders of over 1.5 million acres in Belize (1,560,000 acres to be precise - see calculations below). This is less than half the 3.4 million that you indicate - but is a huge acreage holding for a start-up company like Treaty, who should be commended on the deals that they have done to acquire this acreage position in Belize, where - in my view - they are the second largest acreage holder just behind Princess Petroleum.
These are the facts.
Treaty Energy Corp acquired a 50% participating interest in the Princess Petroleum Concession in 200,000 onshore acres and 1.8 million acres offshore [Option Agreement for Petroleum Exploration in Concession Areas in Belize was signed between Treaty and Princess April 20th 2010]
On July 15th 2010, Treaty sold 10% of this interest to an undisclosed major shareholder.
On September 12th 2011, Treaty sold 4% of this interest to All Energy Corp.
Treaty are therefore the holders of 43% of the Princess concession which is equivalent to 860,000 acres [It appears that Treaty have not complied with the requirements in this agreement with regard to holding onto the offshore acreage - but I have ignored this FUD in these calculations]
AND Treaty purchased the Paradise Energy concession (almost 1.4 million acres onshore) on September 15th 2011.
On March 9th 2012, Treaty entered into an MOU for Princess to acquire 50% holding in the Paradise concession.
Treaty are therefore the holders of 50% of the Paradise concession which is equivalent to 700,000 acres [The fact that a considerable portion of this concession is volcanic intrusion which cannot hold oil has been ignored in this calculation]
On March 1st, Treaty granted All Energy options to purchase a further 6% of the Princess concession and 15% of the Paradise concession. I have ignored this in these calculations.
Don't quite see the oil production assets in Belize in the Press Release that you refer to.
But it is good news that Treaty have equipment and financing in place to drill in both Texas and Belize. This should lead to oil producing assets in one or both of these locations.
I think you are done because there is no evidence that I lied.
Because I don't lie, I just report on what I see Treaty doing in Belize which I know that most Treaty Shareholders are interested in but can't see for themselves.
I have no interest or capability to see what is going in Texas with Treaty Operations there. I rely on Bull for that.
I don't need a telescope from Belize to see Treaty Belize Activity. I only report on facts about their wellsite here when I am close enough to see it.
It is not my business to post positive news to boost share price or negative news to depress it.
I mainly post facts not interpretations. If you don't like them, I am sorry but they are facts or the interpretations of a 30 year professional oilman (just retired but still interested).
And my friends are not naive they don't base what they do with their Treaty shares on just what I post.
This is a open board where everyone is entitled to post the facts they see and their opinions about the future. But I understand that posting off topic or personal attacks is not acceptable - so I don't do it - no matter what people post about me.
There was a red truck mounted rig (White cab) on site on April 9th.
I have a photo from that visit but I can't work out how to get it to you - any suggestions?
Can't post on Treaty Facebook as they seem to have blocked all access to that from Belize including by me.
I am not casting doubt. I am just telling it like it is.
And if it is like that - then there is doubt. The share price still being 4-5 cents shows that I am not the only one with doubt.
We all hope for growth in the future, but if someone lets the baby out with the bathwater, the growth won't be what is expected.
Treaty share price doesn't affect me and so doesn't affect my judgement - but it does impact the present and future wealth several of my friends.
That is why I am watching Treaty activity in Belize.
Bull is exactly right. As far as I am aware the plan is to drill ahead in the first well to 3500 or 4000 ft (depending on how deep they can get with the rig that is there) then do electric logging on the three payzones that Treaty expect to find, including the one that they drilled but couldn't log previously.
I hope Treaty can plan the whole operation better this time, as to drill to 4000 feet and then wait a long time for the logging unit to return from Texas (if is there for the Texas wells) is an unnecessary risk to the well, which might collapse again if left open for a long time.
Also they will need the casing and cement available onsite to case the hole as soon as it has been logged if payzones are confirmed.
Regarding Treaty drilling, there are a few things that I don't really understand that could be a significant revelation in the 10-k once issued:
(1) Who owns the drilling equipment (Treaty Energy Corp or Treaty Drilling LLC)
(2) Does Treaty Energy Corp own Treaty Drilling LLC or did they sell it to someone else? If the latter who owns it?
[This information is as important for Treaty Shareholders as what is going on in Texas and Belize, as this has a big impact on Treaty Energy Corp current assets and cost base]
I suspect I will need a microscope not a telescope to see any Treaty activity in Belize.
I live 137 miles from the Princess Petroleum / Treaty Belize wellsite and pass by the end of the access road when I go on scuba diving trips in the south of Belize - like I am doing on May 12th (and like I did on April 9th).
