SOURCE: American Eagle Energy Corporation

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May 13, 2014 16:05 ET

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

DENVER, CO--(Marketwired - May 13, 2014) - American Eagle Energy Corporation (NYSE MKT: AMZG) ("American Eagle" or the "Company"), announces operational update and financial results for the first quarter ended March 31, 2014. The Company intends to file its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission on or before Thursday, May 15, 2014.

Highlights

  • Closed separate transactions to bring the Company's average working interest in the total Spyglass area to 68% and the proved Spyglass area to 67% resulting in a total of 45,600 net acres in the Spyglass area;
  • Added seven (3.0 net) operated wells to production that included a mix of Bakken and Three Forks wells in central and eastern Spyglass and a step-out well in western Spyglass;
  • April net production averaged approximately 2,250 barrels of oil equivalent per day ("BOEPD");
  • American Eagle reports first quarter 2014 oil production of 148,048 barrels of oil equivalent ("BOE"), or an average of 1,645 BOEPD. First quarter production was up 69% from 972 BOEPD (87,471 BOE) year-over-year for the quarter ended March 31, 2013 ("YOY") but down 12% from 1,879 BOEPD (172,829 BOE) quarter-over-quarter for the period ended December 31, 2013 ("QOQ") due to severe cold weather;
  • Quarterly oil and gas sales of $12.5 million, up 64% YOY and down 7% QOQ;
  • Adjusted EBITDA* of $7.4 million;
  • Adjusted Cash Flow* of $4.6 million or $0.24 per diluted share; and
  • Adjusted Net Income* of $0.8 million or $0.04 per diluted share.

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

Management Comments

Brad Colby, President and CEO of American Eagle, said, "Despite the extremely cold winter in North Dakota, our operations team continued to move forward and successfully drilled, completed and brought onto production approximately seven (3.0 net) operated wells (four Bakken and three Three Forks) during the quarter. Our new wells added to production a number of Bakken wells which continued to successfully de-risk and delineate our Spyglass Bakken well locations and should be additive to future reserve reports. We also tested the far western Spyglass acreage with an American Eagle operated well that our JV partner financed. While the initial results on the test well were below other operated wells, we are still evaluating performance and have seen recent improvements in production rates. We are currently producing approximately 2,250 BOEPD and are completing wells that should be additive to second quarter results. The remainder of our 2014 development plan continues to focus on higher working interest wells in central and eastern Spyglass."

First Quarter 2014 Financial and Operational Results

For the quarter ended March 31, 2014, the Company had oil and gas sales of $12.5 million, which represented an increase of 64% from $7.6 million when compared to the first quarter ended March 31, 2013 and a decrease of 7% from $13.5 million when compared to the fourth quarter ended December 31, 2013. This increase in revenue on a YOY basis is due primarily to production from 35 gross (16.3 net) operated wells in the Spyglass area producing in the Three Forks and Bakken formations during the first quarter 2014, compared to production from 13 gross (3.3 net) operated wells at the end of March 31, 2013 and 28 gross (13.7 net) operated wells as of December 31, 2013. The decrease in revenue on a QOQ basis is due primarily to the impact of severe cold weather in North Dakota. Oil represented 98% of revenue and 95% of production during the first quarter 2014.

Adjusted EBITDA for first quarter 2014 was $7.4 million, up 52% from $4.9 million for the first quarter ended March 31, 2013 but down 2% from $7.6 million for the fourth quarter ended December 31, 2013. The increase in Adjusted EBITDA on a YOY basis is due primarily to higher revenues from increased production which increased 69% YOY and a 1% increase in realized oil price when including the positive effect of hedges during the quarter, which was partially offset by higher lease operating expenses ("LOE") per BOE and a higher differential when comparing realized oil price to benchmark oil prices such as West Texas Intermediate ("WTI"). The modest 2% decrease in Adjusted EBITDA on a QOQ basis is due primarily to a 12% decrease in average daily oil equivalent production and higher LOE per BOE, which was partially offset by higher realized oil prices and lower general and administrative expenses per BOE.

