Allied Energy (PINKSHEETS: AGGI) provided the following report for
its horizontal drilling and other current field operations in
Grimes and Leon Counties, Texas and Northern Ohio.
Allied Howard #1H (Grimes County, Texas) --
Production Operations
The Allied Howard #1H produced and sold 67 million cubic feet of
natural gas equivalent, including approximately 45 million cubic
feet of methane gas and 840 BOE (barrels of oil equivalent) of
condensate and NGL (natural gas liquids) for the 31-day period from
December 1, 2010 to December 31, 2010. Excluding downtime of
approximately five days, the well actually produced at a rate
approximating 80 million cubic feet of gas (MCFG) for the month
while in its first month of production.
It generally takes 4-6 months to better manage downtime and
lease operating expenses (LOE) for a horizontal well of this size
and depth. Typically, LOEs decline as a percentage of gross revenue
for a significant portion of the life of the well. Although
production for this well may or may not increase over the
short-term, oil and gas wells typically decline for the long-term.
The Company is projecting LOEs equal to 10% of gross revenues for
the long-term although they may be higher for the short-term. These
LOEs include but are not limited to water disposal/hauling,
electricity, pumping/administration, gas transmission, severance
taxes, compression and general maintenance.
Allied Howard #2H -- Production Test
The Howard #2H tested at a rate of approximately 4,000 MCFG per
day with associated condensate. We have constructed production
facilities, gas flow lines, processing facilities and other
necessary surface equipment in preparation to begin ongoing
production operations for the Howard #2H.
The Company is pleased with the volumes of gas, wellhead
pressure, etc. demonstrated during the production test for the
Allied Howard #2H and expects to have the well on-line as early as
this week. Although no assurances can be made and risks do exist,
we would like to target approximately 100 million cubic feet of gas
equivalent per month for an initial production rate for this well
in the near future including methane, condensate and NGL sales.
Again, this is a target estimate for an initial production rate for
the well, and whatever the level of initial production, it will
decline in the near future and over the life of the well. No
assurances can be made that this level of initial production will
be achieved.
The Company has an approximate 13% working interest and a 9.75%
net revenue interest in the Allied Howard #2H well.
Allied "Champion Ranch" Wallrath #1H Drilling
Operations -- Leon County, Texas
Allied Operating Texas successfully drilled the directional
curve and set / cemented casing in preparation to begin drilling
our horizontal lateral in the Woodbine formation for the Wallrath
#1H in Leon County, Texas. A formal oil show was encountered
immediately upon drilling the curve into the Woodbine Sand and the
well had a continued oil show reported by the mudlogger while
drilling the majority section of the lateral. Although oil and/or
gas shows are considered favorable indications that the well may be
capable of production, there are numerous wells that have such
shows but that never become capable of commercial production for
any of a number of reasons. Halliburton Services is tentatively
scheduled to perform a frac treatment for the Wallrath #1H in the
latter part of February. We will keep you updated as to our
projected timelines.
The Company has an approximate 13% working interest and a 9.75%
net revenue interest in the Wallrath #1H well.
Allied A-1 "SubClarksville" Re-entry (Leon
County, Texas)
Upon drilling through the SubClarksville formation in Leon
County, we encountered an increase in the rate of penetration and
had a formal gas show reported by the mudlog. As stated above,
although gas shows are considered favorable, they are not
determinative of commercial production, and many wells with formal
gas shows never become commercially productive. The Company plans
to move directly to the A-1 re-entry well-bore immediately
following the treatment and completion of the above Wallrath #1H
horizontal well. Our tentative operations re-entry schedule is
February-March 2011. The Company has an approximate 20% working
interest and a 15% net revenue interest in the A-1 well-bore.
Northern Ohio -- Trempeleau Drilling
Project
Allied participated as a non-operator in this exploratory
drilling program with a subcontracted operator and industry partner
in Ohio. The Dumbaugh #1 was drilled to approximately 3,400' to
test the Trempeleau Dolomite formation and any other potentially
productive reservoirs. Oil shows and increased porosity were
reported in several intervals at the target depth; however, oil
shows often do not result in commercial production. The Company is
now evaluating its plans for completion. The Company has an
approximate 50% working interest and a 40% net revenue interest in
the Dumbaugh #1 well.
