Treaty Energy Corporation announced a Letter of Intent (“LOI”) to enter into a 50/50 Oil and Gas Joint Venture (“JV”) with Discovery Resource Group. The venture could make both companies extremely marketable and attractive to the market place.
Initially, Discovery Resource Group (DRG), which is a Delaware limited liability company, will pledge 19 wells from 4 affiliated partnerships and Treaty will pledge 9 wells to a bank to procure an estimated $2,000,000 line of credit for drilling and working over wells.
With the new line of credit, Treaty plans to do workovers in West Texas, radial jet lateral workovers, and drill new wells in Tennessee. These new endeavours will expand the base of the company and could make Treaty a sleeping giant in their field.
DRG has considerable financial connections and will grow the line of credit as the reserves grow to support the credit facility. The credit line will be secured by the values of production, reserves, and field equipment. Treaty will provide additional drilling and acquisition opportunities from its current considerable list of prospects opportunities.
The joint venture appears to be a win-win scenario. Treaty will expand their already profitable business and be able to accept new opportunities, while DRG will enhance their financial position. An endeavour such as this may make Treaty Energy Corporation a company that investors should keep a very close eye on.
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