American Eagle Energy Closes Share Issue - Analyst Blog

Denver, CO-based American Eagle Energy Corp. AMZG has announced the closure of its previously declared public offering of 11,000,000 common shares priced at $6.60 a piece, with a fully-exercised over-allotment option for an additional 1,650,000 shares.

The energy explorer plans to use the net proceeds from this offering – approximately $78.0 million after the underwriting discount and estimated offering expenses – to pay for the exercise of its purchase option to buy a part of its joint venture partner's stakes in its existing acreage and wells in the Spyglass Area, to partially fund its 2014 capital budget, as well as for corporate purposes, including more lease acre buys.

American Eagle Energy is an independent exploration and production company engaged in the acquisition, finding and development of oil and gas properties. The company's operations are concentrated primarily in the high return Williston Basin, consisting of the Bakken and Three Forks formations in North Dakota and Montana. In particular, American Eagle Energy has done a stellar job at raising production and adding acreage, led by a high quality and experienced management team.

However, as is the case with other independent exploration and production companies, American Eagle Energy's results are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces. Realized prices could differ significantly from our estimates, thereby affecting the company's revenues, earnings and cash flow.

As a result, American Eagle Energy currently retains a Zacks Rank #3 (Hold), implying that it is expected perform in line with the broader U.S. equity market over the next one to three months.

However, some better-ranked domestic upstream energy stocks include Range Resources Corp. RRC, Approach Resources Inc. AREX and Diamondback Energy Inc. FANG. While Range Resources holds a Zacks Rank #1 (Strong Buy), Approach Resources and Diamondback Energy both carry a Zacks Rank #2 (Buy).