Saltwater Disposal Well -- Grimes County,
Texas
We just recently received our approved injection permit and are
working to secure a rig in the very near future to begin drilling
our water disposal well in Grimes County. This should allow us to
dispose of water directly into a well-bore and prevent us from
continued hauling at a much more expensive cost to Allied and its
partners in the Howard #1H and #2H wells.
2011 Horizontal JV Program -- Grimes County,
Texas
We have selected our planned location as a direct offset to the
Apache Wells E #1H location and are currently making preparations
to drill in the future. The Apache Wells E #1H well, to date, has
been the best producer in this area, as per reported by the Texas
Railroad Commission and DrillingInfo.com. It is anticipated that
the Company will have an approximate 13% of working interest and a
9.75% net revenue interest in this well. The actual amounts are yet
to be determined based on a number of currently unknown
factors.
"We are currently making preparations to drill our third
horizontal well in Grimes County and plan to utilize many the
latest technological advancements in horizontal drilling in this
area of Texas," said Steve Stengell, Allied's President and
CEO.
No assurances can be made as it relates to present or future
production rates or estimated reserves for any given project.
Tremendous risks and uncertainty are associated with oil and gas
drilling, completion, development and production operations. It is
impossible to accurately estimate future rates and/or declines in
production operations for oil, condensate and natural gas.
About Allied Energy
Allied Energy, Inc. (PINKSHEETS: AGGI) 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, geologists, petroleum engineers, and other operational
personnel whose combined industry experience is essential to each
project. Allied Energy's strategic focus is the development of oil
and natural gas reserves.
Allied Energy has achieved the "Best of Bowling Green" award for
the category of crude oil and natural gas production for the last
two years and was recently chosen by an independent selection
committee as the recipient for the Bowling Green "Outstanding
Business of the Year" community impact award for 2010.
Allied Operating Texas, LLC, a wholly-owned subsidiary, operates
and develops certain of Allied Energy's vertical and horizontal
drilling programs. Allied Gas Transmission, Inc., a majority-owned
subsidiary of Allied Energy, was formed to construct, operate and
own gathering systems and/or pipelines to connect production
controlled by Allied Energy to larger pipelines.
For more information: www.alliedenergy.com
CAUTIONARY STATEMENTS
Certain statements in this release that are not historical facts
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Those statements may be
identified by the use of words such as "anticipate," "believe,"
"expect," "future," "may," "will," "would," "should," "plan,"
"projected," "intend," and similar expressions. Such
forward-looking statements involve known and unknown risks,
including but not limited to geological and geophysical risks,
risks of blow-outs and other potential damaging occurrences
inherent to the oil and gas industry, and uncertainties and other
factors that may cause the actual results, reliance upon expert
recommendations and opinions, performance or achievements of the
Company to be materially different from those expressed or implied
by such forward-looking statements. The Company may have varying
degrees of working interest ownership in each well and/or prospect.
For these and other reasons, gross revenue projections may not be
equal to what is distributed net to the Company. The Company's
future operating results are dependent upon many factors, including
but not limited to the following: (i) the Company's ability to
obtain sufficient capital or a strategic business arrangement,
including the sponsoring of general or limited partnerships, to
fund its expansion plans; (ii) the Company's ability to acquire
interests in commercially attractive properties to develop and/or
operate; (iii) the Company's ability to build the management and
human resources and infrastructure necessary to support the growth
of its business; (iv) competitive factors and developments beyond
the Company's control, including but not limited to the strength of
the overall economy; and (v) other risk factors inherent to the oil
and gas industry.
Company Contact: Angela Stokes Heather Age Allied Energy, Inc.
2800 Griffin Dr. Bowling Green, KY 42101 Phone: 866-256-5836 Fax:
800-251-9322 Website: http://www.alliedenergy.com Email:
info@alliedenergy.com
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