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Treaty Energy Corporation Reports 2012 Fiscal Year-End Results and Plans Going Forward

Treaty Energy Acquires Two Additional Leases From U.S. Fuels, Inc. of Breckenridge, Texas and Provides Details for Next Two Major Drilling Projects

NEW ORLEANS, LA -- (Marketwired) -- 06/28/13 -- Treaty Energy Corporation (OTCQB: TECO) (http://www.treatyenergy.com), a growth-oriented international energy company, today reported the fiscal results for the year ended December 31, 2012.

Message to Shareholders:

2012 was a challenging time for Treaty Energy Corporation. In 2011, Treaty Energy acquired several leases that the Company believed held great promise for the Company's future. The newly acquired leases were part of Treaty Energy's business model that included purchasing leases that had existing marginal wells on them with proven reserves and new drilling opportunities. These leases showed significant potential for growth but ultimately failed to deliver. While revenue for the twelve months ending on December 31, 2012 increased to $169,947 from $116,241 in the same period a year earlier, these leases created increased net losses for the Company. Higher expenses were the direct result of extra drilling expenses as well as increased work over and maintenance costs.

Towards the end of 2012, Treaty Energy Corporation began to re-evaluate and restructure every aspect of the Company's business plan based on the financial results of 2012. Treaty's new business model was put into action in the first quarter of 2013. To date, these changes have been extremely positive for the Company and have provided a solid financial base for future growth.

  • Treaty Energy's Chairman, Andrew V. Reid, recommended to the board that Bruce Gwyn be appointed to the positions of President and Chief Operating Officer for Treaty Energy Corporation in early 2013. Mr. Gwyn was able to immediately reduce operating costs for all leases and operations. Outside vendors and third party experts were brought in to perform low-cost work overs and evaluations on all existing leases to determine long-term profitability. As a result of these evaluations, Treaty Energy Corporation announced that the company will move away from marginal well operations and will focus on new drills on leases with proven, yet underutilized, reserves.

  • As part of Treaty Energy's newly implemented operating strategy, the Company successfully completed two wells on the Mitchell lease in late May/early June 2013. The two Mitchell wells are producing more than all existing marginal wells in Treaty Energy's inventory combined. They have produced 800% more oil than the marginal well inventory and have significantly lower upkeep and repair costs. The Mitchell lease is currently producing between 70-80 barrels of oil per day (BOPD) and has to date produced more than 1600 barrels of oil since being put into production in early June 2013.

  • On May 9, 2013, Treaty Energy announced that it had signed a binding Letter of Intent (LOI) with U.S. Fuels, Inc. of Breckenridge, Texas to explore and drill five leases that cover 1,830 acres in Texas. With the execution of this agreement, Treaty Energy will have the capability to drill dozens of new wells in Texas. The new wells will be state-of-the-art and hold greater promise and longevity for Treaty Energy and its shareholders.

  • After the success of the Mitchell lease, Treaty Energy Corporation announced that it had acquired a working interest in the rework of the Standard lease (Standard #2 well). The Standard lease, which is located across the street from the Mitchell lease, is expected to provide a high return on investment for Treaty Energy. Should the Standard #2 well prove to be successful, Treaty Energy will expand operations to include the other four wells on the lease.

  • In early 2013, Treaty Energy Corporation reorganized its wholly owned Texas subsidiary, Treaty Energy Drilling, LLC. Treaty Energy Drilling has been refocused to provide contract drilling and completion services for third party vendors. Since reorganizing, Treaty Energy Drilling has secured four drilling contracts and become part of the Company's efforts to diversify its revenue stream. The Company hopes to expand Treaty Energy Drilling's operations in Q3 and Q4 of this year.

  • Overseas, Treaty Belize Energy, Ltd. began drilling San Juan #3. San Juan #3 will be the Company's third exploratory well in Belize. Treaty Energy will likely announce the results of this well within the next month, in full cooperation with the Government of Belize.

New Lease Acquisitions and Plans Moving Forward:

Treaty Energy Corporation has secured the assignment of two additional leases from U.S. Fuels, Inc. of Breckenridge, Texas. After successfully drilling and completing the first two leases assigned from U.S. Fuels on the Mitchell lease, U.S. Fuels will now assign two additional leases to Treaty Energy. The two additional leases are located on a 20 acre track on the Murl Unit (which is also known as the Stroebel lease) and a 20 acre track on the Stockton Lease. The Stockton lease is independent of the LOI signed between the two companies.

The Murl Unit has a gas well that is currently producing 80 mcf a day and some high gravity oil (54 API). Initially drilled in 1994, the Murl Unit received an initial production flowing (IPF) rate of 1,730 mcf per day (CAOF 6,500 MCFD). 3-D seismic data acquired by Treaty shows this particular field holds high ROI potential. This seismic data has already prompted Enserch to invest over one million dollars into a pipeline to service this well and any other potential wells on the lease.

The original drilling operator of the Murl Unit had a gas company come out to test the lease. The gas company failed to follow proper procedures and significantly damaged the well in the process, creating a water cone formation. Following the damage, the well was shut in and a second well was not pursued. U.S. Fuels acquired the well, set a bridge plug over the zone and shot a small 1ft streamer into the well, restoring it to production status. The reworked Murl Unit initially pulled 350 mcf per day and now produces approximately 80 mcf per day, 19 years later with no additional treatment. Treaty Energy plans to drill a new offset well down to an approximate depth of 4,000ft. to re-enter the same zone which had a recorded IPF rate of 1,730 mcf per day (CAOF 6,500 MCFD).

The 1994 completion report, along with some of the available seismic data, can be found on Treaty Energy's website located at: http://www.treatyenergy.com/sites/default/files/MurlWellInformation.pdf. The Company also provides two introductory videos to the Murl lease on the Treaty's media page: http://www.treatyenergy.com/media.

In addition to the Murl Unit, Treaty Energy will drill an offset well from the Mitchell #4 well on the Stockton lease. The Stockton lease is the lease adjacent to the Mitchell lease. Treaty Energy believes that this offset drilling project will be as successful as the Mitchell #4 well, which has produced approximately 800 barrels of oil since it was drilled on June 6, 2013. As announced on June 17, 2013, the Mitchell #4 well is producing 45-50 BOPD.

Treaty Energy is also in the process of hiring a secondary rework operator for the Standard lease. Operations were scheduled to begin approximately 4 weeks ago, but have been delayed due to the loss of an immediate family member on the project. The primary rework contractor will likely be unable to complete the Standard Operation for several more weeks. To address and allay this delay, Treaty Energy is locating a secondary contractor to improve completion times between projects and increase shareholders confidence.

Treaty Energy Corporation looks forward to updating shareholders on the progress of these operations as more information becomes available.

The complete Form 10-K filing for the period ending December 31, 2012 can be viewed at the following link: http://www.otcmarkets.com/edgar/GetFilingPdf?FilingID=9374296.

Company Links
Website: http://www.treatyenergy.com
Facebook: https://www.facebook.com/TreatyEnergyCorp
Twitter: https://twitter.com/TreatyEnergyCo

About Treaty Energy Corporation
Treaty, an international energy company, 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 Energy Corporation (TECO) trades on the OTCQB, the marketplace for companies that are current in their SEC reporting requirements. Investors can find Real-Time quotes and market information for Treaty Energy at http://www.otcmarkets.com/stock/TECO/quote

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 10-KSB, 10-QSB and 8-K. Actual results may differ materially from such forward-looking statements.

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