DENVER, Dec. 7, 2011 /PRNewswire/ -- American Eagle Energy Inc. (OTCBB: AMZG; "American Eagle") and Eternal Energy Corp. (OTCBB: EERG; "Eternal Energy") are pleased to announce that American Eagle and Eternal Energy, along with their working interest partner, Passport Energy LTD ("Passport", TSX: PPO), have successfully completed the first development well in the field, Hardy S HZ 1A4-16-4B4-9-4-21W2 (the "Hardy 4-16" well).
The Hardy 4-16 well was put on production in September, following a 28-stage fracture treatment in the 4,500 ft lateral section, well clean-out and various earlier logistical and weather delays. After an initial clean-up period, the Hardy 4-16 well averaged approximately 165 BOPD during the last ten days of September with an average oil cut of approximately 30%. The well shows a very high, stable fluid level, which is indicative of higher production potential. After recently installing upgraded production equipment, the well has been returned to production at oil rates ranging from 120 to 140 BOPD and oil cuts from 30% to 35%. American Eagle and Eternal Energy will be monitoring the production behavior and expect to be gradually increasing the pumping rates to optimize production over the next few weeks with the goal of returning the Hardy 4-16 well to its initial production levels.
American Eagle and Eternal Energy are also pleased to announce that they have received license approval for the next proposed horizontal well, to be located approximately one mile northwest of the Hardy 4-16 well. Current plans are to drill this well during the next three months, subject to rig availability. This will be the second earning well to be drilled under the farmout agreement with Passport, pursuant to which Passport will pay 38.5% of the well costs to earn a 25% working interest in the well and surrounding leases. The remaining working interest will be shared equally by American Eagle and Eternal Energy, the operator for the well. An application to drill an additional well, to be located approximately one mile southwest of the Hardy 4-16 well, has been submitted and is pending approval.
Plans are also underway to improve operating efficiency and reduce downtime by connecting the Hardy 7-9 well via flowline to the Hardy 4-16 well. The Hardy 7-9 well is currently producing an average of 40 BOPD. This will be the first step in creating the necessary production infrastructure for a full-field development program.
American Eagle, Eternal Energy, and Passport have also signed a Farmin and Option Agreement with a large independent Canadian oil and gas company covering 34 net sections of land in close proximity to the Hardy property.
The agreement provides for Passport, as operator (50%), American Eagle (25%), and Eternal Energy (25%) collectively to pay 100% of the drilling and completion costs of two Bakken horizontal wells to earn an aggregate 100% BPO interest and an aggregate 65% APO interest in ten contiguous sections (5 sections per well) from the surface to the base of the Three Forks zone, subject to the payment of Crown royalties and GORRs. American Eagle, Eternal Energy, and Passport have the option to drill five additional rolling option wells to earn the same interest in the balance of the unearned 34 sections.
Drilling of the first well is expected commence during the first quarter of 2012, subject to rig availability. The drilling of the second commitment well will be commenced within 60 days of rig release of the first well. The drilling of the first of the five option wells is to be commenced within 90 days of rig release of the second commitment well and each successive well is to be commenced within 90 days of rig release of the preceding option well until all option wells are drilled or the option to drill has expired.
The estimated gross costs of drilling, completing and equipping each projected 3,500 meter (measured depth) Bakken horizontal well is approximately $3,200,000.
"American Eagle is extremely pleased with the initial results of our first development well in the Hardy Bakken Field," stated Richard Findley, American Eagle's Chief Executive Officer. "The high productivity displayed by the well will provide a solid economic foundation for the further development of this important Bakken resource. The farmin agreement will significantly expand the opportunity in the Hardy area and increase the potential for creating a large core development area. When we combine our successful efforts at Hardy with the previously announced North Dakota Spyglass production update, we are well on our way to delivering the significant reserve and cash flow growth expected for the year."
About American Eagle Energy Inc. and Eternal Energy Corp:
American Eagle Energy Inc. is an oil and gas company engaged in the exploration of petroleum and natural gas. The company was incorporated in Nevada on March 14, 2007 to engage in the acquisition, exploration and development of natural resource properties.
Eternal Energy Corp. is an oil and gas company engaged in the exploration of petroleum and natural gas. The company was incorporated in Nevada on July 25, 2003 to engage in the acquisition, exploration, and development of natural resource properties.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this press release contains statements that are forward-looking, such as statements relating to the future anticipated direction of the industry, plans for future expansion, various business development activities, planned capital expenditures, future funding sources, anticipated sales growth, potential contracts, and/or aspects of litigation. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and, accordingly, such results may differ from those expressed in any forward-looking statements made by, or on behalf of, each of American Eagle Energy Inc. and Eternal Energy Corp. These risks and uncertainties include, but are not limited to, those relating to development and expansion activities, dependence on existing management, financing activities, and domestic and global economic conditions. Persons are encouraged to read (i) American Eagle's Annual Report on Form 10-K for the eight-month period ended December 31, 2010, and its Quarterly Report on Form 10-Q for the three-month period ended September 30, 2011, and (ii) Eternal Energy's Annual Report on Form 10-K for the year ended December 31, 2010, and its Quarterly Report on Form 10-Q for the three-month period ended September 30, 2011, as well as the other documents filed by the companies with the Securities and Exchange Commission for meaningful cautionary language in respect of forward-looking statements in this joint press release. Interested persons are able to obtain free copies of filings containing information about American Eagle and Eternal Energy at the SEC's internet site (http://www.sec.gov). Neither company assumes any obligation to update any of these forward-looking statements.
SOURCE Eternal Energy Corp.; American Eagle Energy Inc.