Allied Energy provided the following report for its Allied Howard #1H & #2H horizontal Georgetown Buda wells in Grimes County, Texas.

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 1.8 - 2 million cubic feet of gas per day (including natural liquids) along with associated condensate. 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 million cubic feet of gas per month equivalent, at least for the short-term. 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).

It generally takes 4-6 months to better manage downtime and lease operating expenses (LOE) for horizontal wells of this size and depth. Typically, LOEs decline as a percentage of gross revenue for a significant portion of the life of the well. The Company is projecting LOEs equal to 10% of gross revenues for the long-term although they may be higher for the short-term. These LOEs include but are not limited to water disposal/hauling, electricity, pumping/administration, gas transmission, severance taxes, compression and general maintenance.

The Company has selected its third horizontal Georgetown Buda location, the Allied Howard #3H, as a direct offset to the Apache Wells E #1H location and is currently making preparations to drill in the near future. The Apache Wells E #1H well, to date, has been what appears to be the best producer in this area, as per reported by the Texas Railroad Commission and DrillingInfo.com. It is anticipated that the Company will have an approximate 13% of working interest and a 9.75% net revenue interest in this well. The actual amounts are yet to be determined based on a number of currently unknown factors.

"We are very pleased with the early production volumes in Grimes County and plan to continue to utilize many of the latest technological advancements in horizontal drilling in Grimes County and other areas of Central-East Texas," said Steve Stengell, Allied's President and CEO.

Tags: Allied Energy