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American Eagle Energy Announces Operations Update and Reports Results for Third Quarter 2014


November 5, 2014 - DENVER, CO

DENVER, CO--(Marketwired - November 05, 2014) - American Eagle Energy Corporation (NYSE MKT: AMZG) ("American Eagle" or the "Company"), announces an operational update and discussion of its financial results for the third quarter ended September 30, 2014. The Company intends to file its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission prior to November 14, 2014.

Highlights

  • American Eagle added 8 gross (6.3 net) operated wells to production during the quarter;
  • Production of 201,774 barrels of oil equivalent ("BOE"), or an average of 2,193 BOEPD;
    • year-over-year increase of 62% from the 1,362 BOEPD (125,343 BOE)
    • sequential quarterly increase of 9% from 2,006 BOEPD (182,522 BOE)
  • Third quarter 2014 oil and gas sales of $17.1 million;
    • a year-over-year increase of 47%
    • a sequential quarterly increase of 4%
  • Adjusted EBITDA* of $9.1 million;
  • Adjusted Cash Flow* of $5.3 million;
  • Adjusted Net Earnings* of $0.9 million or $0.03 per diluted share; and
  • Liquidity of $83.8 million as of September 30, 2014 consisting of $48.8 million in cash and $35 million of availability under the revolving credit facility.

* Non-GAAP financial measure. Please see Adjusted EBITDA, Adjusted Cash Flow and Adjusted Net Earnings descriptions and tables later in this earnings release for a reconciliation of these measures to their nearest comparable GAAP measure.

Third Quarter 2014 Financial and Operational Results

For the quarter ended September 30, 2014, the Company reports oil and gas sales of $17.1 million, which represents an increase of 47% over the third quarter ended September 30, 2013 and an increase of 4% from the second quarter ended June 30, 2014. This increase in sales, on both an annual and sequential quarterly basis, is primarily due to an increase in production, as 51 gross (30.3 net) operated wells were producing in the Bakken and Three Forks formations at the end of third quarter 2014, compared to production from 25 gross (7.8 net) operated wells at the end of September 30, 2013 and 43 gross (24.0 net) operated wells as of June 30, 2014. During the third quarter 2014, oil production represented 98% of total oil and gas sales revenue and 98% of total production.

American Eagle's third quarter 2014 realized oil price per barrel prior to the effect of hedges was negatively impacted by lower crude oil prices for West Texas Intermediate ("WTI"). The Company has an agreement in place that locks in a $10.75 discount to WTI for the Company's 2014 operated oil production to stabilize realized crude oil prices against the risk of volatile pricing differentials. The agreement locks in a $10.00 discount to WTI for the Company's 2015 operated oil production. American Eagle's third quarter 2014 realized oil price per barrel after the effect of hedges of $81.86 per barrel was negatively impacted by realized hedge prices that were lower than the benchmark prices for WTI over the same time period.

Adjusted EBITDA for third quarter 2014 was $9.1 million, representing an increase of 26% from $7.2 million reported for the third quarter ended September 30, 2013 and a decrease of 6% from $9.6 million reported for the second quarter ended June 30, 2014. Relative to the third quarter ending September 30, 2013, the increase in Adjusted EBITDA is primarily due to higher oil and gas production sales volume and operating leverage realization in general and administrative ("G&A") expenses (excluding stock-based compensation) on a BOE basis. However, the improvement in Adjusted EBITDA was partially offset by lower realized oil prices before, and after, including the negative effect of hedges realized during the quarter and higher lease operating expenses. Similarly, in comparison to the quarter ending June 30, 2014, the 6% decrease in Adjusted EBITDA is due primarily to lower realized oil prices before, and after, including the negative effect of hedges realized during the quarter and higher G&A and lease operating expenses, which was partially offset by higher oil production sales volume.

Lease Operating Expense ("LOE") for the quarter ended September 30, 2014 was $18.20 per BOE, which was similar to the previous quarter but higher than the same period last year due to a continuation of higher than normal costs for site and road maintenance expenses and workover expenses. Higher production levels helped to reduce per-unit G&A expenses year-over-year, but were not enough to offset the higher sequential costs, as G&A, excluding stock-based compensation, was $8.25 per BOE during the third quarter 2014 compared to $12.04 per BOE for the prior year and $6.67 per BOE for the prior quarter. Adjusted EBITDA per BOE for the quarter ended September 30, 2014 was $44.92, as compared to $57.43 per BOE for the third quarter ended September 30, 2013 and $52.69 per BOE for the second quarter ended June 30, 2014.



