Treaty Energy Corp. (fka TECO)

[Belize Oilwatch]

Oil or No Oil in San Juan #3? - I agree it is too early to tell but this week should give us more facts.

The rules concerning a commercial oil find are set out in the PSAs and well understood in practice in Belize. They are a little different to immediately putting wells on production in West Texas under the governance or the Texas Railroad Commission [TRRC].

If oil - which is economic to extract - is found in an exploration well in Belize then the Oil Company either has to make a declaration of the commercial discovery of an oilfield to the Government of Belize [GoB] (including credible information on the oilfield's extent and size) or the Oil Company advises the GoB that it has potentially made a commercial discovery and needs to conduct an appraisal program to find out the size of its find. In the latter case the Oil Company would probably drill further wells before the declaration of a commercial discovery - as has happened in the case of Maranco at South Canal Bank #1 well.

Once a commercial discovery is declared in Belize:
- the acreage which contains the field is converted to a development lease (25 years) vs. the exploration concession (8 years - which will be fully relinquished by October 2015).
- A development plan for the field has to be prepared submitted and approved by Geology and Petroleum Division of GoB
- An EIA for production from the field has to be prepared submitted and approved by the National Environmental Appraisal Committee and the Department of Environment of GoB.
[After production testing the well would stay shut-in while this process is gone through]

[After drilling a well the Oil Company has 180 days after drilling a well to conduct a production test and to make a declaration of commercial discovery - if this is not done it is deemed that the Oil Company has advised the GoB that the well is not of commercial interest. In Treaty's case this would apply to San Juan #1 and #2]

In prior postings, I showed facts that indicate: GoB has to approve all announcements regarding well results in Belize; In the event of oil discoveries the well results are normally announced by GoB, and In the event of dry holes the well results are normally announced by the Contractors.

Awaiting more facts on San Juan #3 results this week.

Just facts. From Belize.