I am planning to report back in an IH post on activity there - just like I expect Bull will do from Texas.
Bull - Much appreciate you keeping an eye on Treaty Texas Operations.
I am keeping an eye on Belize in a similar manner. I will be visiting the wellsite here too late next week and will report on the progress I see.
Just to add some facts on some of the things that have been said about Belize that have been posted on this Message Board:
(1) The Superbond is a huge debt burden for a small country like this. It was taken out by the previous PUP Government of PM Said Musa. Now PM Barrow of the UDP has to try to renegotiate it to allow more money to be channelled towards development instead of debt service.
(2) Onshore oil in Belize is already greatly helping the Belize economy, oil is the country's second largest industry and BNE is the country's largest taxpayer (their production is 4600 bpd). More onshore oil, like Treaty could find in the Princess or Paradise concessions would be a great help to this country.
(3) The GoB do not yet believe that Treaty have found oil in Belize, as Treaty have not been able to the things that oil companies normally do to demonstrate an oil discovery (many wells were drilled in Belize in the 1955-1997 period that had similar oil stows to Treaty's well and which were not oil discoveries).
(4) Much of the Paradise concession (just under 1.4 million acres onshore) is volcanic intrusion and not of any interest for oil exploration but the edges of the concession contain rock types that could hold oil.
(5) Treaty have a non-exclusive option over the offshore part of the Princess Concession (1.8 million). The average water depth in this offshore part of the concession is between 4000 and 5000 feet , similar to the deepwater horizon. [In addition to these facts - it is my opinion that neither Princess nor Treaty have the technical nor financial capability to drill in the offshore part of this concession]
These are barrels per month, this rate just under 10 bbls per day.
Treaty needs 100 times this to reach its stated target of 1000 bpd. Does anyone have any idea where that much production will come from? And how long the build up will take?
With oil at $100/barrel monthly gross revenues are $29000.
With 750 million shares issued, Income per share right now is $39.42 millionths ($39.42 for every 1,000,000 shares issued)
Just stating the facts.
As well as geological potential around the edges of the Paradise concession, the purchase of that concession may also benefit Treaty in another way.
Buy buying it for a mix of cash and shares, it means that the Belize Prime Minister's cousin is now a Treaty Shareholder.
Albertaoil thanks for pointing out that Treaty CEO's estimate of oil volumes were included in a Press Release attached to the January 31st 2012 8-K report, where he quoted "Our internal analysis indicates that the Stann Creek Field covers an area of around 350 acres, and with 4-acre spacing we would expect to drill up to 90 wells in this oil field. Based on our initial findings, we estimate there are about 5,000,000-6,000,000 Barrels of recoverable oil in place in this first finding."
In response to your question, the 8-K form is used to notify the SEC of material events. But IMO the press release attached to Treaty's January 31st 2012 8-K report would not be seen as an official reporting of reserves to the SEC as he talks about "recoverable oil-in-place" which means nothing in the oilpatch. Oil-in-place is the volume of oil in the ground and recoverable reserves are how much of that oil in expected to be recovered over field life.
The official reporting of reserves at the end of each year is included in the 10-K report for each company. The reserves stated in the 10-K report must follow the SEC rules in order not to mislead investors.
The facts on reserves in 8-Ks are:
(1) Treaty Belize well reached TD sometime between January 27th and January 30th 2012 (Treaty PR 1/31/2012)
(2) Treaty have filed 3 8-Ks since the well reached TD (Treaty Energy Corp website)
(3) The 8-Ks filed are as follows:
January 31st - Drilling success in Belize. "Found hydrocarbons". No mention of reserves.
March 8th - Red Rock Consulting Appointed
April 3rd - Woolridge Leases
So again I request you to advise where you have seen reserves reported to the SEC in 8-K.
It is impossible to calculate the bookable reserves for Treaty Oil Belize. Of the 7 things that Treaty would need to measure in the field or study in the lab to certify their reserves with SEC, they have done none. IMO
The SEC has established rules for reserves reporting so that all companies cannot just make up numbers about what they have found. These rules apply to majors, minors, independents and all. For example see this link http://www.sec.gov/rules/final/2008/33-8995.pdf
In addition to booking reserves with the SEC, reserves are also used to help plan developments, as in Treaty PR of 1/30/2012 where they stated that a large number of wells (90) were needed to tap their estimated reserves over the 350 acres. For comparison, BNE's 16 million barrel field with a maximum production of 4500 bpd has about 15 producing wells.
