Allied Energy to Expand HZ Drilling in East Tx.

Allied Energy announced that based on the company's recent successful horizontal discovery that Allied plans to pursue its goals of expanding and accelerating its horizontal oil and gas drilling opportunities in the East Texas Basin utilizing new available technologies.

The Company is currently planning, through Allied Operating Texas, a wholly owned subsidiary, to operate and drill additional horizontal wells near the Company's proven existing vertical production in the East Texas Basin. The new horizontal project area is located in close proximity to Allied's recently announced successful discovery in Grimes County, Texas, and will target the Company's oil prone reserves at depths of ~ 8,000 to 10,000 feet true vertical depth. The initial proposed horizontal well has a total measured depth planned of 12,000 to 14,000 feet. The Company's believes that its existing vertical oil production could be significantly enhanced through the application of horizontal drilling and multi-stage "frac" stimulation technologies that have become available to the industry. Such methods have been proven commercially viable by Companies that have drilled and produced various horizontal Shale Gas plays within the continental US. Although no assurances can be made, vertical wells in the target area typically produce in the range of 7,000 - 10,000 BO per year while horizontal wells recently drilled in similar areas approximate 50,000 - 70,000 BO per year.

On May 15, 2010, Allied tested the Howard #1H Well located in Grimes County, Texas at a flowing rate of 4,011 MCFGD on a 20/64" choke with associated condensate. It is anticipated that this well will initially produce at the sales rate of ~ 2,000 MCFGD and potentially higher in the future. The company is currently underway constructing the production facilities, the gas flow lines and preparing the project for ongoing producing operations.

"We are extremely pleased with the results we have seen thus far in Grimes County and are now making plans for additional horizontal wells in the Basin," said Steve Stengell, Allied's President. "We plan to optimize our horizontal wells by utilizing new frac technologies that are currently economic for both oil and natural gas wells to enhance recoverable reserves," added Stengell.