SOURCE: Allied Energy, Inc.

January 19, 2011 10:11 ET

Allied Energy Provides a Production Operations Update for Grimes County, Texas

BOWLING GREEN, KY--(Marketwire - January 19, 2011) - (PINKSHEETS: AGGI) Allied Energy provided the following report for its Allied Howard #1H & #2H horizontal Georgetown Buda wells in Grimes County, Texas.

The Allied Howard #2H was recently turned into production at an initial rate approximating ~ 4 million cubic feet of gas per day (including natural gas liquids) and associated condensate, and the Allied Howard #1H continues to produce in the range of 1.8 - 2 million cubic feet of gas per day (including natural liquids) along with associated condensate. Although no assurance can be made and risks do exist, the Company anticipates that combined production from both wells of methane gas, natural gas liquids and condensate should potentially stabilize in the range of ~170 million cubic feet of gas per month equivalent, at least for the short-term. Although production may increase or decline for the short-term, production rates typically experience an annual decline over the productive life of the well(s).

It generally takes 4-6 months to better manage downtime and lease operating expenses (LOE) for horizontal wells of this size and depth. Typically, LOEs decline as a percentage of gross revenue for a significant portion of the life of the well. 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.

The Company has selected its third horizontal Georgetown Buda location, the Allied Howard #3H, as a direct offset to the Apache Wells E #1H location and is currently making preparations to drill in the near future. The Apache Wells E #1H well, to date, has been what appears to be 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 very pleased with the early production volumes in Grimes County and plan to continue to utilize many of the latest technological advancements in horizontal drilling in Grimes County and other areas of Central-East 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. Oil and natural gas volumes are often reported in an equivalent amount of one or another petroleum product as determined by prices and volumes of the petroleum produced. Production volumes herein were reported from the wellhead via electric flow meters.

About Allied Energy

Allied Energy, Inc. (PINKSHEETS: AGGI) is an independent oil and natural gas operator and developer primarily engaged in the exploration, development, and production of oil and natural gas in the continental United States. The Company relies upon its confidential 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.

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