DENVER, Aug. 19, 2013 /PRNewswire/ -- American
Eagle Energy Corporation (OTCQX: AMZG) (the "Company" or
"American Eagle") announced today that it has entered into a
Purchase, Sale and Option Agreement with a Joint Venture Partner
("JV Partner") that increases the Company's net acreage and share
of production on wells that it currently operates, as well as
interests in future wells that it plans to develop as the operator
in its Spyglass Project area in the Williston Basin in northwestern Divide County, North Dakota.
Highlights of Agreements
- For cash consideration of $47
million, American Eagle agrees to acquire from the JV
Partner approximately 9,300 net acres in Spyglass with current
production of approximately 600 barrels of oil equivalent per day
("BOEPD");
- American Eagle has an option through March 2014 to acquire from the JV Partner an
additional 9,300 net acres in Spyglass that is currently producing
approximately 600 BOEPD for an additional $47 million.
Purchase, Sale and Option Agreement with JV Partner
American Eagle and the JV Partner are parties to a Joint
Operating Agreement ("JOA"), pursuant to which American Eagle is
the operator. The JV Partner has agreed to sell a portion of its
interests in Spyglass to American Eagle in a Purchase, Sale and
Option Agreement dated August 12,
2013 and approved August 16,
2013. At closing, which is scheduled for September 30, 2013, American Eagle will pay
$47 million in cash to the JV Partner
for approximately 9,300 net acres in the Spyglass Project area in
northwestern Divide County, North
Dakota ("First Property"). The purchased assets include
approximately 600 BOEPD of current production. The effective date
of the transaction will be June 1,
2013. Purchase price adjustments will be included for well
production, operating expenses and development costs that occur
after the effective date.
American Eagle has an option to purchase additional interests of
approximately 9,300 net acres ("Second Property") in the same
Spyglass Project area in northwestern Divide County, North Dakota with current
production of approximately 600 BOEPD for an additional
$47 million. The option may be
exercised by American Eagle anytime within 180 days after the close
of the First Property, which would be March
29, 2014, based on the current scheduled close date. If
exercised, the effective date of the second transaction would also
be June 1, 2013.
Impact of Purchase, Sale and Option Agreement on American
Eagle
During second quarter of 2013, American Eagle reported sales
production that averaged approximately 1,300 BOEPD. The Company has
operating control of 14 contiguous drilling spacing units ("DSUs")
in a proved area within its Spyglass Project with an average
working interest of approximately 40%. American Eagle has interests
in a total of approximately 15,900 net acres in Spyglass with
operable control of approximately 39 DSUs. Upon the closing of the
First Property purchase transaction, the Company estimates that its
average net production for second quarter 2013 on a pro forma basis
would be approximately 1,900 BOEPD, with an average working
interest of approximately 52% on its 14 proved DSUs and a total of
approximately 25,100 net acres in Spyglass. Should American Eagle
exercise the option to purchase the Second Property, the Company
estimates that its average net production for second quarter 2013
on a pro forma basis would be approximately 2,500 BOEPD, with an
average working interest of approximately 63% on its 14 proved DSUs
and a total of approximately 34,400 net acres in Spyglass.
Management Comments
Brad Colby, President and CEO of
American Eagle, said, "We are excited about the operational success
we have experienced in our Spyglass Project area and the strong
relationship we have with our JV Partner. The purchase transactions
will increase the Company's working interest, which will
immediately add to our production, cash flow, and proved reserves.
The transactions will give us a larger stake in developing future
operated wells in which 14 contiguous DSUs are already proven with
production from our 20 operated wells. We believe the fully
developed value of our proven area in Spyglass is a compelling risk
/ reward proposition considering the attractive well economics with
low well development costs and quick payback. We continue to
increase our position in Spyglass and to position the Company for
significant growth in production and cash flow."
ABOUT AMERICAN EAGLE ENERGY CORPORATION
American Eagle Energy Corporation is an independent exploration
and production operator that is focused on acquiring acreage and
developing wells in the Williston
Basin of North Dakota and
Montana, targeting the Bakken and
Three Forks shale oil formations.
The Company is based in Denver,
CO. More information about American Eagle Energy can be
found at www.americaneagleenergy.com or by contacting investor
relations at 303-798-5235 or ir@amzgcorp.com. Company filings with
the Securities and Exchange Commission can be obtained free of
charge at the SEC's internet site at www.sec.gov.
SAFE HARBOR
This press release may contain forward-looking statements
regarding future events and the Company's future results that are
subject to the safe harbors created under the Securities Act of
1933 (the "Securities Act") and the Securities Exchange Act of 1934
(the "Exchange Act"). All statements other than statements of
historical facts included in this press release regarding the
Company's financial position, business strategy, plans and
objectives of management for future operations, industry
conditions, and indebtedness covenant compliance are
forward-looking statements. When used in this report,
forward-looking statements are generally accompanied by terms or
phrases such as "estimate," "project," "predict," "believe,"
"expect," "anticipate," "target," "plan," "intend," "seek," "goal,"
"will," "should," "may" or other words and similar expressions that
convey the uncertainty of future events or outcomes. Items
contemplating or making assumptions about, actual or potential
future sales, market size, collaborations, and trends or operating
results also constitute such forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties and important factors (many of which are beyond the
Company's control) that could cause actual results to differ
materially from those set forth in the forward-looking statements,
including the following: general economic or industry
conditions, nationally and/or in the communities in which the
Company conducts business, changes in the interest rate
environment, legislation or regulatory requirements, conditions of
the securities markets, our ability to raise capital, changes in
accounting principles, policies, or guidelines, financial or
political instability, acts of war or terrorism, other economic,
competitive, governmental, regulatory and technical factors
affecting the Company's operations, products, services, and
prices.
The Company has based these forward-looking statements on its
current expectations and assumptions about future events.
While management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory, and other risks, contingencies,
and uncertainties, most of which are difficult to predict and many
of which are beyond the Company's control. The Company does not
assume any obligations to update any of these forward-looking
statements.
INVESTOR RELATIONS CONTACT:
Marty Beskow
Vice President of Capital Markets and Strategy
American Eagle Energy Corporation
303-798-5235
ir@amzgcorp.com
www.americaneagleenergy.com
Brad Holmes
EnergyIR
713-654-4009
B_holmes@att.net
SOURCE American Eagle Energy Corporation
