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January 10, 2014
07:04 EDTAMZGAmerican Eagle Energy provides operation update
American Eagle Energy announces an update to operations and guidance for production and operated well development in its Spyglass Project area in northwestern Divide County, North Dakota. During the quarter ended December 31, 2013, American Eagle added four operated wells to production in its Spyglass Project area consisting of two field extension wells and two infill wells. The extension wells included one Three Forks producer and one Middle Bakken producer and the two infill wells are producing from the Middle Bakken formation. Two of the wells are part of the Farm-Out Agreement in which the company's JV partner pays 100% of the company's working interest share of well development costs for up to six wells, all of which will be operated by American Eagle. The company does not have a 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 initial well bore interests revert back to it, including a 30% net revenue interest. The other two wells are part of the Carry Agreement in which the JV partner pays 100% of the company's working interest share of well development costs for up to five wells, all of which will be operated by American Eagle. The company initially receives 50% of its net revenue interest in each well's production over the first two years or until the JV partner has recouped 112% of its development costs on a per-well basis, after which 100% of the company's initial well bore interests revert back to it. The two Farm-Out wells were brought onto production during November and the two Carry wells were brought onto production during October. Since American Eagle receives no net revenue interest on the Farm-Out wells and only receives half of its net revenue interest on the Carry wells, contribution from these wells to Q4 net production was minimal. However, the wells are beneficial to American Eagle's future growth by extending the proved producing area in both the Three Forks and Middle Bakken formations to the west of the company's current producing areas in Spyglass.
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