American Eagle added seven gross (3.0 net) operated wells to production during the quarter ended March 31, 2014. American Eagle's first quarter 2014 realized oil price per barrel prior to the effect of hedges was positively impacted by a lower differential discount of about $11.57 relative to WTI due to an agreement that locks in a $10.75 discount to WTI for all 2014 operated oil production and compares with a differential discount of approximately $17.04 during the fourth quarter 2013. Lease operating expenses for the quarter ended March 31, 2014 were $15.36 per BOE, which were higher than normal due to weather conditions and increased workovers. The higher production and revenue helped to reduce per unit general and administrative expenses ("G&A") on a YOY and QOQ basis, as G&A, excluding stock-based compensation, was $10.56 per BOE during the first quarter 2014 compared to $12.23 per BOE the previous year and $15.07 per BOE the previous quarter. Adjusted EBITDA per BOE for the quarter ended March 31, 2014 was $50.29, compared to $56.13 per BOE for the first quarter ended March 31, 2013 and $44.16 per BOE for the fourth quarter ended December 31, 2013.

   
  Three Months Ended
  Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
  2014 2013 2013 2013 2013
Crude Oil Revenues ($000s) $12,267 $13,272 $11,585 $10,366 $7,628
Natural Gas Revenues ($000s) $72 $114 $26 $4 $1
Natural Gas Liquids Revenues ($000s) $206 $115 $28 $0 $0
                
Net Production:               
Crude Oil (Barrels)  140,841  164,923  123,343  117,000  87,440
Crude Oil Mix  95%  95%  98%  100%  100%
Natural Gas (Mcf)  11,370  20,055  6,333  981  187
Natural Gas Liquids (Barrels)  5,312  4,563  944  0  0
                
Total Net Production (BOE)  148,048  172,829  125,343  117,164  87,471
Quarter-Over-Quarter Increase  -14%  38%  7%  34%  44%
                
Average Daily Production (BOEPD)  1,645  1,879  1,362  1,288  972
Quarter-Over-Quarter Increase  -12%  38%  6%  32%  47%
                
Average Sales Prices:               
Crude Oil Per Barrel $87.10 $80.48 $93.92 $88.60 $87.23
Effect of Settled Oil Derivatives Per Barrel $0.82 $4.16 $0.94 $0.00 $0.00
Crude Oil Net of Settled Derivatives Per Barrel $87.92 $84.64 $94.86 $88.60 $87.23
Natural Gas Per Mcf $6.37 $5.67 $4.09 $4.39 $5.70
Natural Gas Liquids Per Barrel $38.83 $25.27 $29.67 $0.00 $0.00
Realized Price Per BOE $85.52 $82.10 $93.78 $88.51 $87.21
                
Average Per BOE:               
Lease Operating Expenses $15.36 $13.59 $14.09 $15.31 $9.27
Production Taxes $9.32 $9.28 $10.28 $9.89 $9.58
G&A Expenses, Excluding Stock-Based Compensation $10.56 $15.07 $12.04 $8.31 $12.23
Total $35.24 $37.94 $36.41 $33.51 $31.08
                
Adjusted EBITDA per BOE $50.29 $44.16 $57.36 $54.99 $56.13
                     
                     

Well Development Activity

Since the Company's March 26, 2014 operations update, it has continued to drill and complete wells successfully. In that update, American Eagle released preliminary results on wells that had not yet produced for a full 30 days. The first full 30 days of production on these wells is listed below:

                     
 
Well
  
Formation
 30-Day
IP Rate

BOEPD1
 Lateral Length
Feet
 Approximate
DSUAcres
 Infill Number
in DSU2
Tangedal 13-31-
164-101 (30 & 31)

 
 Three Forks
 
 363
 
 5,784
 
 800
 
 1st well in DSU, 1st Three Forks
 
Janice 2-3-
163-101 (3 & 10)

 
 Bakken
 
 276
 
 9,473
 
 1,280
 
 4th well in DSU, 1st Bakken
 
1 IP Rate BOEPD is calculated taking the cumulative production from each well divided by the number of days each well has been on production. Results above are based on the first 30 days of production.
2 Drill spacing unit ("DSU")
 

The initial results from the Tangedal 13-31 Three Forks well seem to confirm and expand the good quality area of the reservoir in the north central portion of the Spyglass acreage as was previously established by the offset wells, Lynda 15-32 to the east and the Stanley 8-1E to the south. The Janice 2-3 well-established, good Middle Bakken production in a DSU in the middle of the eastern Spyglass acreage.

