American Eagle Energy Divests Stake in Spyglass Proj.
American Eagle Energy and its proposed merger partner Eternal Energy, and a third party signed two related Purchase and Sale Agreements for the sale by American Eagle and Eternal Energy of half of their respective interests in the Spyglass Project located in Divide County, North Dakota. The closing of the first transaction occurred today and relates to the sale of an undivided 50% interest in approximately 8,188 net acres for approximately $7.165 million to be divided equally between American Eagle and Eternal Energy. Up to an additional undivided 50% interest in 714 net acres may be sold to the third party on the same terms and conditions as part of the first transaction in the near term. The closing of the second purchase and sale agreement is currently scheduled for July 26, 2011, and relates to the potential sale of an undivided 50% interest in approximately 1,096 additional net acres for approximately $959,000 to be divided equally between American Eagle and Eternal Energy. The further closing of the first transaction and the closing of some or all of the second transaction remains subject to confirmation by the purchaser of certain aspects of title or other previously granted preferential sale rights. The purchaser is a wholly-owned subsidiary of a publicly traded company with a market cap in excess of $10 billion.
American Eagle and Eternal Energy have recently sought approval for six 1,280 acre spacing units in an area of the Spyglass Project in which they expect to operate and currently plan to drill two horizontal wells in the near term. Eternal Energy will retain operatorship for the project.
The Spyglass Project is a Bakken and Three Forks play in northern Divide County, North Dakota, that has seen a recent increase in drilling in the area. American Eagle and Eternal Energy hold non-operated working interests in several wells drilled in 2011 by SM Energy and by Samson Resources. During the remainder of this year, American Eagle and Eternal Energy expect to participate in up to four additional non-operated wells to be drilled by these parties.
Richard Findley, the Company's Chief Executive Officer stated, "American Eagle is excited to consummate this sale, which will provide a significant capital influx to the Company while it still retains a major interest in its Spyglass Project. The ability to accelerate our strategic growth plan in the near term is an important component of this transaction."