Three Months Ended
------------------------------------------------------
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
2014 2014 2014 2013 2013
--------- --------- --------- --------- ---------
Crude Oil Revenues
($000s) $ 16,939 $ 16,225 $ 12,267 $ 13,272 $ 11,585
Natural Gas Revenues
($000s) $ 31 $ 106 $ 72 $ 114 $ 26
Natural Gas Liquids
Revenues ($000s) $ 121 $ 132 $ 206 $ 115 $ 28

Net Production:
Crude Oil (Barrels) 197,740 175,509 140,841 164,923 123,343
Crude Oil Mix 98% 96% 95% 95% 98%
Natural Gas (Mcf) 1,968 16,977 11,370 20,055 6,333
Natural Gas Liquids
(Barrels) 3,706 4,183 5,312 4,563 944

Total Net Production
(BOE) 201,774 182,522 148,048 172,829 125,343
Quarter-Over-Quarter
Increase 11% 23% (14)% 38% 7%

Average Daily
Production (BOEPD) 2,193 2,006 1,645 1,879 1,362
Quarter-Over-Quarter
Increase 9% 22% (12)% 38% 6%

Average Sales
Prices:
Crude Oil Per Barrel $ 85.66 $ 92.45 $ 87.10 $ 80.48 $ 93.92
Effect of Settled
Oil Derivatives Per
Barrel ($3.80) ($2.60) $ 0.82 $ 4.16 $ 0.94
--------- --------- --------- --------- ---------
Crude Oil Net of
Settled Derivatives
Per Barrel $ 81.86 $ 89.85 $ 87.92 $ 84.64 $ 94.86
Natural Gas Per Mcf $ 15.52 $ 6.25 $ 6.37 $ 5.67 $ 4.09
Natural Gas Liquids
Per Barrel $ 32.85 $ 31.44 $ 38.83 $ 25.27 $ 29.67
Realized Price Per
BOE $ 80.98 $ 87.69 $ 85.52 $ 82.10 $ 93.78

Average Per BOE:
Lease Operating
Expenses $ 18.20 $ 18.15 $ 15.36 $ 13.59 $ 14.09
Production Taxes $ 9.66 $ 10.34 $ 9.32 $ 9.28 $ 10.28
G&A Expenses,
Excluding Stock-
Based Compensation $ 8.25 $ 6.67 $ 10.56 $ 15.07 $ 12.04
--------- --------- --------- --------- ---------
Total $ 36.11 $ 35.16 $ 35.24 $ 37.94 $ 36.41
--------- --------- --------- --------- ---------

Adjusted EBITDA per
BOE $ 44.92 $ 52.69 $ 50.43 $ 44.24 $ 57.43


Operated Well Development

The Rick 13-31 (Three Forks short-lateral) well with an 85% working interest was stimulated earlier in October and began producing oil in late October. Following the positive initial production rates of the Eli 8-1E well, American Eagle intends to use slickwater stimulations for the Byron 4-4 (Bakken long-lateral) and Shelley Lynn 4-4N (Bakken short-lateral) wells, which are on a 2-well pad located between the Eli 8-1E and Christianson Bros 15-33 (Bakken short lateral) well. Both wells have been very strong Bakken producers. The Byron 4-4 and the Shelley Lynn 4-4N wells have an average working interest of 96%, representing 1.9 net wells, and are scheduled to be stimulated in November. The Company has nearly completed the drilling of the Huffman 15-34S (Three Forks long-lateral) well with a 94% working interest. The Huffman 15-34S well is located between the Bryce 3-2 (Three Forks long-lateral) well that produced approximately 400 BOEPD during the first 30 days, and the Donald 15-33S (Three forks long-lateral) well that produced approximately 320 BOEPD during the first 20 days. The Company anticipates that all of these wells will be completed and on production before the end of the year. In addition, remedial completions will be performed during the fourth quarter of 2014 on the Shelly 3-2N (Three Forks short-lateral, 97% WI) and the La Plata State 2-16 (Three Forks long lateral, 39% WI) wells, both of which were drilled and completed during the first half of the year. American Eagle estimates that it will add 4 gross (3.7 net) operated wells to production before the end of 2014 or possibly 6 gross (5.0 net) if the Shelly 3-2N and La Plata State 2-16 are completed and producing before the end of the year.

