Allied Commences Production at Giddings Field

Allied has commenced production operations for its first horizontal well, the Allied Howard #1H, in the historic Giddings Field of Grimes County, Texas.

Earlier this spring, the Allied Operating Howard #1H, was drilled to a total measured depth of approximately 17,000' in two horizontal laterals oriented northwest and southeast along existing trends. The Howard #1H encountered a series of natural gas bearing intervals while drilling through the primary objective Buda / Georgetown Limestone Formation.

On May 15, 2010, the Howard #1H had an initial flowing test rate of 4,011 MCFGD on a 20/64" choke with associated condensate.

The Howard #1H is currently producing as expected at an estimated sales rate of ~2,000 MCFD of gas with 25 to 30 BCPD while maintaining ~2250 PSI FTP.

"We are extremely pleased with the results we have seen thus far for this project and are now drilling our second horizontal location, the Allied Howard #2H," said Steve Stengell, Allied's President. "Allied plans to continue to pursue and develop additional horizontal opportunities in Central-East Texas and implement the newer technological advances that relate to horizontal drilling and production," added Stengell.

Allied Energy, Inc. contracted Allied Gas Transmission, a majority owned subsidiary of Allied, to trench, lay line and connect the Howard #1H to the local gas market. Allied Energy, Inc. recently signed and executed a connection agreement with Atmos Pipeline - Texas, a division of Atmos Energy Corporation, in order to sell its gas in Grimes County, Texas.