| Re: | Hardy      Assets; Spyglass Assets |
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| 1. | Schedules.  The      following schedules are attached hereto and made a part of this      Agreement: |
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| 2. | Sale      of Hardy      Assets; Sale of Spyglass Assets.  Eternal, for the      consideration set out in Clause 3, agrees to sell, convey, transfer, and      assign to American Eagle 50% of Eternal’s right, title, estate, and      interest in and to the Hardy Assets.  American Eagle, for the      consideration set out in Clause 3, agrees to sell, convey, transfer, and      assign to Eternal 50% of American Eagle’s right, title, estate, and      interest in and to the SpyglassAssets. |
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| 3. | Consideration.  In      consideration of these premises, the respective representations and      warranties of the parties, the sale, conveyance, transfer, and assignment      transactions contemplated herein, (i) American Eagle shall sell, convey,      transfer, and assign to Eternal 50% of American Eagle’s right, title,      estate, and interest in and to the Spyglass Assets and (ii) Eternal shall      sell, convey, transfer, and assign to American Eagle 50% of Eternal’s      right, title, estate, and interest in and to the Hardy    Assets. |
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| 4. | Management      and Operation of the Hardy Assets and the Spyglass      Assets.  The management and operation of the Hardy Assets      and the Spyglass Assets shall be governed by an Operating Agreement, the      general form of which (subject to commercially reasonable modifications)      is attached hereto as Schedule “C” (the “Operating      Agreement”).  Eternal and American Eagle shall each      execute the Operating Agreement as soon as commercially reasonable, but,      in any event, no later than 30 days, following Closing (as defined      below). |
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| 5. | Closing.  The      closing shall take place on June 25, 2010 at such time, place, and manner      as the parties may mutually agree upon in writing (the “Closing”).  On      Closing (a) Eternal shall execute and deliver such general and specific      conveyances, transfers, and assignments, and other documents, as American      Eagle may reasonably require to complete the sale, conveyance, transfer,      and assignment of the Hardy Assets, and (b) American Eagle shall      execute and deliver such general and specific conveyances, transfers, and      assignments, and other documents, as Eternal may reasonably require to      complete the sale, conveyance, transfer, and assignment of the Spyglass      Assets.  Each party shall also deliver such further      documentation as the other party may reasonably request to complete the      transactions contemplated hereby, including, without limitation, officer’s      certificates in respect of each party’s representations and      warranties.  All documentation delivered at Closing shall be in      form and substance satisfactory to the parties, acting      reasonably.  Eternal shall make available to American Eagle all      of its lease and agreement files and other records pertaining to the Hardy      Assets as soon as commercially reasonable following Closing and American      Eagle, in turn, shall make available to Eternal all of its lease and      agreement files and other records pertaining to the Spyglass Assets as      soon as commercially reasonable following  Closing. |
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| 6. | Representations      and Warranties. |
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|   | (a) | Eternal:  Eternal      makes the following representations and warranties to American Eagle, all      of which shall be true and accurate in all material respects as of the      Closing: |
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|   | (i) | Organization and      Standing:  Eternal Energy Corp. is a corporation duly      organized, validly existing and in good standing under the laws of the      State of Nevada and EERG Energy ULC is a corporation duly organized,      validly existing and in good standing under the laws of Saskatchewan      Canada; |
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|   | (ii) | Power and      Authority:  Eternal has all requisite power and authority      to carry on its business as presently conducted, to enter into this      Agreement, and to perform its obligations hereunder.  This      Agreement has been approved by all necessary corporate action on the part      of Eternal and the consummation of this Agreement will not violate, nor be      in conflict with, (A) any provision of the governing documents of Eternal,      (B) any agreements to which Eternal is a party, or (C) any judgment,      decree, ordinance, law, regulation, orpermit; |
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|   | (iii) | Enforceability:  This      Agreement and all other agreements and instruments executed in accordance      herewith shall constitute the valid and binding obligation of Eternal      enforceable in accordance with their respective terms, subject to      applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,      or similar laws affecting the rights of creditors generally and subject to      the general principles of equity; |
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|   | (iv) | Sole Ownership and No      Encumbrances:  Eternal is the sole owner of and has good      and marketable title to the Hardy Assets, free and clear of material      liens, claims, and encumbrances; |
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|   | (v) | No Consents or Rights      of First Refusal:  There are no consents required or      rights of first refusal or similar rights triggered as a result of the      contemplated sale and transfer of the Hardy Assets or the transactions      contemplated by the Closing; |
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|   | (vi) | Compliance with      Laws:  To the best of Eternal’s knowledge, all laws,      rules, regulations, ordinances, and orders of all local, provincial, and      federal governmental bodies having jurisdiction over the Hardy Assets have      been complied with; and |
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|   | (vii) | Full      Disclosure:  To the best of Eternal’s knowledge, none of      the above representations and warranties fails to state a material fact      necessary to make the statements contained therein not      misleading. |
