Allied Energy Provides a Summary of Operations for Its Southern Fields in Rogers County, Oklahoma

Allied Energy Provides a Summary of Operations for Its Southern Fields in Rogers County, Oklahoma

Allied Energy, Inc. provided the following report regarding its drilling, completion and production operations in Rogers County, Oklahoma for the following programs:

12-Well Program (USCBM)

The Begley #12-3 and Begley #12-4 wells are now in production with the Noble Brewer #12-1 and Noble Brewer #12-2 wells in the final stages of completion. Artificial lift systems are currently being installed for each well. Tank batteries have been set and a connection to the main gas line has been made. The Begley #12-3 and Begley #12-4 have a combined initial reported production rate of 20 barrels of crude and an estimated 20,000 cubic feet of gas per day (in excess of 100,000 +/- cubic feet of gas per day per well at today’s prices). There can be no assurance made as it relates to future production rates. The Begley #12-5 (5th well) and Begley #12-6 (6th well) were both drilled to total depth and encountered hydrocarbons in the Mississippi formation and are now awaiting completion. Allied should finalize drilling for the 7th and 8th wells in the next several weeks and potentially finalize drilling for all 12 wells by year-end.

Cherokee 25 (CHK25)

The J. Begley #1, M. Begley #3 and C. Begley #4 have been perforated and treated in the Burgess formation. The M. Begley #2 needs to be re-logged and evaluated before completion is attempted in the Burgess. We have performed a significant amount of work toward the rework of existing oil and gas producers on the lease and have also been adding additional wells to our re-completion inventory. The two existing Begley oil wells have been reworked and added to production and together appear to be contributing some pretty decent oil production (estimated 5-6 BO per day). The ultimate goal over the net 6-9 months is to establish production for four (4) newly drilled wells, maximize production from the existing producers on the lease (8-10 wells) and add 8-12 additional re-completed wells to the production stream. Although no assurance can be made, the Company believes that the program should be at full production capacity in the next 9-12 months providing years of income.

Hickory Hollow / Caney River (8-well program)

The Smith Peter Hickory #1 has produced nearly 1,300 barrels of crude from the Mississippi Lime and continues to produce at an estimated rate of 5-6 BO per day. Allied Energy has new plans to convert the Dana #5 to a water disposal well and add the recently drilled replacement well (Smith Peter #2b) to the program’s future income stream. The Dana #1-4 wells (4 of the 5 existing producers) are already completed for production and are currently awaiting a water disposal system in order to begin producing at full capacity. We have successfully connected the Dana #1 to our gas line which will deliver the gas across the Caney River and approximately 2.5 miles to our Cherokee Tap and Meter (i.e. gas market). However, a water disposal system is our top priority in order to maximize production for the Dana #1 and the other program wells. In summary, there will be 4 newly drilled producers (Smith Peter #1, #2, #2b, #3) and the Dana #1, #2, #3 and #4 contributing gas for the program. Due to continuous delays resulting from record rains last year, access to gas line right-of-ways and ongoing negotiations with several landowners in the area, the project has been delayed and is now anticipated to reach full production capacity from all 8 wells in the next 6-9 months.

South Rogers Six (SR6: 6-well program)

The Minor #1 & #2, Phil Minor #1, Lindsey #1, Shockemoehl #1, and Shockemoehl #2 wells have successfully been drilled to total depth and are now in the completion phase. The R. Minor #1 has been completed for production and demonstrates significant gas potential from the Burgess Sandstone at 750 +/- feet. The Lindsey #1 also demonstrates decent gas potential from the Burgess Sand. The Lindsey #1 has been perforated, treated and completed for production. We have treated the Phil Minor #1 and are in the final completion mode for each of these wells. Due to the fact that these locations are in a remote area, we expect these wells to reach full production capacity in the next 6-12 months.

Hickory 4 (H4: 4-well program)

The Floyd Patrick #1 and #2 wells are now in production. The Floyd Patrick #1 & #2 appear to be predominately oil producers. The J. Begley #2H has had production casing set and is now awaiting perforation and treatment. The Noble Brewer #1H was placed on pump and is now returning treatment/formation water with an oil cut. We anticipate that the well will bring on oil production only once we re-perforate the lower lobe of the Mississippi Lime. The Noble Brewer #1 is also awaiting connection to the gas line. Due to the remote location of these wells and other delays resulting from record rains earlier this year and ongoing negotiations with landowners, we expect to reach full production capacity in the next 6-9 months.

Ultimately, the Company expects to establish production from more than 50 wells with an estimated aggregate daily gas production rate of 1 – 2 million cubic feet of gas and 75 – 200 barrels of crude oil per day from its two southern fields. This projection includes all wells drilled, reworked and/or completed for production this year and next. Although the Company is very confident in the development of its properties, no assurances can be made as it relates to the future production rates of oil and/or natural gas. There are tremendous risks associated with the drilling, completion and production operations for oil and natural gas projects.

“Despite the fact that we have endured continued delays in specific areas of Rogers County, we continue to make significant progress for all of our projects in this area,” said Steve Stengell, Allied’s President. “The recently formed Allied Operating, LLC, a wholly owned subsidiary of Allied Energy, Inc., is the primary entity responsible for this progress and continues to exceed our expectations in the field,” added Mr. Stengell.

Allied Energy, Inc. is an independent energy development firm primarily engaged in the exploration, development, and production of oil and natural gas in the continental United States. The company relies upon its industry partners, well operators, third party geologists, industry consultants, petroleum engineers, and financial analysts whose combined industry experience is essential to the success of each project. Understanding the inherent risks of oil and gas development, Allied Energy’s strategic focus is the development of oil and natural gas reserves. As the fuel of choice to meet the growing demand for a clean-burning domestically produced fuel, the company firmly believes its natural gas exploration strategy should provide substantial growth to the company for the years to come.
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