Allied Updates HZ Program in Tx.

Allied provided the following update for its horizontal program in Leon County, Texas.

Over the last year or two, there has 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. Some horizontal wells in this trend have produced at a rate as high as 900 barrels of oil per day. 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.

Allied Operating Texas and Pioneer Rig #33 successfully drilled the directional curve and set / cemented casing in preparation to begin drilling our horizontal lateral in the Woodbine formation for the Allied Wallrath #1H in Leon County, Texas. A formal oil show was encountered immediately upon drilling the curve into the Woodbine Sand and the well had a continued oil show reported by the mudlogger while drilling the majority section of the lateral. Although oil and/or gas shows are considered favorable indications that the well may be capable of production, there are numerous wells that have such shows but that never become capable of commercial production for any of a number of reasons. Schlumberger is tentatively scheduled to perform a multiple-stage frac treatment for the Allied Wallrath #1H in April.

"We are extremely pleased with the results we have seen for our Leon County horizontal project and are excited about completing the well for production," said Steve Stengell, Allied's President and CEO. "The price for oil makes this project even more attractive," added Stengell.