American Eagle Energy announced that, effective January 26, 2011, the Company and Big Sky Operating LLC ("Big Sky") have entered into a Farm-in Agreement with Somont Oil Company Inc. ("Somont") on an approximate 15,000 acre leasehold position owned by Somont, located in Toole County, Montana. Under terms of the Agreement, the initial test well will target the Bakken Formation and will spud by June 30, 2011. American Eagle and Big Sky will each own a 50% working interest before payout in the initial test well and a 37.5% working interest after payout. American Eagle and Big Sky have the right to drill subsequent wells on the farm-in leasehold at terms substantially the same as those for the initial test well. All of such wells in the prospect area will be operated by American Eagle.
"The execution of the Farm-in Agreement with Somont Oil Company represents the second part of our three-prong strategy to obtain large, contiguous acreage positions in both the Bakken Basin Facies and the Bakken Dome Facies plays," stated Richard Findley, the Company's President and Chief Executive Officer. "This agreement marks another milestone in our effort to become a major operator in this developing Bakken play."
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