Allied Energy, through its wholly-owned subsidiary Allied Operating Texas, has begun drilling its first horizontal location in the Giddings field area of east Texas.

The proposed horizontal location is a direct 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 4,833mcfd (thousand cubic feet per day) of gas and 30 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 approximately 2,200mcfd of gas and 25 barrels of condensate/oil.

The proposed plans for an initial horizontal test well are to drill a long length single lateral and/or two 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 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 barrels of condensate/oil in less than five years from a single 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 two billion cubic feet of gas and 22,000 barrels of condensate/oil 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.

Allied Energy is an oil and natural gas company primarily engaged in the exploration, development, and production of oil and natural gas in the continental US.