Allied Energy has begun the production operations for its first horizontal well, the Allied Howard #1H, in the Giddings Field of Grimes County, Texas.

Earlier this spring, the Allied Operating Howard #1H, was drilled to a total measured depth of approximately 17,000′ in two horizontal laterals oriented northwest and southeast along existing trends.

The Howard #1H well found a series of natural gas bearing intervals while drilling through the primary objective Buda/Georgetown Limestone Formation.

On 15 May 2010, the Howard #1H had an initial flowing test rate of 4,011mcfgd on a 20/64" choke with associated condensate.

The well is currently producing as expected at an estimated sales rate of approximately 2,000mcfd of gas with 25 to 30bcpd while maintaining 2250psi FTP approximately.

Allied Energy contracted Allied Gas Transmission, a majority owned subsidiary of Allied, to trench, lay line and connect the Howard #1H to the local gas market.

Allied Energy recently signed and executed a connection agreement with Atmos Pipeline – Texas, a division of Atmos Energy, in order to sell its gas in Grimes County, Texas.