2011-03-02-2011-02-23

To merge, creating company with combined ND Bakken and Three Forks presence plus asets in MT& SK.

American Eagle Energy Inc., Billings, Mont., (OTCBB: AMZG) plans to merge with a wholly owned subsidiary of Littleton, Colo.-based Eternal Energy Corp., (OTCBB: EERG) which will be the surviving entity. The deal value was not disclosed.

American Eagle focuses on the North Dakota Bakken and Three Forks formations; the Alberta Basin Bakken source system in Montana; and the Hardy Bakken project in Saskatchewan, Canada. Eternal Energy also targets the Bakken and Three Forks formations.

American Eagle currently expects that, immediately following the closing of the possible merger, the resulting company, through a reverse split, will reduce the number of outstanding shares of common stock that would result from the merger transaction. In addition, American Eagle anticipates that the resulting company will file an application to list its common stock on a senior exchange.

"This proposed merger provides a unique opportunity in the near term for American Eagle and Eternal Energy to consolidate their respective interests in several low risk Bakken properties in Saskatchewan and North Dakota with a large, highly prospective acreage position in the Montana portion of the rapidly emerging Alberta Bakken play," notes Richard Findley, American Eagle president and chief executive. "In the longer term, the combined company will also provide better leverage for development of the other recently announced American Eagle oil plays located in Montana."

"Combining these assets and the management teams of both companies should increase stockholder value and provide a whole that is greater than the sum of its parts," adds Brad Colby, Eternal Energy president and CEO.