DENVER, Oct. 11, 2006 (PRIMEZONE) -- Mammoth Energy Group, Inc. (Pink Sheets:MMTH) announced today that it has entered into a Partnership Agreement with Allied Energy Group, Inc. (Pink Sheets:AGGI). Under the terms of the partnership, Allied Energy will invest $1.5 million into the natural gas project in Northeastern Oklahoma in exchange for a 33% working interest. This leaves Mammoth's wholly owned subsidiary, KMV Consulting, Inc., with a 66% working interest. The two companies are also working jointly on a shallow natural gas project in Colorado and an extensive project in northeastern Montana.
The two companies have agreed that the funds will be utilized to increase the net acres under lease in Oklahoma and to drill another 20 or more wells, which if all are successfully completed would put the total well count at 35 wells. Three wells were completed last week and are being brought on-line, which puts the current well count at 15 producing wells. Assuming 30 wells are producing like the current 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.
"We have been talking with Allied for the past four months and are pleased to be jointly working together to take this project to the next level," said Christopher Miller, Mammoth's CEO. "The data we can aggregate across 20 to 30 wells should be sufficient to generate a proven reserve report that we can then take to finance an aggressive drilling program in our project. This partnership has come at a critical time when we have an opportunity to take advantage of renewed interest in natural gas in northeastern Oklahoma."
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 recompletion, 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 expenses according to each company's proportional working interest.
About KMV Consulting, Inc.
KMV is focused on developing shallow gas projects in northeastern Oklahoma due to the low risk, blanket characteristics in the area that make it possible to drill and produce a well nearly every time. It is currently focused on developing its Rogers County, OK project into a property with between 5,000 and 8,000 total net acres leased where it can embark on a drilling program aimed at getting 150 to 200 wells on-line. With rigs readily available and shallow wells that can be drilled quickly, this project is positioned to grow consistently each month as new wells are brought on-line.
More information is available at the company's website at www.mammothenergygroup.com.
About Allied Energy Group, Inc.
Allied Energy Group, 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 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.
More information is available at the company's website at www.alliedenergy.com.
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