Allied Energy Turns on Taps at Four Wells in Oklahoma

Allied Energy has provided an update today on its 4 well project located near the Arkansas River in Pawnee County, Oklahoma. Allied commenced a 4 well project on this lease at the end of 2008 and is now putting all four wells into production along with a salt water disposal well to handle formation water from the four wells.

The first well that Allied drilled in this project was the Eric Foust 7-9, which was drilled to a depth of about 3,000 feet. The well had shows during drilling in several reservoirs, and the log revealed at least five intervals that should be tested. Allied started with the Misner at 2882-86' and perforated and tested it. It had a trace of oil and some gas but was deemed to not be commercially viable. The company then moved up-hole to the Bartlesville and perforated it from 2480-90'. The well has some oil, and gas and this interval will be put into production at a later date.

Allied then went up to an intriguing zone at 2150' and decided to test this seemingly gas rich zone, which is known locally as the Prue. With some successful gas tests in the area, the Company knew that this zone could be gas rich. After perforating from 2162-70', the well began blowing gas out of the hole before the perforating gun was even retrieved out of the well bore.

"When swabbing the well after acidizing it, the gas actually blew the swabbing tool and about 200 pounds of cable out of the well bore and into the air about 40 feet," said Steve Stengell, President of Allied Energy. "Thankfully, nobody was hurt, but it was a very clear confirmation that this reservoir has a lot of gas to be recovered, since there is evidently still quite a bit of gas drive left in the reservoir," he added.

The well was initially put into production in December after being tied into the gas pipeline that runs through the area. The well had initial production rates of 180 to 210 thousand cubic feet of gas per day (MCFD) during its first few days of production. The gas in this well that was being used to run the gas driven motor was wet, and so the motor would shut off periodically, making it difficult to get a consistent fluid recovery drive. Therefore, it was decided to shut the well in until electric was run to the well and work on the salt water disposal well was completed, which has now been done. The electric company will be turning on the meter this week.

Allied then drilled the Eric Foust 8-9, which was drilled to a depth of about 2,990 feet. The well encountered numerous drilling difficulties and had only minor amounts of oil and gas in the Bartlesville after completion. While not commercially viable, the well was converted into a salt water disposal well after perforating from 2705 to 2715 feet and recovering only minor amounts of oil and gas.

"Due to our relationship with the original operator and owner of the lease, we were able to get the operator to log and analyze a nearby well bore that had been shut-in for years but that had good production from the Bartlesville," said Stengell.

The previous operator cleaned out the well bore and recommended that the well be completed for production. So, Allied completed it in the Red Fork and renamed the well the Eric Foust 8-9A. The well is expected to produce oil and gas based on initial results from swabbing and production tests.

"We really think that this lease has quite a bit of potential, since there are so many oil and gas bearing reservoirs that have either not been tested or clearly have not been depleted," added Stengell. "These two wells will be put into production as they are, but we know that they both have other zones that we plan to go back and complete for production. We're also analyzing the logs from this area as we believe there may be a bigger play here that has been 'left behind' that we could develop," he continued.

Revenue distribution should begin for the Foust #7-9 and #8-9A in the next 90-120 days.

No assurances can be made as it relates to future production rates, rates of return or estimated reserves. There are tremendous risks and uncertainties associated with oil and gas drilling and development.



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