Production Volume Guidance

The Company is maintaining its guidance that it will exit 2014 with production ranging between 2,700 BOEPD to over 3,000 BOEPD. American Eagle's average production for October 2014 was approximately 2,700 to 2,800 BOEPD. The Company is comfortable with consensus production estimates for the fourth quarter of 2014.

Commodity Hedges

The Company's existing crude oil hedges average $90.40 per barrel, with hedged volumes averaging 1,600 barrels of oil per day for fourth quarter 2014. For the first half of 2015, the Company's existing crude oil hedges average $89.72 per barrel with hedged volumes averaging 1,200 barrels of oil per day. The Company's existing crude oil hedges average $89.21 per barrel with hedged volumes averaging 800 barrels of oil per day for the second half of 2015.

Liquidity and Shares Outstanding

As of September 30, 2014, American Eagle had approximately $48.8 million in cash, $175 million total debt and 30.4 million shares of common stock outstanding. The Company also has a revolving credit facility with $60 million of borrowing base, based on its June 30, 2014 mid-year reserve report, with $35 million committed and available from SunTrust. The credit facility remains undrawn. SunTrust and the Company are not currently pursuing syndication of the remaining portion of the initial borrowing base.

The Company ended the third quarter of 2014 with approximately $5.3 million of negative working capital, when classifying marketable securities as current assets and excluding commodity derivatives from current assets and liabilities. Given that the Company has no long-term contracts on its rigs, American Eagle can be flexible with its development program to take into account potentially volatile crude oil price and match development to be in-line with cash flow.

Operated Well Development Guidance

During the third quarter, the Company was in the process of swapping out one of its two rigs for a newer rig. American Eagle has elected not to bring back the second rig. Based on the wells drilled to date, including the Huffman 15-34S, the Company believes it will hit its production guidance for 2014. Given the current volatility of crude oil prices and the onset of winter, American Eagle is planning to lay down the rig that is currently drilling and bringing back a newer rig that would be available in 2015. This would allow the Company to manage its capital spending plan to be within cash flow in the near term and not build up an inventory of wells awaiting completion during the winter. American Eagle intends to resume drilling before the end of first quarter 2015. If the rig were to continue drilling for the remainder of 2015, the capital spending budget for 2015 would be approximately $60 million to develop approximately 10 net wells. At that pace of development, the Company would be able to grow production as 2015 progresses, with an estimated average production rate of over 3,000 BOEPD. The Company could accelerate development further if warranted based on crude oil prices and market conditions. Alternatively, if crude oil prices remain at low levels or weaken further, American Eagle could choose to develop wells within free cash flow. Assuming crude oil prices remain at current levels, the Company estimates is would be able to maintain production rates near current levels for most of 2015 while managing capital spending to be within cash flow.

Third Quarter 2014 Earnings Release and Conference Call

The Company will host a conference call on Thursday, November 6, 2014 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss financial and operational results for the quarter.

 ---------------------------------------------------------------------------- American Eagle Energy Corporation 3Q 2014 Financial and Operational Results Conference Call ---------------------------------------------------------------------------- Date: Thursday, November 6, 2014 ---------------------------------------------------------------------------- Time: 10:00 a.m. Eastern Time 9:00 a.m. Central Time 8:00 a.m. Mountain Time 7:00 a.m. Pacific Time ---------------------------------------------------------------------------- Webcast: Live and rebroadcast over the Internet at American Eagle website ---------------------------------------------------------------------------- Website: www.americaneagleenergy.com ---------------------------------------------------------------------------- Telephone Dial-In: 877-407-9171 (toll-free) and 201-493-6757 (international) ---------------------------------------------------------------------------- Telephone Replay: Available through Thursday, November 13, 2014 877-660-6853 (toll-free) and 201-612-7415 (international) Passcode: 13572777 ---------------------------------------------------------------------------- 

ABOUT AMERICAN EAGLE ENERGY CORPORATION

American Eagle Energy Corporation is an independent exploration and production operator that is focused on acquiring acreage and developing wells in the Williston Basin of North Dakota, targeting the Bakken and Three Forks shale oil formations. The Company is based in Denver, CO. More information about American Eagle can be found at www.americaneagleenergy.com or by contacting investor relations at 303-798-5235 or ir@amzgcorp.com. Company filings with the Securities and Exchange Commission can be obtained free of charge at the SEC's website at www.sec.gov.

SAFE HARBOR

This press release may contain forward-looking statements regarding future events and the Company's future results that are subject to the safe harbors created under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). All statements other than statements of historical facts included in this press release regarding the Company's financial position, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as "estimate," "project," "predict," "believe," "expect," "anticipate," "possible," "target," "plan," "intend," "seek," "goal," "will," "should," "may" or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements. 

