Allied to Begin Drilling 3rd HZ Well in Grimes County

Allied is preparing to begin drilling its third Georgetown Buda horizontal well in the Giddings Field of Grimes County, Texas, the Allied Howard #3H.

The Allied Howard #2H was recently turned into production at an initial rate approximating ~ 4 million cubic feet of gas per day (including natural gas liquids) and associated condensate, and the Allied Howard #1H continues to produce in the range of 2 million cubic feet of gas per day (including natural liquids) along with associated condensate (~10 - 20 barrels per day). This equates to 2 - 3 million cubic feet of gas per day equivalent. Although no assurance can be made and risks do exist, the Company anticipates that combined production from both wells of methane gas, natural gas liquids and condensate should potentially stabilize in the range of ~170 - 200 million cubic feet of gas per month equivalent, at least for the short-term. Based on actual production test information, wellhead pressure, etc. and reports from regional experts and engineers, the Company believes the Allied Howard #2H may become the most prolific producer in the regional Georgetown Buda trend. The Allied Howard #2H is currently awaiting turn-on, while a larger J/T unit is being installed on its location. Initially, the #2H would maximize or overload production into the existing production facility causing the J/T unit to shut-in. Although production may increase or decline for the short-term, production rates typically experience an annual decline over the productive life of the well(s).

The Company is tentatively scheduled to begin drilling the Allied Howard #3H as early as 4 - 6 weeks.

"We are extremely pleased with the results we have seen thus far for the Allied Howard #1H and #2H projects and are preparing to drill our third horizontal location, the Allied Howard #3H," said Steve Stengell, Allied's President and CEO. "Allied plans to continue to pursue and develop additional horizontal opportunities in Central-East Texas and are now making preliminary plans to select a fourth horizontal location in Grimes County to be drilled this spring or summer," added Stengell.