American Eagle Buys In North Dakota
Purchase of larger working interest in Spyglass area of North Dakota
American Eagle Corp. (OTCQX: AMZG) bought additional working interest in its operated properties in the Spyglass area of North Dakota from SM Energy Co. for $9.1 million.
The transaction, which closed on Jan. 4 and has an effective date of Sept. 1, 2012, includes SM Energy’s working interest in four different spacing units operated by American Eagle. The deal is the second of two pending acquisitions announced by the company at the start of the year. American Eagle will own 55% of the acquired interest in its Spyglass Property while its joint venture 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 1,975 barrels of oil per day (BOPD), with the associated working interest volumes equaling approximately 375 BOPD.
A seventh well has been drilled in the area, 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. 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 million.
"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," said Brad Colby , American Eagle's president. "We believe these acquisitions are a prudent use of capital enabling us to concentrate our interest in a group of de-risked properties."
American Eagle Energy Corp. is an independent upstream energy company focused primarily on exploiting unconventional resource plays within the Bakken and Three Forks formations. The company operated under the name Eternal Energy Corp. until December 2011 when it changed its name to American Eagle Energy Corp. upon its acquisition of American Eagle Energy Inc., another oil and gas company engaged in a similar business with which the company shared certain properties and prospects.