My calculation of potential reserves is professional but as I said before the equation is easy but the input data is hard to come by. That is why I based my calculation on a minimum and maximum range of values. I was surprised by two things from my calculation:
(1) How Treaty don't have any of the information required yet to certify reserves ith the SEC. IMO
(2) How low the range of reserves came out to be with even the upside based on 350 acreas and 50 feet thickness coming out way short of the 5-6 million quoted by Treaty.
I have been very clear in my postings, it is not my intention to misinform. Being as how all you guys are shareholders in a start-up oil company, I though you would be interested in tapping into the experience of an oilman. Are you?
And finally stiflerz28caamarohemi, you mention an 8k filed with the SEC. I cannot find any 8k that mentions reserves, please could you point me to the one you are talking about.
dloggold - Thanks for your question. Not sure why I had never tried to calculate this before. The calculation took me back to my early days as a field Petroleum Engineer.
IMO the range of potential reserves from the well in Belize so far is 0 to 2 million, but Treaty have not met any of the requirements for reporting any of these as reserves yet.
I have based my calculations on reported data or typical values for the following parameters:
First I calculated Oil In Place (OIP based on following ranges:
Thickness (ft) 15 to 50 (Range of Treaty reported values - I think)
Net-to-Gross (%) 50 to 80 (Typical range IMO)
Porosity (%) 8 to 12 (Treaty Press release 2/1/12)
Residual Water Saturation (%)40 to 20(Typical range IMO)
Drainage Area (acres) 4 to 350 (SEC will only accept 4 acres based on well drainage area in Treaty Press Release 2/1/12. Max 350 for development planning purposes is also from the same Treaty Press Release)
Formation Volume Factor (%) 1.5 to 1.4 (Typical range IMO)
Then Potential Reserves are OIP * Recovery Factor
Recovery factor (%) 5 to 30 (Range based on Min primary recovery; Max pumping)
I have a spreadsheet of the calculation, which I will send to anyone who wants it - just send me your email address via IH messaging.
Please note this is just my opinion based on available data and a lot of estimates as most of data is not available.
The Math of the equation is easy. Proving the input numbers is difficult and hasn't been done.
I used to be a qualified reserves assessor for my company and IMO Treaty haven't proved any reserves yet.
IMO 6 million bbls is only based on SWAG (Scietific Wild Assed Guess)
I am not dissing you but nothing is proved in Belize yet to international oil industry standards and no reserves can be officially filed with SEC until there is more proof of them.
I have a list of 40 wells drilled in Belize by major oil companies earlier which had live or dead oil shows and which did not produce anything commercial.
So I and many other hope that Treaty have found oil reserves in Belize but they need to prove them up to get any company / shareholder value from them. IHMO..
All Energy used to be All Fuels and Energy a company who's business was Ethanol Production. Then they changed their strategy and decided to go into the international oil exploration business - purchasing 4% of Treaty Belize with options on a further 6% and 15% of Paradise concession.
Didn't realise their share price was falling,butI suspect it reflects their Shareholders not being happy with this change of business strategy. IMO
[Worth noting that Treaty Energy Corp underwent a change of strategy too a while back: from a opportunitic stripper well company to an international exploration company with different risks and potential rewards].
I am not picking apart everything. I want Treaty to succeed. But I am concerned that they don't know what they don't know about operating an exploration well in a foreign country.
The rig here is not big.
Companies that work in the daytime and don't even leave a watchman at night (or in the early morning whe I normally visit on the way to somewhere else) are unprofessional.
No insider information, garbage or conspiracy theories I am afraid.
As far as I am aware there are two places that Treaty should be drilling to add to oil production. In the absence of the normally informative press releases about what is going on from Treaty PR, on Texas I am relying on what is said on IH.
Blind Investor in post 30797 advised that Treaty are not yet drilling in Texas - I thought they were already.
And I have seen with my own eyes that there is no drilling activity in Belize right now.
So this means no Treaty drill crews are working on drilling which is adding oil inventory.
Hope this is clear.
For a company not running one drill crew right now, I seriously doubt their ability to go from nothing to two drill crews operating in parallel in two different countries in such a short period.
This is why IMHO Treaty's buy and set up own drilling operation reduces their flexibility.
And I heard nothing about what happened with the drilling company sell off. Can anybody update me? Should make interesting reading in the 10-K.
With drill crews time is money. Where are they? Expect they are on standby at Treaty shareholders expense.
What PR machine. No news for so long is concerning. And no answer to FAQ about timing of 10K is also worrying.
I am a big oil shareholder.
My friends are Treaty Shareholders.