Treaty Energy Corp. (fka TECO)

[smithsd7]

Kansas and Belize projects

Kansas deal numbers

Paragraph 5 of the amended sale and purchase agreement(teco_ex991008.gif)
http://www.sec.gov/Archives/edgar/data/1075773/000111650210000035/0001116502-10-000035-index.htm

clearly states:
"Buyer shall deliver to Seller the full payment of Six Million Dollars($6,000,000.00) in collected funds at closing."
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Per the Reserve Report:
http://findarticles.com/p/articles/mi_pwwi/is_201001/ai_n47546970/

Operating Expenses; oil wells $225/well-month = $2,700/well-year
Operating Expenses; deeper oil wells $750 - $850/well-month = $9,000/well-year
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660 well x $2,700 = $1,782,000 operating expense per year(conservative)
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current production = 135 bbls/day using $70/bbl = $3,449,250/year gross revenue, minus the 5% overriding royalty interest for Town Oil($172,463) = $3,276,787
$3,276,787 - $1,782,000 operating expense/year =
$1,494,787 pre-tax income for deposit to the joint operating account.
Treaty gets 50% of this = $747,394 per year, which is put into the "joint operating account", and which they intend to use to help pay for the wells.
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They owe $6,000,000 at closing or they default.
Excerpt from the PR dated 12/20/2010 "Treaty Energy and Town Oil have agreed to extend the term of the purchase agreement to February 21, 2011."

Excerpts from the PR dated 2/28/2011
"Treaty's lender is located in an area that has been affected by continued severe weather which has caused the lender to ask for a closing date of April 1, 2011."

"Treaty has asked for additional time from Town Oil and has been told to continue toward the loan closing and they would hold off on taking possession of the 60 million shares of Treaty Energy stock held in escrow as liquidated damages should the loan not close. Just to be clear, these shares are held in an escrow account in Kansas and can be converted from the listed owner of the shares to Town Oil at their discretion should the loan not close."

I found the wording of the PR a bit ambiguous.
It doesn't specifically say that Town Oil agreed to the date of April 1, 2011, only that the lender asked for that date.

And it certainly didn't say anything about any signed and notarized agreement to extend the date.

Without a signed and notarized agreement Town Oil can, if they so decide, call the deal null and void and take the shares that are being held in escrow at any time. Maybe they'll wait until April 1 and maybe they won't.


$6,000,000 - $747,394 = $5,252,606 that they need to come up with from a source other than the current well production of these leases.

If they default, what will be forfeited is:
the $900,000 in stock(60 million shares per PR released Feb 28, 2011) that has been placed in escrow as earnest money and all of the funds accrued in the "joint operating account".

Drilling Cost - Oil well $30,000/well
Drilling Cost - Injector $20,000/well
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Pr dated Dec 20, 2010
Treaty claims to have a funding commitment for the Kansas property by an, as yet, unnamed lender.
http://www.marketwire.com/press-release/Treaty-Energy-Corporation-Announces-9-Million-Funding-Commitment-Acquire-Assets-Town-1371761.htm

The 10Q for 3/31/2011 filed on 5/16/2011 clearly indicated that, as of 3/31/2011, the Kansas deal had not been closed and there was no mention of it in the Subsequent Events section either.
As of this date, due to the lack of follow up by TECO to its shareholders, things are looking real bad concerning Kansas.

See post titled "A summary of the Acquisition PR’s and 8-k’s" to see their track record for accomplishing the other claims that they've made in PR's.
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The Belize project

4/22/2010 Treaty Energy PR
http://investor.wedbush.com/wedbush/?GUID=5845413&Page=MEDIAVIEWER
Entered into a 50\50 Joint Venture Agreement with Princess Petroleum Limited.
Treaty intends to start drilling its first well no later than July 1, 2010.(It didn't happen.)
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From the 10Q dated 6/30/2010 concerning the Belize project:
http://www.sec.gov/Archives/edgar/data/1075773/000135448810002585/0001354488-10-002585-index.htm
“A major shareholder of the Company paid $100,000 cash as required under the agreement.”
(Note: This dollar amount is inaccurate, see 8ka filed on 3/31/2011)
http://www.sec.gov/Archives/edgar/data/1075773/000135448811001031/0001354488-11-001031-index.htm
(and also see the 8ka filed on 4/5/2011)
http://www.sec.gov/Archives/edgar/data/1075773/000135448811001100/teco_8ka.htm
Kind of makes me wonder how well this shareholder (Ron Blackburn, 'my assumption') is keeping the official management of this company up to date on his wheeling and dealings.

