Eternal Energy announced the following operational update on its Spyglass project in North Dakota.
Activity in the Company's Spyglass Project, a Bakken and Three Forks play in Divide County, North Dakota, increased significantly during the third quarter following a number of weather-related delays in the second quarter.
The second closing of the previously announced sale of half of the respective working interests in the Spyglass Project by Eternal Energy and its proposed merger partner American Eagle Energy Inc. ("American Eagle") to a third party occurred on August 5, 2011. The second closing involved sale of an undivided 50% interest in approximately 760 acres for approximately $642,000 that was divided equally between Eternal Energy and American Eagle.
During the third quarter, the Company has elected to participate in eight non-operated wells within the Spyglass Project. The wells will be operated by Samson Resources Company, SM Energy Company and Crescent Point Energy Corp. Three wells that were pending completion in the Three Forks Formation were stimulated and put on production at average initial flowing rates of 514 bopd, 574 bopd and 644 bopd over a fourteen-day period. The Company's approximate working interest in these wells is 2.28%, 0.17% and 3.60%, respectively. The other five wells (two Bakken and three Three Forks), were drilled and are pending completion. The Company's approximate working interests in these five wells ranges from 1.88% to 6.24%. An additional three non-operated wells are scheduled to be drilled prior to year end, in which the Company will own approximate working interests ranging from 1.50% to 16.00%. Based on this projected drilling schedule and similar production results, Eternal Energy and American Eagle could show a joint 2011 exit rate of approximately 240 bopd, net, from the non-operated Spyglass properties.
"This is an exciting time for our shareholders and management team," stated Brad Colby, the Company's President and CEO. "It is rewarding to see the fruits of our labors begin to take shape in the form of successful, producing wells. We look forward to expanding our drilling program in the near-term in order to exploit our substantial acreage position within the Bakken and Three Forks plays."
The Company, along with its working interest partner, American Eagle, has secured a drilling rig and expects to begin drilling company-operated wells within the Spyglass Project in 2011. Efforts to permit an additional three Bakken and three Three Forks wells are underway. The Company expects that the first two wells will be drilled prior to December 31, 2011.
Including land packages purchased during the second quarter of 2011, along with ongoing leasing efforts, the total acreage jointly controlled by Eternal Energy and American Eagle within the project area is approximately 14,700 acres.
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