American Eagle Energy Corporation is pleased to announce the acquisition of additional working interest in several of the Company’s operated properties in the Spyglass area from SM Energy Company. The purchase price of $9,100,000 includes SM Energy’s working interest in four different spacing units operated by American Eagle. This transaction, which closed on January 4, 2013 and has an economic effective date of September 1, 2012, is the second of the two pending acquisitions referenced by the Company in the January 2, 2013 announcement of its financing agreement with Macquarie Bank Ltd. The Company will initially own 55% of the acquired interest and its Spyglass Property joint venture partner will own the remaining 45%.
The four spacing units affected by the transaction are located in T163N-R101W and T164N – R101W, Divide County, North Dakota and include 6 producing wells with the acquired working interests ranging from approximately 5% to over 34%. Total gross production from these wells is approximately 1975 BOPD, with the associated working interest volumes equaling approximately 375 BOPD. A seventh well has been drilled in the subject area, is awaiting completion, and is expected to be on production by mid-February. American Eagle currently projects that an eighth well will be drilled, completed, and on production by the end of March, 2013. A full development scenario for each of these spacing units is expected to include up to four wells completed in the Three Forks Formation and up to four additional wells completed in the Middle Bakken zone. Based on a third-party engineering report, the estimated net present value of the 8 active locations, discounted at 10% (NPV10), is approximately $18,000,000.
“These two acquisitions of producing properties in North Dakota will help bolster American Eagle’s position in the area and enable it to extend the remarkable growth we have experienced in 2012 into the upcoming year,” stated Brad Colby, American Eagle’s President. Colby continued, “We believe these acquisitions are a prudent use of capital enabling us to concentrate our interest in a group of de-risked properties.”