Since the Company's March 26, 2014 operations update, there are five additional operated wells that have produced an average of 30 days. The operated wells are listed below from the most easterly well listed first and moving to the west with the most westerly well listed last:

                     

Well
 
Formation
 30-Day
IP Rate

BOEPD1
 Lateral Length
Feet
 Approximate
DSUAcres
 Infill Number
in DSU2
Harvard State
16-36S-163-101
(1 & 12)
 Bakken
 190
 9,924
 1,280
 4th well in DSU, 2nd Bakken
Uncompahgre
State 14-36-
164-101 (25 & 36)
 Bakken
 233
 5,885
 800
 3rd well in DSU, 1st Bakken
Blackwatch 2-2N-
164-101 (26 & 35)
Carry
 Bakken
 194
 6,023
 800
 4thwell in DSU, 2nd Bakken
Taylor 16-1E-
163-101 (5 & 6)
Farm-Out
 Bakken
 358
 9,915
 1,280
 2nd well in DSU, 1st Bakken
Haugen 15-12-
163-103 (1 & 12)
Farm-Out
 Three Forks
 91
 9,677
 1,280
 1st well in DSU, 1st Three Forks
1 IP Rate BOEPD is calculated taking the cumulative production from each well divided by the number of days each well has been on production. Results above are based on the first 30 days of production.
2 Drill spacing unit ("DSU")
 

The Taylor 16-1E well is a Bakken well and part of the Farm-Out well program with the JV partner that is in the central portion of the Spyglass acreage in the same DSU as the Stanley (Three Forks) well and exhibits similarly strong production results as the other wells in the surrounding area.

The Haugen 15-12 step-out well is a Three Forks completion and part of the Farm-Out well program with the JV partner. It is designed to test the far western edge of the Spyglass area close to the Montana border. The Haugen 15-12 produced an average of 91 BOEPD during the first 20 days of production with an apparent water-cut in excess of 90%. The well has shown some chemical emulsion problems that have resulted in fluctuating oil rates ranging from 60 to 192 barrels of oil per day. Although the initial results are disappointing, the Company is still evaluating the improving production trend observed over the last 10 days and will incorporate the production results over the next 30 to 60 days into the interpretation of the prospectivity of the Three Forks zone as we approach the western edge of our acreage position.

In addition to the wells listed above, the Company has one operated well that is producing but has not yet produced for 30 cumulative days, four operated wells that are in various stages of completion, one operated well that is awaiting completion, and two wells that are being drilled. Below is a list of operated wells that have spud but have not yet produced for 30 cumulative days:

                     

Well
 
Formation
 
Status
 Lateral
Length
 Approximate
DSUAcres
 Infill Number
in DSU1
Braelynne 2-2N
164-101 (26 & 35)
Carry
 

Bakken
 Producing
(< 30 days)
 Short  800  5th well in DSU, 3rd Bakken
Ella 3-15-
163-102 (15 & 22)
Farm-Out
 Three Forks
 Completing
 Long
 1,280
 1st well in DSU, 1st Three Forks
La Plata State
2-16-
163-101 (16 & 21)
Carry
 Three Forks
 Completing
 Long
 1,280
 2nd well in DSU,
2
nd Three Forks
Shelly 3-2N-
164-102 (26 & 35)
 Three Forks
 Completing
 Short
 800
 1st well in DSU,
1
st Three Forks
Warren 4-2-
163-101 (2 & 11)
 Bakken
 Completing
 Long
 1,280
 4th well in DSU,
1
st Bakken
Murielle 9-1E-
163-101 (5 & 6)
 Three Forks
 Awaiting Completion
 Long
 1,280
 3rd well in DSU, 2nd Three Forks
Richard 2-13N-
163-101 (1 & 12)
 Three Forks
 Drilling
 Long
 1,280
 5th well in DSU, 3rd Bakken
George 3-1-
163-102 (1 & 12)
 Three Forks
 Drilling
 Long
 1,280
 1st well in DSU,
1
st Three Forks
1 Drill spacing unit ("DSU")
 

American Eagle plans to announce results of the wells once it has achieved approximately 30 days of cumulative production. The Company anticipates releasing results for wells in an operations update that will likely be after the end of June 2014, but before announcing second quarter 2014 operational results in August.

