American Eagle Energy Charges Ahead
American Eagle Energy provided a general operations update on the Company's projects. The Company's proposed merger with Eternal Energy Corp. continues to progress, subject to the completion of remaining, standard regulatory and administrative processes. American Eagle's individual project updates include:
Hardy Field, Saskatchewan, Canada
The first development well in the field, Hardy S HZ 1A4-16-4B4-9-4-21W2, was drilled and cased in May, 2011. Completion plans included a 29-stage fracture stimulation of the Bakken horizontal well that placed a total of 429,000 pounds of sand and 6,400 barrels of water in the 1370 meter lateral section. The well is currently being evaluated and is projected to be placed on pump in the first week of August. Additional locations are being considered for the 2011 drilling program pending the outcome of the well testing. The existing producing well, Hardy S Re 2D7-9-3D2-16-4-21W2, continues to average approximately 40 BOPD.
Spyglass Project, Divide County, ND
The Spyglass Project is a Bakken and Three Forks play in northern Divide County, North Dakota. The first closing of the sale of half of the respective working interests in the Spyglass Project by American Eagle, and its proposed merger partner Eternal Energy Corp., to a third party occurred on May 26, 2011. The first transaction netted approximately $7.165 million divided equally between American Eagle and Eternal Energy. The previously announced second closing is now scheduled for August 2, 2011, and relates to the potential sale of an undivided 50% interest in approximately 800 additional net acres for roughly $700,000. In addition, the Company will complete the closing on the sale of an undivided 50% interest in 227 net acres for approximately $200,000 from the original closing. The proceeds from both of these subsequent closings will be divided equally between American Eagle and Eternal Energy
American Eagle and Eternal Energy requested regulatory approval for six 1,280-acre spacing units in an area of the Spyglass Project in which they expect to operate. Well permitting for two company-operated horizontal wells in these spacing units has started with the intention of drilling them in late 2011.
Approximately 5,000 acres of additional leasehold has been acquired in the western portion of the Spyglass project through purchase of two land packages and ongoing leasing efforts.
American Eagle and Eternal Energy have participated in drilling of three outside-operated wells in the second quarter of 2011 that are pending completion. One of these wells, fracture stimulated in mid-July, is the second offsetting Three Forks well to yield average flowing rates above 500 BOPD. The other two are expected to be fracture stimulated in August. American Eagle and Eternal Energy have elected to participate in 4 additional wells, with working interests ranging from 4.19% to 7.03%, operated by Crescent Point Energy Corp., SM Energy Company, and Samson Resources Company that are expected to be drilled in the current quarter.
Glacier Project, Glacier & Toole Counties, MT
The American Eagle Glacier Project is located in Montana portion of the Alberta Bakken play. The Company and its two partners control Bakken/Three Forks rights in slightly over 75,000 net acres.
Two vertical evaluation wells were drilled during the second quarter of 2011.
The FX 81-3 well was drilled to evaluate the Banff, Bakken, Three Forks, Nisku and Devonian Formations by deepening an existing well in the Southwest Cut Bank Sand Unit where American Eagle and its partners, FX Energy and Big Sky Operating, own a controlling interest in approximately 10,000 net acres about 6 to 10 miles southeast of multiple vertical and horizontal wells being completed by both Rosetta Resources, Inc and Newfield Exploration Company. The 81-3 well encountered oil shows in the Banff, Bakken and Three Forks and is scheduled to be fracture stimulated in August.
The FX American Eagle Big Sky 14-29 well was drilled in May as the first earning well associated with a large farm-in block east of the Cut Bank well structurally higher on the Kevin Sunburst Dome. A core of the Bakken and Three Forks encountered excellent oil saturation within a thick section including the Middle Bakken and Three Forks. The 14-29 well is scheduled to be fracture stimulated in August.
A third vertical assessment well is currently expected to be drilled in September, 2011 to evaluate the eastern portion of the Company's leasehold. Depending upon the results of the testing of the vertical wells, one or more horizontal wells are projected to be drilled during the fourth quarter of 2011.
Benrude Project, Roosevelt County, MT
The Benrude Project is high-impact Nisku Formation development project in Montana. A contract with Dawson Geophysical was signed for a focused 3-D seismic survey designed to optimize the structural location for the proposed development well. After acquiring and analyzing the seismic data, the new well is currently expected to be drilled in early 2012.
Richard Findley, the Company's Chief Executive Officer stated, "American Eagle has made significant progress on several of our projects despite the operational constraints associated with the exceptionally wet spring and high activity levels in these areas. The drilling of our Hardy and Glacier wells represents major steps forward for both of these projects and the consummation of several acreage acquisitions bodes well for future growth potential of the Company. The non-operated production results in Spyglass provide significant confirmation of the high potential of the Spyglass Project and furthers our efforts to build solid cash-flow and reserves as we move our focus towards company-operated drilling of our higher interest wells"