American Eagle Energy Corporation (ticker: AMZG) is engaged in the exploration and production of petroleum and natural gas in North America. Currently, American Eagle is focused primarily on exploiting unconventional resource plays within the Bakken and Three Forks formations. The Company operated under the name Eternal Energy Corp. until December 2011 when it changed its name to American Eagle Energy Corporation upon its acquisition of American Eagle Energy Inc., another oil and gas company engaged in a similar business with which the Company shared certain properties and prospects.
AMZG and its joint venture (JV) partner announced on October 1, 2013, a revised agreement for the Spyglass play. The purchase, sale and option agreement is dated August 12, 2013, approved August 16, 2013, and modified September 30, 2013. The contract listed the following:
- AMZG acquires approximately 9,700 net acres in Spyglass from the JV partner for $47 million cash. The acres currently produce roughly 750 BOEPD. The transaction date has been extended from September 30, 2013 to October 7, 2013, and the effective date of the transaction is June 1, 2013.
- AMZG holds the option to acquire an extra 8,900 net acres in Spyglass from the JV partner for an additional $47 million. The properties currently produce roughly 450 BOEPD. The option may be exercised by American Eagle anytime on or before March 31, 2014, with 20 days advance written notice. If exercised, the effective date of the second transaction would also be June 1, 2013.
AMZG currently has operating control of 14 contiguous drilling spacing units (DSUs) in the Spyglass Project area, located in northwestern Divide County, North Dakota.
Spyglass Operations based on JV acquisitions, pro forma for Q2’13 results on 14 DSUs.
|
|
Net Acreage |
Working Interest |
BOEPD |
|
Q2’13 |
15,900 |
40% |
1,300 |
|
First Acquisition |
25,500 |
54% |
2,050 |
|
Second Acquisition (proposed) |
34,400 |
63% |
2,500 |
Overall, American Eagle Energy holds interests in approximately 15,900 total net acres with operable control of approximately 39 drilling spacing units (DSUs) in Spyglass, and averaged roughly 1,300 BOEPD in Q2’13.
Common Stock Offering and Amendment to Credit Facility
AMZG amended its credit facility following the purchase on October 1, 2013. American Eagle obtained $40 million to complete the transaction, and therefore reduced its working capital requirement to $23.5 million from $33.0 million.
On October 2, 2013, AMZG announced the sale of 13,709,386 shares of its common stock at $1.70 per share. The sale closed on October 7, 2013.
On October 10, 2013, AMZG announced the sale of an additional 2,056,408 shares of common stock at the same price. The new offering is a 15% increase over its initial sale. AMZG’s gross proceeds from the two common stock offerings will be approximately $26.8 million, with net proceeds of approximately $24.8 million after the deduction of underwriting discounts, commissions, and other expenses.
The proceeds will be used to fund the first half of AMZG’s most recent acquisition and its capital budget for the balance of 2013. Any remaining equity will be used for general corporate purposes, including working capital.
American Eagle Energy previously completed the sale of 5 million shares of its common stock at $2.00 per share on August 9, 2013. Following the offering on October 10, 2013, AMZG will have a total of 70,834,140 shares outstanding and roughly $34 million cash on hand. According to its release on October 7, 2013, AMZG has a total of $108 million in debt outstanding.
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