Allied Energy, Inc. Announces Operations Updates
BOWLING GREEN, KY--(Marketwire - Apr 26, 2012) - Allied Energy, Inc. ("Company") (PINKSHEETS:AGGI) today announced updates relating to its operations.
Cherokee County, Texas: During March 2012, the Company commenced operations to re-enter the Ragsdale #1 well located on the Ragsdale Estate lease, which totals approximately 186 acres in the East Texas Basin. The drilling plan calls for re-entry into the original well bore to a depth of approximately 5,230', at which depth a deviated/slant hole will be drilled to an approximate total measured depth of 10,160'. Based upon logs from the original well and additional areal well control data, it is expected that the Pettet D formation will be encountered, with an anticipated pay-zone thickness of 10'-15', but there is no assurance that this will occur. The well operator has advised that total depth should be achieved and logging operations should begin no later than the end of April.
One or more of the general partnerships sponsored by the Company holds a 32% working interest in the Ragsdale #1 gas well. The remaining working interest (68%), which currently is held by the Company, may be used to satisfy certain obligations of the Company.
Leon County, Texas: The Company has successfully completed the Champion Ranch 1-H oil well drilled in Leon County, Texas. The well was drilled to a total depth of 12,015 feet, followed by the completion of a 17-stage fracking procedure. A new pump jack was recently installed and commenced operation on April 17, 2012.
One or more of the general partnerships sponsored by the Company holds a majority of the working interest in the Champion Ranch 1-H oil well. The Company owns a 25% working interest (4.75% net revenue interest), inclusive of its interests in the general partnerships.
Wood County, Texas: During November 2011, the Rock Hill #1 well located on the Quitman Lake lease was drilled to a total depth of 10,080 feet. During drilling operations, several changes were made due to final placement of the bottom hole location. The well was plugged back on two occasions in order to relocate the bottom hole position. Analysis of the well log indicated several potentially productive intervals that warranted testing. Despite the difficulties encountered during drilling operations, the well was approved for completion in several intervals within the Rodessa and Travis Peak formations. Oil and gas production from the well has been disappointing, averaging 4 bopd and 100mcf per day (flared). Based upon these production numbers, the well is considered non-commercial.Our production engineers believe that the poor production is due primarily to complications resulting from a fault that was encountered during drilling operations.
After further research and well evaluation, our consulting engineers believe that it will be possible to avoid this fault during the drilling of subsequent wells on nearby acreage, although there can be no assurance that this will occur.
Working interest in the Rock Hill #1 prospect is held by one or more general partnerships sponsored by the Company. The Company holds a 24% working interest (18% net revenue interest), inclusive of its interests in the general partnerships.
Leon County, Texas: In April 2011, the Company, on behalf of certain of its sponsored partnerships, managed the drilling and completion of the Wallrath #1H, a horizontal oil well in Leon County, Texas. The well continues to produce at commercial levels, and in March 2012, produced an average of 130 barrels of oil per day. The Company holds a 13.38% working interest (0.66% net revenue interest), inclusive of its interests in the general partnerships.
Lavaca County, Texas: During December 2011, the Company purchased working interests in the #1 Konvicka well located on the Yoakum East Property lease. The well, originally drilled in August 2010, and testing at over 2,000 MCF per day, did not sustain acceptable flow rates. In an attempt to increase production, a fracking operation was scheduled and completed in January 2012. According to recent reports from the on-site engineers, due to unknown reasons, the fracking procedure failed. The operator has completed swabbing operations and has performed a casing evaluation. A report of the failed fracking procedure is being finalized by the Company's engineer, and the operator is currently evaluating the merits of performing a second frack or a re-completion in an up-hole zone in an attempt to improve the chances of producing a commercially viable well. It is not currently known whether it will be possible to bring the well into production, and, if so, what levels of production may be expected. The Company holds a 44% working interest, (32.56% net revenue interest), in the #1 Konvicka well.
Grimes County, Texas: The Howard 1H and the Howard 2H gas wells currently are being operated by Allied Operating Texas, LLC, on behalf of partnerships sponsored by the Company. The Company owns working interests of 16.4% and 13.38%, and net revenue interests of .85% and 2.53%, respectively (inclusive of its interests in the general partnerships), in the Howard 1H and the Howard 2H wells.
