Glacier Project
The Glacier Project is located in northwest Montana, in what many refer to as the South Alberta Basin Bakken Play. This project shares many similarities with the Williston Basin Bakken Play. Both plays focus on the presence of porous, low permeability reservoirs adjacent to the world-class mature source rocks of the Bakken Shales. The application of fracture stimulation in horizontal wellbores within this system has proved to be the key to unlocking the high potential of this type of resource play.
Much has been written about the Bakken Shale as a world-class source rock. Where it is "mature," a combination of thickness, organic content and temperature combine to generate enormous volumes of oil. The attached map of the Glacier Project identifies the locations where the Bakken Shale is mature and represents the first consideration of a successful exploration program. Of particular interest is the eastward extension of mature Bakken source rock over the north end of the Kevin Dome (a huge oil and gas producing structure covering more than 1,000 square miles with over 800 feet of structural closure). American Eagle has mapped the extent of the mature Bakken Shale using geochemical data and well logs. The Kevin Dome has produced an estimated 130 million barrels of oil and 150 billion cubic feet of gas from formations shallower and deeper than the Bakken. It has a history of igneous intrusive activity, which may have aided in the generation of oil from the Bakken.
With our past experience, including the Elm Coulee Field, which served as the first analogy for the Bakken Play in the Williston Basin, we have identified and mapped the potentially best reservoir developments in each of the Middle Bakken and Three Forks Formations within the area of adjacent mature Bakken source rock, and have based our leasing and farm-in strategies on these maps. These maps identify two prospective areas, separately identified and abbreviated as the "Basin" area and the "Dome" area.
Most companies actively drilling in this play, such as Rosetta Resources Inc. and Newfield Exploration Company in the U.S. and Crescent Point Energy Corp., Shell Oil Company, Murphy Oil Corporation, DeeThree Exploration Ltd., Bowood Energy Inc., and others in Canada, have focused on the "Basin" play. The prospective Middle Bakken Formation in this area in the U.S. consists of generally a 10-20 foot dolomite with porosity in the 4-6% range at depths of 3,500 to 6,000 feet. Rosetta Resources, the most active driller in the U.S. with approximately 300,000 net acres, and has now drilled multiple horizontal wells targeting the Middle Bakken Formation and has reported initial "stabilized" rates of 104 to 154 barrels of oil equivalent per day in their first two horizontal completions. Just across the border in Alberta, DeeThree has announced an initial rate of 250 barrels of oil per day and 250 mcf of gas per day.
In the Basin, American Eagle owns a 33% working interest in the Bakken in approximately 10,000 acres that is part of a shallow producing field called the South West Cut Bank Sand Unit. Together with its partners, FX Energy Inc. and Big Sky Operating LLC, American Eagle has drilled an initial test well documenting the presence of oil and a geologic reservoir system similar to other wells drilled in the Basin. As previously reported by FX Energy, as the operator, this well was a re-entry of a shallow well with the intent to perform some confidential tests and subsequently plug and abandon. The partner group is currently seeking jurisdictional approval to drill a horizontal Bakken well adjacent to this well.
Also in the basin, American Eagle owns a 100% interest in approximately 2042 net and 2234 gross acres of leasehold in what we call "Glacier Central." This leasehold is in the middle of the most actively drilled Bakken test area to date, referencing the Rosetta and Newfield activity. This acreage represents the potential for 13 net horizontal wells to American Eagle. American Eagle is currently waiting for further results from Rosetta and Newfield before initializing its plans for this acreage.
American Eagle believes in the potential of the Dome area. Together, with its partners, FX Energy and Big Sky Operating, American Eagle owns a 33% interest in a large acreage position on the Dome, as well as a similar interest in a large farm-in block. On the Dome, the Middle Bakken attains a thickness of 30 to 130 feet at a depth of only 2500 to 3500 feet, sitting on top of very mature Lower Bakken Shale, thicker than in the Basin. American Eagle has mapped distinct areas of enhanced reservoir quality, both of which are within the Middle Bakken and Three Forks Formations with porosity as great as 13-16%. American Eagle has participated in the drilling and coring of two wells on the Dome, the FX 14-29 and Big Sky 15-13 wells. The FX 14-29 well was subsequently drilled horizontally and fracture stimulated and production tested. American Eagle expects to participate in an additional vertical well in the first quarter of 2012.
American Eagle, along with its partnership companies in the Glacier Project Area, is the third most active drilling company in this play on the U.S. side of the border.