Forward-looking statements involve inherent risks and uncertainties and important factors (many of which are beyond the Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the amount we may invest, the location, and the scale of the drilling projects in which we intend to participate; our beliefs with respect to the potential value of drilling projects; our beliefs with regard to the impact of environmental and other regulations on our business; our beliefs with respect to the strengths of our business model; our assumptions, beliefs, and expectations with respect to future market conditions; our plans for future capital expenditures; and our capital needs, the adequacy of our capital resources, and potential sources of capital.

The Company has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks, contingencies, and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. The Company does not assume any obligations to update any of these forward-looking statements.

 AMERICAN EAGLE ENERGY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands, except for Per Share Data) September December 30, 31, 2014 2013 ----------- ----------- Current assets: Cash $ 48,784 $ 31,850 Trade receivables 17,785 17,920 Income tax receivable 25 - Prepaid expenses 38 68 Current derivative asset 466 211 ----------- ----------- Total current assets 67,098 50,049 Equipment and leasehold improvements, net of accumulated depreciation and amortization of $445 and $322, respectively 252 174 Oil and gas properties, full-cost method – subject to amortization, net of accumulated depletion of $26,271 and $12,849, respectively 293,685 155,145 Oil and gas properties, full-cost method – not subject to amortization 2,487 2,487 Marketable securities 1,162 1,050 Noncurrent derivative asset 155 - Other assets 7,894 7,503 ----------- ----------- Total assets $ 372,733 $ 216,408 =========== =========== Current liabilities: Accounts payable and accrued liabilities $ 73,099 $ 41,841 Derivative liability 3 276 Current portion of notes payable - 3,000 ----------- ----------- Total current liabilities 73,102 Asset retirement obligation 1,352 1,060 Noncurrent portion of notes payable 105,000 Bonds payable, net of discount of $1,615 and $0, respectively 173,385 - Noncurrent derivative liability - 750 Deferred taxes - 5,386 ----------- ----------- Total liabilities 247,839 157,313 Stockholders' equity: Common stock, $.001 par value, 48,611 shares authorized, 30,437 and 17,712 shares outstanding 30 18 Additional paid-in capital 146,888 67,198 Accumulated other comprehensive income (loss) (243) (6) Accumulated deficit (21,781) (8,115) ----------- ----------- Total stockholders' equity 124,894 59,095 ----------- ----------- Total liabilities and stockholders' equity $ 372,733 $ 216,408 ============ =========== 
 AMERICAN EAGLE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, except for Per Share Data) For the Three- For the Nine- Month Period Month Period Ended September Ended September 30, 30, ------------------ ----------------- 2014 2013 2014 2013 -------- ------- ------- ------- Oil and gas sales $ 17,091 $ 11,639 $ 46,099 $ 29,638 Operating expenses: Oil and gas production costs 5,621 3,055 14,475 7,657 General and administrative 2,110 1,812 5,790 4,380 Depletion, depreciation and amortization 6,154 2,524 15,497 5,915 Impairment of oil and gas properties, subject to amortization - - - 1,525 -------- ------- -------- -------- Total operating expenses 13,885 7,391 35,762 19,477 -------- -------- -------- -------- Total operating income 3,206 4,248 10,337 10,161 Interest and dividend income 28 19 56 57 Interest expense (4,163) (1,316) (10,628) (2,149) Loss on early extinguishment of debt (11,894) (3,714) (11,894) (3,714) Loss on sale of oil & gas properties (12) - (12) - Gains (losses) on settlement of derivatives (7,113) 115 (7,455) 115 Change in fair value of derivatives 8,641 (934) 618 (775) -------- -------- -------- -------- Total other income (expense) (14,513) (5,830) (29,315) (6,466) -------- -------- -------- -------- Income (loss) before taxes (11,307) (1,582) (18,978) 3,695 Income tax expense (benefit) (2,569) (646) (5,311) 1,639 -------- -------- -------- -------- Net income (loss) $ (8,738) $ (936) $(13,667) $ 2,056 ======== ======== ======== ======== Net income (loss) per common share: Basic $ (0.29) $ (0.07) $ (0.52) $ 0.16 ======== ======== ======== ======== Diluted $ (0.29) $ (0.07) $ (0.52) $ 0.16 ======== ======== ======== ======== Weighted average number of shares outstanding - Basic 30,448 13,224 26,524 12,741 ======== ======= ======= ======= Diluted 30,448 13,224 26,524 13,225 ======== ======= ======= ======= 
 AMERICAN EAGLE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In Thousands) For the Three-Month For the Nine-Month Period Period Ended September 30, Ended September 30, --------------------- --------------------- 2014 2013 2014 2013 --------- --------- --------- --------- Net income (loss) $ (8,738) $ (936) $ (13,667) $ 2,056 Other comprehensive income (loss), net of tax: Unrealized foreign exchange gains (losses) (3) 2 (126) 15 Unrealized gains (losses) on securities (96) 27 (111) (6) --------- --------- --------- --------- Total other comprehensive income (loss), net of tax (99) 29 (237) 9 --------- --------- --------- --------- Comprehensive income (loss) $ (8,837) $ (907) $ (13,904) $ 2,065 ========= ========= ========= ========= 
 AMERICAN EAGLE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands) For the nine-month periods ended September 30, ----------------------- 2014 2013 --------- --------- Cash flows provided by operating activities: Net income (loss) $ (13,667) $ 2,056 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Non-cash transactions: Stock-based compensation 1,344 827 Depletion, depreciation and amortization 15,497 5,915 Accretion of discount on asset retirement obligation 60 36 Amortization of deferred financing costs 1,158 274 Amortization of debt discount 32 - Provision for deferred income tax expense (benefit) (5,325) 1,662 Loss on early extinguishment of debt 11,894 3,714 Impairment of oil and gas properties - 1,525 Change in fair value of derivatives (1,432) 653 Foreign currency transaction gains - 2 Changes in operating assets and liabilities: Prepaid expense 30 (2) Trade receivables (6,271) (3,032) Income taxes receivable (25) (33) Accounts payable and accrued liabilities 17,292 11,654 ---------- ---------- Net cash provided by operating activities 20,587 25,251 ---------- ---------- Cash flows used for investing activities: Additions to oil and gas properties (135,234) (80,432) Proceeds from sale of oil and gas properties 1,824 - Additions to equipment and leasehold improvements (201) (15) Purchases of marketable securities (222) - Decrease in amounts due to Carry Agreement partner - (4,957) ---------- ---------- Net cash used for investing activities (133,833) (85,404) ---------- ---------- Cash flows provided by financing activities: Proceeds from issuance of stock 78,298 13,877 Proceeds from issuance of notes payable - 68,000 Proceeds from issuance of bonds 167,257 - Payment of other deferred financing costs (1,882) (651) Repayment of long-term debt (113,465) (21,131) ---------- ---------- Net cash provided by financing activities 130,208 60,095 ---------- ---------- Effect of exchange rate changes on cash (28) 38 ---------- ---------- Net change in cash 16,934 (20) Cash - beginning of period 31,850 19,058 ---------- ---------- Cash - end of period $ 48,784 $ 19,038 ========== ========== 