Operated Well Development Guidance

American Eagle currently has two rigs drilling in its Spyglass area. Thus far during the second quarter, the Company has spud two gross operated wells, is in the process of completing four gross operated wells and anticipates drilling and completing an additional two gross operated wells. At the current pace of development, American Eagle estimates that approximately six gross operated wells will be spud, completed and brought onto production each quarter.

For the remainder of 2014, American Eagle plans to drill a mix of Three Forks and Middle Bakken wells, with a weighting towards Three Forks wells. The Company will focus on developing wells with high working interests and giving effect for the increased working interests now expects to drill and complete a total of 24 gross (16 net) operated wells during 2014 for approximately $97 million. American Eagle also plans to participate in the development of non-operated wells in its Spyglass area and spend approximately $3 million to participate in less than one non-operated well. The Company's total well development budget for 2014 is approximately $100 million.

2014 Production Volume Guidance

American Eagle has reaffirmed its production volume guidance to exit 2014 at over 3,000 BOEPD. As weather in the Williston Basin has recently improved, production volumes are expected to return to normal levels during second quarter 2014 with the added benefit of higher working interests that now average 68% in the Spyglass area following the acquisitions completed in March 2014. The Company estimates that its current production is approximately 2,250 BOEPD. American Eagle anticipates significant QOQ production volume growth during the third and fourth quarters of 2014 and overall is comfortable with consensus estimates for 2014 production volumes.

Liquidity and Shares Outstanding

As of March 31, 2014, American Eagle had approximately $50.1 million in cash, $108.0 million total debt outstanding and 30.4 million shares of common stock outstanding. American Eagle believes that its cash on hand, cash flow from operations, and anticipated additional availability under the $200 million credit facility driven by increased proved producing reserves should adequately fund its two-rig drilling program to drill 16 net operated wells per year in 2014 and well development at a similar pace in 2015.

Conference Call

American Eagle will host a conference call on Wednesday, May 14, 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 1Q 2014 Financial and Operational Results Conference Call
Date:  Wednesday, May 14, 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 Wednesday, May 21, 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)
         
    March 31,   December 31,
    2014   2013
Current assets:            
  Cash   $ 50,081,532   $ 31,850,161
  Trade receivables     8,955,900     17,919,518
  Income tax receivable     25,000     -
  Prepaid expenses     213,858     68,194
    Total current assets     59,276,290     49,837,873
Equipment and leasehold improvements, net of accumulated depreciation and amortization of $356,524 and $322,437, respectively     221,598     173,516
Oil and gas properties, full-cost method - subject to amortization, net of accumulated depletion of $16,312,547 and $12,849,063, respectively     237,324,350     155,145,039
Oil and gas properties, full-cost method - not subject to amortization     2,487,322     2,487,158
Marketable securities     1,016,024   1,049,944
Other assets     7,123,972     7,503,612
             
Total assets   $ 307,449,556   $ 216,197,142
             
Current liabilities:            
  Accounts payable   $ 53,830,430   $ 41,842,068
  Current derivative liability     1,260,380     64,737
  Current portion of long-term debt     4,800,000     3,000,000
    Total current liabilities     59,890,810     44,906,805
Asset retirement obligation     1,293,720     1,059,689
Noncurrent portion of long-term debt     103,200,000     105,000,000
Noncurrent derivative liability     1,377,331     749,872
Deferred taxes     4,755,465     5,385,954
Total liabilities     170,517,326     157,102,320
Stockholders' equity:            
  Common stock, $.001 par value, 48,611,111 shares authorized, 30,370,537 and 17,712,151 shares outstanding    
30,371
    17,712
  Additional paid-in capital     145,937,382     67,197,521
  Accumulated other comprehensive income (loss)     107,588     (5,747)
  Accumulated deficit     (9,143,111)     (8,114,664)
Total stockholders' equity     136,932,230     59,094,822
Total liabilities and stockholders' equity   $ 307,449,556   $ 216,197,142
             
