American Eagle Energy Corp. (NYSE: AMZG) announced Dec. 31 it suspended its 2015 operated drilling budget and does not anticipate resuming drilling operations until crude oil prices improve.
After drilling the Huffman 15-34S well in Divide County, N.D., in November, American Eagle released the drilling rig.
The Denver-based company expects to conduct completion operations in the first quarter of 2015 on two gross (1.9 net) wells (Byron 4-4 and Shelley Lynn 4-4N) in the Bakken/Three Forks play that were drilled during the fourth quarter ended Dec. 31. These operations are estimated to require a capital expenditure of about $4.5 million in 2015.
The company continues to be focused on capital discipline and maintaining liquidity.
American Eagle recently monetized all of its crude oil hedge positions for December 2014 through December 2015, generating proceeds of $13 million. The hedges represented about 414,000 barrels of oil at an average price of $89.59 per barrel. Proceeds will be used to improve the company liquidity position.
American Eagle has $175 million of outstanding indebtedness on its 11% secured bonds. The bonds do not have maintenance covenants.
Operated Well Development
During the fourth quarter, American Eagle added to production three gross (1.8 net) new operated wells and two gross (1.3 net) operated wells that were re-completed.
The Donald 15-33S (Three Forks long lateral) well was the last of six wells developed under the company's farm-out program. The Donald 15-33S extends the productive area two miles west of the Bryce 3-2 well and appears to prove up an additional four to six spacing units in the western part of the field. The well began producing oil in early October at an average of about 312 barrels of oil equivalent per day (boe/d) during the first 30 days of production.
The Rick 13-31 (Three Forks short-lateral) well with an 85% working interest was stimulated earlier in mid-October and began producing oil in late October. During the first 30 days of production, the Rick 13-31 well produced an average of about 267 boe/d.
The Huffman 15-34S (Three Forks long-lateral) well with a 94% working interest was stimulated in November using a slickwater stimulation and has been cleaning up after being put on pump in mid-December with rates exceeding 250 boe/d for the last few days, The Huffman 15-34S well is located between the Bryce 3-2 (Three Forks long-lateral) well that produced about 400 boe/d during the first 30 days, and the Donald 15-33S (Three Forks long-lateral) well that produced about 312 boe/d during the first 30 days.
Remedial completions to correct problems with faulty sleeves were performed during the fourth quarter of 2014 on the Shelly 3-2N (Three Forks short-lateral, 97% working interest) and the La Plata State 2-16 (Three Forks long lateral, 39% working interest) wells, both of which were drilled and completed during the first half of the year. Reperforating and restimulation operations were successfully conducted on both wells and they have been cleaned out and put on pump but no meaningful production data is available yet.
Production Volume Guidance
The company anticipates that its average production for the fourth quarter will be about 2,600-2,700 boe/d. The new estimate is a reduction from its previous guidance of between 2,700 boe/d to more than 3,000 boe/d due mostly to anticipated completion of the Byron 4-4 and Shelley Lynn 4-4N now scheduled for first quarter of 2015 rather than fourth quarter of 2014.
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