Allied Energy Commences Drilling Ops in Leon County

Allied Energy has commenced drilling operations for its first horizontal well in Leon County, Texas.

The Company plans to drill 7,000 feet +/- vertical and approximately 4,000 feet horizontal to test the oil bearing Woodbine Formation utilizing new and evolving fracture stimulation methodologies.

Over the last year, there have been a series of horizontal Woodbine wells on trend, which were drilled and completed for production, and reported average initial production rates of approximately 200 to 300 BO per day. Allied plans to mimic the most prolific wells in the play, which utilize the combination of horizontal laterals with multi-stage hydraulic fracture treatments. The ability to drill horizontal laterals and apply multi-stage treatments to the Woodbine Formation has created what appears to be a growing trend of horizontal drilling activity in the regional area of the East Texas Basin.

In Grimes County, the Allied Operating Howard #2H was recently drilled to a total measured depth of approximately 18,000' along existing trends. The Howard #2H is a horizontal lateral that encountered a series of natural gas bearing intervals while drilling through the primary objective Buda / Georgetown Limestone Formation.

On December 12, 2010, the Howard #2H tested at a rate of approximately 4,000 MCFGD with associated condensate. It is anticipated that the well will initially produce at a sales of ~2,000 MCFGD equivalent and potentially higher in the future. The Company is currently constructing production facilities, gas flow lines, processing facilities and other necessary surface equipment in preparation to begin its ongoing production operations.

On May 15, 2010, Allied first horizontal location in Grimes County, the Howard #1H, tested at a flowing rate of 4,011 MCFGD with associated condensate.

"We are extremely pleased with the results we have seen for our Grimes County project and are also excited about utilizing many of the latest technological advances for horizontal drilling in Leon County as well," said Steve Stengell, Allied's Chief Executive Officer. "The price for oil makes this project even more attractive," added Stengell.


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