             
 
AMERICAN EAGLE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
         
    For the Three-Month Periods
    Ended March 31,
    2014   2013
         
Oil and gas revenues   $ 12,545,479   $ 7,628,707
             
Operating expenses:            
  Oil and gas production costs     3,652,876     1,648,534
  General and administrative expenses     2,017,538     1,307,333
  Depreciation, depletion and amortization     3,635,919     1,274,923
  Impairment of oil and gas properties     -     1,525,027
    Total operating expenses     9,306,333     5,755,817
             
Total operating income     3,239,146     1,872,890
             
Other income (expense)            
  Interest income     641     3,156
  Dividend income     15,797
    17,240
  Interest expense     (3,214,952)
    (418,340)
  Realized gains on derivatives     115,648
    -
  Unrealized loss on derivatives     (1,823,102)
    (27,507)
    Total other income (expense)     (4,905,968)
    (425,451)
             
Income (loss) before taxes     (1,666,822)     1,447,439
             
Income tax expense (benefit)     (638,375)
    1,092,092
             
Net income (loss)   $ (1,028,447)
  $ 355,347
             
Net income (loss) per common share:            
  Basic   $ (0.06)
  $ 0.03
  Diluted   $ (0.06)
  $ 0.03
             
Weighted average number of shares outstanding:            
  Basic     18,556,695
    12,472,642
  Diluted     18,556,695     12,889,584
               
 
 
AMERICAN EAGLE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
     
  For the Three-Month Periods
  Ended March 31,
  2014 2013
Cash flows from operating activities:        
Net income (loss) $ (1,028,447) $ 355,347
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
    Non-cash transactions:        
      Stock-based compensation   454,026   237,348
      Depreciation, depletion and amortization   3,635,919   1,274,923
      Accretion of discount on asset retirement obligation   21,906   2,631
      Amortization of deferred financing costs   379,640   45,231
      Provision for deferred income tax expense (benefit)   (630,489)   1,091,636
      Impairment of oil and gas properties   -   1,525,027
      Unrealized loss on derivatives   1,823,102   27,507
    Changes in operating assets and liabilities:        
      Income taxes receivable   (25,000)   -
      Trade receivables   4,374,671
  5,510,325
      Prepaid expense   (145,785)
  (67,381)
      Accounts payable   (1,475,176)   481,359
Net cash from operating activities   7,384,367   10,483,953
Cash flows used for investing activities:   (67,349,728)   (13,923,555)
  Additions to oil and gas properties        
  Additions to equipment and leasehold improvements   (82,169)   (3,453)
  Purchases of equity securities   (8,940)   -
  Decrease in amounts due to Carry Agreement partner   -   (2,450,723)
Net cash used for investing activities   (67,440,837)   (16,377,731)
Cash flows from financing activities:        
  Proceeds from issuance of stock   78,298,494   4,000,000
  Proceeds from issuance of long-term debt   -   2,000,000
  Repayment of long-term debt   -   (970,803)
Net cash from financing activities   78,298,494   5,029,197
Effect of exchange rate changes on cash   (10,653)   (83,425)
Net change in cash   18,231,371   (948,006)
Cash - beginning of period   31,850,161   19,057,727
Cash - end of period $ 50,081,532 $ 18,109,721
         
   
   
  For the Three-Month Periods
  Ended March 31,
    2014
  2013
         
Net income (loss)   $ (1,028,447)   $ 355,347
             
Other comprehensive income (loss):            
  Unrealized gains (losses) on securities, net of tax     (42,860)     (1,587)
  Foreign currency translation adjustments     156,195     (99,958)
             