The two wells had been "shut-in" since September 2011 for approximately 3 1/2 months, by the owner of the pipeline through which the production gas flows, for unacceptably high levels of CO2 detected in the production gas. In response to the pipeline owner's action, an amine facility was installed and placed into service resulting in a return to acceptable levels of CO2.
As of December 2011, the Howard IH and Howard 2H gas wells were placed back into production. The production of hydrocarbons of the two wells has returned to flows approximately similar to those experienced immediately prior to the "shut-in" period and the operator continues to monitor and fine-tune the amine plant in order to maximize efficiency and production.
Rogers County, Oklahoma: The Company is currently evaluating all the general partnerships for which the Company acts as managing general partner in Rogers County, OK. These general partnerships sponsored by the Company have approximately 94 wells in production or under development from which gas and/or oil are being produced from a variety of formations.
The Company originally focused on this area in late 2006, with the primary objective being to develop the coal bed methane (natural gas) reserves that occur in multiple layers at relatively shallow depths. Over the last five years, the Company has reduced its drilling and development programs with respect to the leases in the area, as the market price of natural gas has steadily declined to historically low levels.
As a result of these low market prices, many of the wells in Rogers County that might have been profitable producers at 2007 prices, are now unable to generate sufficient revenue to cover the lease operating expenses.
The Company is presently conducting a review of production and expense records to determine the financial condition of the partnerships and the status of each of the partnerships' wells. Based upon the findings of the review, we expect to make specific recommendations either to 1) "shut-in" wells that might benefit by a future rebound in the market prices of gas, 2) plug and abandon wells deemed to be non-commercial, or 3) continue to operate wells that are profitable or may be candidates for enhancement procedures or re-engineering to improve production.
Appointment of CFO: In July 2011, the Company entered into an agreement with Tatum LLC ("Tatum") to engage the services of Gene Kamarasy, a partner of Tatum, as interim Chief Financial Officer. Since that time, Mr. Kamarasy has been in charge of the accounting, compliance and financial functions, has moved aggressively towards the restructuring of the accounting and finance departments of the Company, and is bringing the Company current in its financial reporting requirements. Mr. Kamarasy brings with him over 30 years of experience in the finance and accounting industries and has extensive experience in the restructuring of companies. Tatum is a national, professional services firm supporting the offices of the CFO and CIO in many companies within and outside the U.S.
About Allied Energy:
Allied Energy, Inc. is engaged in the oil and gas exploration and development business, with operations located primarily in Texas, Oklahoma and Ohio. The Company sponsors oil & gas partnerships through which it raises funds for the drilling and development of oil & gas wells. The Company serves as managing general partner of the partnerships and often owns differing partnership interests in the partnerships and/or differing direct interests in the properties in which the partnerships participate.
The Company's subsidiaries include Allied Operating, LLC and Allied Operating, Texas, LLC, two operating companies that are used to manage the drilling, development and operations of the oil & gas drilling partnerships sponsored by the Company, as well as for other non-affiliated oil and gas companies that are joint interest owners in drilling activities owned primarily by partnerships sponsored by the Company. The Company is also majority owner of Allied Gas Transmission, Inc., which owns the pipeline system used to transmit production from gas wells located in Rogers County, Oklahoma to gas purchasers.
The Company's ultimate strategic focus is on the development of oil and natural gas production and reserves. The Company believes that its oil and natural gas development strategy will provide growth to the Company in the future. For more information: www.alliedenergy.com
Forward-Looking and Continuing Statements:
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 including but not limited to geological and geophysical risks inherent to the oil and gas industry, uncertainties and other factors that may cause the actual results, price of oil and natural gas, state of the economy, industry regulation, 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's future operating results are dependent upon many factors, including but not limited to the Company's ability to: (i) obtain sufficient capital or strategic business arrangements to fund its drilling 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, including but not limited to the strength of the overall economy; and (iv) other risk factors inherent to the oil and gas industry.
Allied Energy, Inc.
2427 Russellville Road
Bowling Green, KY 42101