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|   | (b) | American      Eagle:  American Eagle makes the      following  representations and warranties to Eternal, all of      which shall be true and accurate in all material respects as of the      Closing: |
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|   | (i) | Organization and      Standing:  American Eagle Energy Inc. is a corporation      duly organized, validly existing and in good standing under the laws of      the State of Nevada and AEE Canada Inc. is a corporation duly organized,      validly existing and in good standing under the laws of Saskatchewan      Canada; |
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|   | (ii) | Power and      Authority:  American Eagle has all requisite power and      authority to carry on its business as presently conducted, to enter into      this Agreement, and to perform its obligations hereunder.  This      Agreement has been approved by all necessary corporate action on the part      of American Eagle and the consummation of this Agreement will not violate,      nor be in conflict with, (A) any provision of the governing documents of      American Eagle, (B) any agreements to which American Eagle is a party, or      (C) any judgment, decree, ordinance, law, regulation, or      permit; |
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|   | (iii) | Enforceability:  This      Agreement and all other agreements and instruments executed in accordance      herewith shall constitute the valid and binding obligation of American      Eagle enforceable in accordance with their respective terms, subject to      applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,      or similar laws affecting the rights of creditors generally and subject to      the general principles of equity; |
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|   | (iv) | Sole Ownership and No      Encumbrances:  American Eagle is the sole owner of and      has good and marketable title to the Spyglass Assets, free and clear of      material liens, claims, andencumbrances. |
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|   | (v) | No Consents or Rights      of First Refusal:  There are no consents required or      rights of first refusal or similar rights triggered as a result of the      contemplated sale and transfer of the Spyglass Assets or the transactions      contemplated by the Closing; |
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|   | (vi) | Compliance with      Laws:  To the best of American Eagle’s knowledge, all      laws, rules, regulations, ordinances and orders of all local, state, and      federal governmental bodies having jurisdiction over the Spyglass Assets      have been complied with; and |
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|   | (vii) | Full      Disclosure:  To the best of American Eagle’s knowledge,      none of the above representations and warranties fails to state a material      fact necessary to make the statements contained therein not      misleading. |
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| 7. | Survival.  The      representations and covenants of Eternal and American Eagle shall survive      the Closing for a period of 6 months and shall be deemed to apply to all      agreements and instruments executed in accordance herewith, it being the      express intention of the parties that there shall not be any merger of the      aforesaid representations and covenants notwithstanding any rule of law,      equity, or statute to the contrary, all such rules being      waived.  Each of Eternal and American Eagle shall indemnify the      other from and against all claims arising within the aforesaid survival      period that are occasioned by reason of a representation being untrue or      inaccurate. |
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| 8. | No      Consequential Damages.  No party shall be liable to the      other hereunder for indirect, consequential, special, or punitive damages,      including, without limitation, loss of future revenue, income or profits,      diminution of value, or loss of business reputation or      opportunity. |
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| 9. | Press      Releases; SEC Reports.  The parties each acknowledge that      the other is a publicly traded entity and that each shall be required to      issue a press release and to file with the Securities and Exchange      Commission a Current Report on Form 8-K concerning this Agreement and the      transactions contemplated hereunder.  Nothing herein shall      prevent a party from furnishing any information to any governmental agency      or regulatory authority or to the public insofar and to the extent such      disclosure is required by applicable law (including, without limitation,      securities laws or the rules or regulations of any stock exchange or other      trading medium applicable to such party), provided that a party that      proposes to make such a public disclosure shall, to the extent reasonably      possible, provide the other party with a draft of such statement in      sufficient time prior to its release to enable such other party to review      such draft and advise the disclosing party of any comments it may have      with respect thereto. |
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| 10. | Amendment.  This      Agreement may only be amended by a formal written instrument executed by      proper signing officers for theparties. |
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| 11. | Waiver.  The      parties acknowledge and agree that any waiver of the provisions of this      Agreement shall only be binding upon the waiving party if evidenced in      writing and signed on behalf of the waiving party; any such waiver shall      apply only to the particular breach, default, obligation, or provision      specifically identified and waived and not to any other breaches,      defaults, obligations, or provisions, whether or not similar; any such      waiver shall not constitute a continuing waiver unless expressly stated;      and any delay or omission on the part of a party in exercising any right      or power under this Agreement shall not impair the ability of such party      to exercise such right or power or be considered to be a waiver of, or      acquiescence to, any breach ordefault. |
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| 12. | Notices.  Any      notices which may be required to be given under the terms of this      Agreement shall be in writing and shall be considered duly delivered if      personally delivered or sent by facsimile to the addresses of the parties      as set out below: |
