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American Eagle Energy Accelerating Development In Spyglass

Stocks in this article: AMZG









DENVER, Aug. 19, 2013 /PRNewswire/ --  American Eagle Energy Corporation (OTCQX: AMZG) (the "Company" or "American Eagle") and a Joint Venture Partner ("JV Partner"), collectively (the "Parties") have entered into a Carry Agreement and a Farm-Out Agreement pursuant to which the JV Partner will fund the drilling and completion of up to 11 new wells in the Spyglass Project area, which is located within the Williston Basin in Divide County, North Dakota. The wells will be operated by American Eagle.

Highlights of Agreements

  • JV Partner agrees to pay 100% of the Company's working interest share of well development costs for up to 5 Bakken wells that will be operated by American Eagle, with American Eagle initially receiving 50% of the Company's net revenue interest in each well's production over the first two years or until JV Partner has recouped 112% of development costs on a per-well basis, after which 100% of the Company's well bore interests revert back to American Eagle; and 
  • JV Partner agrees to pay 100% of the Company's working interest share of well development costs for up to 6 wells targeting the Three Forks and Bakken formations that will be operated by American Eagle, with the JV Partner initially receiving 100% of the Company's net revenue interest in each well's production until the JV Partner has recouped 112% of development costs on a per-well basis, after which 30% of the Company's individual well bore interests revert back to American Eagle. 

Carry Agreement with JV Partner

American Eagle and the JV Partner entered a Carry Agreement in which the JV Partner desires to facilitate development of Bakken wells in the Spyglass Project area by agreeing to pay for 100% of the Company's working interest share of well development costs for up to five Middle Bakken wells that will be developed and operated by American Eagle.  The JV Partner will fund up to 120% of the original authorization for expenditure ("AFE") amount. If exceeded, the Parties will share the excess costs based on their original working interests. Initially, American Eagle will receive 50% of its net revenue interest from production on each of the five carried wells, and the JV Partner will pay for 50% of the Company's working interest share of lease operating expenses ("LOE"), for a period of two years, or until the JV Partner has recouped 112% of payout on a per-well basis, whichever occurs sooner. If 112% of payout is not achieved on a per-well basis within the first two years, American Eagle will pay the JV Partner for the remaining obligation, at which time 100% of the Company's well bore interest on a per-well basis will revert back to American Eagle.

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