Non-GAAP Financial Measures

Adjusted EBITDA

In addition to reporting net income (loss) as defined under GAAP, American Eagle also presents net earnings before interest income, dividend income, interest expense, income taxes, depletion, depreciation, and amortization, non-cash expenses related to stock-based compensation, impairment of oil and gas properties, loss on early extinguishment of debt, and change in value of derivatives recognized under ASC Topic 718 ("Adjusted EBITDA"), which is a non-GAAP performance measure. Adjusted EBITDA consists of net earnings after adjustment for those items described in the table below. Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss) (its most directly comparable GAAP measure), and the calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, American Eagle believes the measure is useful in evaluating its fundamental core operating performance. The Company also believes that Adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. American Eagle's management uses Adjusted EBITDA to manage its business, including in preparing its annual operating budget and financial projections. Management does not view Adjusted EBITDA in isolation and also uses other measurements, such as net income (loss) and revenues to measure operating performance. The following table provides a reconciliation of net income (loss) to Adjusted EBITDA for the periods presented (in thousands):

 Three Months Ended ----------------------------------------------------- September December September 30, June 30, March 31, 31, 30, 2014 2014 2014 2013 2013 --------- --------- --------- --------- --------- Net income (loss) ($8,738) ($3,900) ($1,028) ($462) ($936) Less: Interest and dividend income (28) (12) (16) (23) (19) Add: Interest expense 4,163 3,251 3,215 3,207 1,316 Add: Income tax expense (benefit) (2,569) (2,103) (638) 130 (646) Add: Depletion, depreciation and amortization 6,154 5,707 3,636 4,158 2,524 Add: Stock-based compensation 445 445 454 375 303 Add: Accretion of asset retirement obligations 9 30 22 14 8 Add: Impairment of oil and gas properties - - - 206 - Add: Loss on sale of oil and gas properties 12 - - - - Add: Loss on early extinguishment of debt (11,894) - - - 3,714 Add: One-time loss on settlement of derivatives 6,362 - - - - Add: Change in value of derivatives (8,641) 6,200 1,823 40 934 --------- --------- --------- --------- --------- Adjusted EBITDA $9,063 $9,618 $7,468 $7,645 $7,198 ========= ========= ========= ========= ========= 

Adjusted Cash Flow

In addition to reporting net income (loss) as defined under GAAP, American Eagle also presents cash flow after paying interest expense ("Adjusted Cash Flow"), which is a non-GAAP performance measure. Adjusted Cash Flow consists of Adjusted EBITDA after adjustment for those items described in the table below. Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss) (its most directly comparable GAAP measure), and the calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, American Eagle believes the measure is useful in evaluating its fundamental core operating performance. The Company also believes that Adjusted Cash Flow is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. American Eagle's management uses Adjusted Cash Flow to manage its business, including in preparing its annual operating budget and financial projections. Management does not view Adjusted Cash Flow in isolation and also uses other measurements, such as net income (loss) and revenues to measure operating performance. The following table provides a reconciliation of Adjusted EBITDA to Adjusted Cash Flow for the periods presented (in thousands, except for per share data):

 Three Months Ended ----------------------------------------------------- September December September 30, June 30, March 31, 31, 30, 2014 2014 2013 2013 2013 --------- --------- --------- --------- --------- Adjusted EBITDA (1) $ 9,063 $ 9,618 $ 7,468 $ 7,645 $ 7,198 Less: Interest expense (4,163) (3,251) (3,215) (3,207) (1,316) Add: Amortization of deferred financing costs and bond discount (non-cash) 426 384 327 327 162 --------- --------- --------- --------- --------- Adjusted Cash Flow $ 5,326 $ 6,751 $ 4,580 $ 4,745 $ 6,044 ========= ========= ========= ========= ========= (1) See previous table for reconciliation of net income (loss) to Adjusted EBITDA. 

Adjusted Net Earnings

In addition to reporting net income (loss) as defined under GAAP, American Eagle also presents net earnings before the impairment of oil and gas properties, loss on early extinguishment of debt, and non-cash expenses related to the change in fair value of derivatives ("adjusted net earnings"), which is a non-GAAP performance measure. Adjusted net earnings consists of net earnings after adjustment for those items described in the table below. Adjusted net earnings does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss), and the calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, American Eagle believes the measure is useful in evaluating its fundamental core operating performance. The Company also believes that adjusted net earnings is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. American Eagle's management uses adjusted net earnings to manage its business, including in preparing its annual operating budget and financial projections. Management does not view adjusted net earnings in isolation and also uses other measurements, such as net income (loss) and revenues to measure operating performance. The following table provides a reconciliation of net income (loss), to adjusted net earnings for the periods presented:

 Three Months Ended ---------------------------------------------------- September March December September 30, June 30, 31, 31, 30, 2014 2014 2014 2013 2013 ---------- -------- -------- -------- ---------- Net income (loss) ($8,738) ($3,900) ($1,028) ($462) ($936) Add: Impairment of oil and gas properties - - - 206 - Add: Loss on early extinguishment of debt 11,894 - - - 3,714 Add: One-time loss on settlement of derivatives 6,362 Add: Loss on sale of oil and gas properties 12 - - - - Add: Change in fair value of derivatives (8,641) 6,200 1,823 40 934 ---------- -------- -------- -------- ---------- Adjusted Net Earnings / (Loss) $889 $2,300 $795 ($216) $3,712 ========== ======== ======== ======== ========== Adjusted Net Earnings (Loss) per share - basic $0.03 $0.08 $0.04 ($0.02) $0.28 Adjusted Net Earnings (Loss) per share - diluted $0.03 $0.07 $0.04 ($0.01) $0.27 Weighted average shares - basic 30,448 30,436 18,557 13,962 13,224 Weighted average shares - diluted 30,922 31,018 19,205 14,598 13,733 

CORPORATE CONTACT:

Marty Beskow, CFA
Vice President of Capital Markets and Strategy
American Eagle Energy Corporation
720-330-8378
ir@amzgcorp.com
www.americaneagleenergy.com

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