“In July, 2010, we sold a 5% interest in our investment in the Joint Venture with Princess Petroleum Limited (2.5% of the total partnership interest) to an investor for $250,000 in cash.”

"We intend to finance the drilling of one to three wells by selling additional interests in our Joint Venture with Princess Petroleum Limited."

From the Treaty Belize Energy Limited 'Articles of Incorporation' document, downloadable via Treaty's website, the percentages are now:
50% Princess
40% Treaty
2.5% Bass
2.5% Cluff
5% BASCO.LLC
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07/02/2010 Amandala Newspaper article
http://www.amandala.com.bz/index.php?id=10024
"Broke, no experience, but gets oil concession!!"

"Cho, however, put little weight on the fact that the partner of Princess, Treaty Energy Corporation, continues to be “in the red,” and with very little to invest in Belize."

"One of the investors in Treaty with whom we had a chance to communicate this week told us that many, including the Government of Belize, think that crude and natural gas reserves are “plentiful” in Belize."

"As to the partnership between Princess and Treaty, Cho said that although Treaty wants a stake in the Princess Petroleum production sharing agreement, the Government of Belize would need to approve it. However, Treaty can still continue works for Princess under the existing “farm in” agreement, of which he says the Government has received a copy."
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7/15/2010 Treaty Energy PR
http://www.marketwire.com/press-release/Treaty-Energy-Reports-Progress-on-Tennessee-and-Belize-Oil-and-Gas-Leases-1290939.htm
"Treaty representatives flew to Panama City, Panama, for meetings the past Monday with the president of Princess Petroleum, Inc. Both groups then flew to Belize City for meetings with government officials to layout the drilling plan that the Treaty/Princess joint venture proposes to implement. Treaty Energy indicated that it has funding in place to proceed with the required efforts to pick the first drill site and then drill well #1 as soon as can be done, and working with its partner, Princess Petroleum, will assure that all drilling projects will be in compliance with rules and regulations of the Belize government."

7/21/2010 Article quoting Director of Geology and Petroleum, Andre Cho/Belize:
http://belizean.com/news/belize-petroleum-director-comments-on-treaty-energy-statement/
"The Belize Petroleum and Geology Department has denied reports in a press release from Treaty Energy Corporation claiming it met with government officials in Belize last week."
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9/20/2010 Treaty Energy PR announcing the signing of a service contract between Treaty and Radar Satellite Solutions on July 20, 2010.
http://finance.yahoo.com/news/Treaty-Energy-Reports-Signing-iw-708494159.html?x=0&.v=1

Link to Treaty's website for Radar Satellite Solutions initial analysis report of a portion of the land based concession in Belize.
http://www.treatyenergy.com/belize1/belize1.htm

03/17/2011 Treaty Energy PR:
http://www.marketwire.com/press-release/Treaty-Energy-Updates-Progress-on-Belize-1413250.htm
"Drilling Schedule: The Company explained that it has made very strong progress on this project at a relatively reasonable level of expenses to-date, and it is very close to announcing up to three initial drilling locations, with a projected drilling date within 60 to 90 days."

also:
"...to date $725,000 has been invested in the Belize project by Treaty Energy."
(Note: This dollar amount maybe inaccurate, see 8ka filed on 3/31/2011)
http://www.sec.gov/Archives/edgar/data/1075773/000135448811001031/0001354488-11-001031-index.htm
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4/1/2011 Treaty Energy PR:
http://www.marketwire.com/press-release/Treaty-Energy-Acquires-Oil-Gas-Company-1421275.htm
Drilling process in Belize is set to commence in May 2011.
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5/3/2011 Treaty Energy PR:
http://finance.yahoo.com/news/Treaty-Energy-Forms-Treaty-prnews-1872257313.html?x=0&.v=1
Treaty announces selection of first eight drilling locations.
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5/9/2011 Treaty Energy PR:
http://finance.yahoo.com/news/Treaty-Energy-Corporation-prnews-1856752106.html?x=0&.v=1
Treaty announced that it has completed the organization of its new Belizean operating subsidiary, Treaty Belize Energy Limited.