Allied Energy is planning to operate and drill additional horizontal wells near its proven existing vertical production in the East Texas Basin.

The new horizontal project area is located in close proximity to the company’s recent discovery in Grimes County, Texas, and will target its oil prone reserves at depths of approximately 8,000ft to 10,000ft true vertical depth.

The initial proposed horizontal well has a total measured depth planned of 12,000ft to 14,000ft. The company believes that its existing vertical oil production could be significantly enhanced through the application of horizontal drilling and multi-stage ‘frac’ stimulation technologies. Such methods have been proven commercially viable by companies that have drilled and produced various horizontal shale gas plays within the continental US, Allied said.

On May 15, 2010, Allied tested the Howard #1H well located in Grimes County, Texas at a flowing rate of 4,011mcfgd on a 20/64″ choke with associated condensate. It is anticipated that this well will initially produce at the sales rate of approximately 2,000mcfgd 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.

Steve Stengell, pesident of Allied, said: “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.

“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.”

In the first quarter of 2009, Allied formed Allied Gas Transmission, a majority-owned subsidiary, for the purpose of developing its future gas market and natural gas transmission systems in Rogers County, Oklahoma. The company has contracted Allied Gas Transmission to trench, lay line and connect the Howard #1H to the local gas market in Grimes County, Texas.

In 2009, Allied also formed Allied Operating Texas, a wholly-owned subsidiary, for the purposes of operating and developing its vertical and horizontal drilling programs in the East Texas Basin.