Comprehensive income (loss)   $ (915,112)   $ 253,802
             

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 unrealized loss (gain) from mark-to-market on 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:

       
   Three Months Ended  
   March 31,
2014
 December 31,
2013
 September 30,
2013
 June 30,
2013
 March 31,
2013
 
                  
Net income (loss)   ($1,028,447 ) ($462,160 ) ($936,237 )$2,637,484  $355,347  
Less: Interest income   (641 ) (6,964 ) (1,700 ) (1,472 ) (3,156 )
Less: Dividend income   (15,797 ) (16,523 ) (16,697 ) (16,982 ) (17,240 )
Add: Interest expense   3,214,952   3,207,039   1,315,865   414,797   418,340  
Add: Income tax expense (benefit)   (638,375 ) 130,056   (646,123 ) 1,192,691   1,092,092  
Add: Depletion, depreciation and amortization   3,635,919   4,158,124   2,524,039   2,116,378   1,274,923  
Add: Stock-based compensation   454,026   375,756   302,842   287,172   237,348  
Add: Impairment of oil and gas properties   -   206,508   -   -   1,525,027  
Add: Loss on early extinguishment of debt   -   -   3,713,972   -   -  
Add: Unrealized (gain) loss on derivatives   1,823,102   39,569   934,287   (186,754 ) 27,507  
Adjusted EBITDA  $7,444,739  $7,631,405  $7,190,248  $6,443,314  $4,910,188  
                                 

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:

       
   Three Months Ended  
  March 31,
2014
  December 31,
2013
  September 30,
2013
  June 30,
2013
  March 31,
2013
 
                     
Adjusted EBITDA (1) $7,444,739  $7,631,405  $7,190,248  $6,443,314  $4,910,188  
Less: Interest expense  (3,214,952 ) (3,207,039 ) (1,315,865 ) (414,797 ) (418,340 )
Add: Amortization of deferred financing  379,640   327,922   161,758   66,944   45,231  
Adjusted Cash Flow $4,609,427  $4,752,288  $6,036,141  $6,095,461  $4,537,079  
                      
Adjusted Cash Flow per share - basic $0.25  $0.34  $0.46  $0.49  $0.36  
Adjusted Cash Flow per share - diluted $0.24  $0.33  $0.44  $0.47  $0.35  
                      
Weighted average shares - basic  18,556,695   13,961,688   13,223,608   12,517,087   12,472,642  
Weighted average shares - diluted  19,205,118   14,598,836   13,732,595   12,992,218   12,889,584  
                      
(1) See previous table for reconciliation of net income (loss) to Adjusted EBITDA.  
               

Adjusted Income

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 the effect of unrealized loss (gain) from mark-to-market on derivatives ("adjusted income (loss)"), which is a non-GAAP performance measure. Adjusted income (loss) consists of net earnings after adjustment for those items described in the table below. Adjusted income (loss) 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 income (loss) 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 income (loss) to manage its business, including in preparing its annual operating budget and financial projections. Management does not view adjusted income (loss) 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 income (loss) for the periods presented:

   
  Three Months Ended
March 31,
2014
 December 31,
2013
 September 30,
2013
 June 30,
2013
 March 31,
2013
               
Net income (loss)  ($1,028,447 )($462,160 ) ($936,237 )$2,637,484  $355,347
Add: Impairment of oil and gas properties  -  206,508   -   -   1,525,027
Add: Loss on early extinguishment of debt  -  -   3,713,972   -   -
Add: Unrealized lossed on derivatives  1,823,102  39,569   934,287   (186,754 ) 27,507
Adjusted Income / (Loss) $794,655  ($216,083 )$3,712,022  $2,450,730  $1,907,881
                   
Adjusted Income per share - basic $0.04  ($0.02 )$0.28  $0.20  $0.15
Adjusted Income per share - diluted $0.04  ($0.01 )$0.27  $0.19  $0.15
                   
Weighted average shares - basic  18,556,695  13,961,688   13,223,608   12,517,087   12,472,642
Weighted average shares - diluted  19,205,118  14,598,836   13,732,595   12,992,218   12,889,584
                           

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