Allied Energy has begun drilling its first horizontal location in the Giddings Field Area of East Texas.

The proposed horizontal location is a direct PUD, Proved Undeveloped, offset location to the Apache Corporation Butaud #1 Well located in Grimes County, Texas that was completed in March 2009 and tested at 4,833 MCFD (thousand cubic feet per day) of gas and 30 BC (barrels of condensate/oil) as reported to the Texas Railroad Commission. As per it's production records, the Butaud #1 continues to produce from a single lateral at an estimated and reported daily rate approaching ~ 2,200 MCFD of gas and 25 BC.

The proposed plans for an initial horizontal test well are to drill a long length single lateral and/or two (2) opposing horizontal laterals. Although risks do exist and the Company can make no assurances as it relates to production or reserves, this long length single lateral and/or dual-lateral strategy could dramatically enhance reserve and production potential for this location.

As reported to the Texas Railroad Commission, the nearby Chesapeake Upchurch #1 Well located in a similar setting was completed for production in 1992 and initially tested at 6,200 +/- MCFDGE (thousand cubic feet of gas per day equivalent) and produced 3.6 billion cubic feet of natural gas and more than 147,000 BC in less than five years from a single (1) lateral.

Per the December production reports provided by the Texas Railroad Commission, the Apache Butaud #1, Apache Dalbosco #E1, Apache Thomas Landry #1 and Apache Wells #1H off-set producers in the field have combined produced nearly 2 billion cubic feet of gas and 22,000 BC over an average period of nine months.

Allied has acquired substantial working interest position in the initial test location and in the project area which potentially consists of thousands of acres located in the prolific Austin Chalk, Buda and Georgetown horizontal trends.

"We are currently drilling the vertical hole section at 2,400 +/- feet in vertical depth," said Steve Stengell, Allied's President.

Tags: Allied Energy