SOURCE: Allied Energy Group Inc.

October 11, 2006 16:45 ET

Allied Energy Group, Inc. Announces Joint Venture With Mammoth Energy Group

BOWLING GREEN, KY -- (MARKET WIRE) -- October 11, 2006 -- Allied Energy Group, Inc. (PINKSHEETS: AGGI) announced today a Joint Venture with Mammoth Energy Group, Inc. Under the terms of the partnership, AEG will invest $1.5 million into the Rogers County, OK Coal Bed Methane project in exchange for a 33% working interest, leaving Mammoth's wholly owned subsidiary, KMV Consulting, Inc., with a 49.5% net revenue interest. Under terms of the agreement, the two companies will also be working jointly on a shallow natural gas project in Colorado and also a large project in northeastern Montana.

The two companies have agreed that the funds will be utilized to increase the net acres under lease in Oklahoma, Colorado, and Montana and have already used some funds to drill, test, and complete three new wells in the Oklahoma play. The funding should be sufficient to drill another 20 or more wells, which, if all are successfully completed, would put the total well count at 35 wells. Assuming 30 wells are completed and produce like the first 12 wells, this would put total daily production at about 1,500,000 cubic feet per day (1,500 MCFD). With production at these levels, management believes that it can renegotiate a better gas purchase price, lower its line charges, gain economies of scale on well operations, and increase the project's overall gross profits.

"The company is delighted to work with Mammoth Energy Group on this project and is confident that the results from the first twenty to thirty program wells will warrant a more aggressive drilling program for the future," said Steve Stengell, Allied's Sr. Vice President for Operations. "The predictable nature of coalbed methane development in this area is important in developing the company's reserve base," said Stengell.

KMV Consulting will operate the project and manage the drilling of new wells, which typically cost significantly lower than other larger scale drilling programs since the wells are shallow and can be drilled in a day or two. There are several wells that are shut-in and are just awaiting re-completion, which costs even less and are faster to bring on-line. After the $1.5 million is utilized, the two companies will each be responsible for their pro-rata working interest expenses on additional development of this area.

About Allied Energy Group

Allied Energy Group, 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 employs geologists, petroleum engineers, seismic specialists, and financial analysts whose combined industry experience is essential to the success of each project. Allied Energy Group'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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Certain statements in this release and the attached corporate profile that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such 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, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to the Company's ability to: (i) obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; and (iv) other risk factors.

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