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| If to Eternal:                                                                                                    |         | If to American Eagle:                                                             |
|-------------------------------------------------------------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------|
|                                                                                                              |         |                                                                              |
| Eternal      Energy Corp.                                                                                         |         | American      Eagle Energy Inc.                                                   |
| 2549      West Main Street, Suite 202                                                                             |         | 27      North 27th Street, Suite 21G                                              |
| Littleton,      Colorado 80120                                                                                    |         | Billings,      Montana 59101                                                      |
| Facsimile:  303.798.5767                                                                                |         | Facsimile:                                                                        |
| Attn:        Brad      Colby                                              |         | Attn:     Richard      Findley                           |
|                     Chief Executive Officer |    |             President |

| 13. | Non-Assignable.  This      Agreement is not assignable by either party without the prior written      consent of the other party, such consent not to be unreasonably withheld,      delayed, or denied. |
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| 14. | Inurement.  This      Agreement shall be binding upon and inure to the benefit of the parties      and their respective successors and/orassigns. |
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| 15. | Headings.  The      headings utilized in this Agreement are inserted for convenience of      reference only and shall not affect the construction of the provisions      hereof. |
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| 16. | Gender      and Number.  This Agreement shall be read with all      changes in gender and number as may be required by the      context. |
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| 17. | Conflict.  Wherever      any provision, whether express or implied, of any schedule conflicts or is      at variance with any provision of the main body of this Agreement, the      provision in the main body shall prevail.  Wherever any      provision, whether express or implied, of this Agreement conflicts or is      at variance with any documentation issued in furtherance thereof, the      provision of this Agreement shallprevail. |
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| 18. | Governing      Laws/Courts. |
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|   | (a) | Governing      Laws:  This Agreement shall, in all respects, be subject      to, interpreted, construed, and enforced in accordance with and under the      laws of the State of North Dakota, without regard to principals of      conflicts of law.  To the extent that the location of the Hardy      Assets in the Province of Saskatchewan requires the application of the      laws in force in the Province of Saskatchewan, such laws shall be adduced      as evidence in the North Dakota courts having jurisdiction in respect of a      dispute arisinghereunder. |
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|   | (b) | Courts:  The      parties irrevocably attorn and submit to the exclusive jurisdiction of the      courts of the State of North Dakota and courts of appeal therefrom in      respect of all matters arising out of this  Agreement. |
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| 19. | Invalidity      of Provisions.  If any provision of this Agreement or the      application thereof to any party or circumstance shall to any extent be      held invalid, illegal, or unenforceable by a court of competent      jurisdiction, the remainder of this Agreement, the application of such      provision to parties or circumstances other than those to which it is held      invalid, illegal, or unenforceable, or the validity, legality, or      enforceability of such provision in any other jurisdiction shall not in      any way be affected or impaired thereby and such provision shall be      severable from this Agreement to the extent of such invalidity,      illegality, or unenforceability. |
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| 20. | Negotiated      Transaction.  The parties have participated jointly in      the negotiation and drafting of this Agreement and, in the event an      ambiguity or question of intent or interpretation arises, this Agreement      shall be construed as jointly drafted by the parties and no presumption or      burden of proof shall arise favoring or disfavoring any party by virtue of      the authorship of any provision of this  Agreement. |
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| 21. | Intent;      Further Assurances.  It is Eternal’s intent to convey,      transfer, and assign to American Eagle 50% of Eternal’s right, title,      estate, and interest in and to the Hardy Assets, legal, beneficial, or      equitable; and it is likewise American Eagle’s intent to convey, transfer,      and assign to Eternal 50% of American Eagle’s right, title, estate, and      interest in and to the Spyglass Assets, legal, beneficial, or      equitable.  In this regard, both parties agree to execute and      deliver all such instruments, conveyances, and other documents and do such      other acts not inconsistent with the terms of this Agreement as may be      necessary or advisable to carry out each party’s intent as stated      herein. |
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| 22. | Complete      Agreement.  This Agreement constitutes the complete      agreement between the parties regarding the matters addressed herein and      shall supercede all prior agreements between the parties in relation      thereto, whether written or oral. |
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| 23. | Counterpart      Execution/Delivery.  This Agreement may be executed in      one or more counterparts, each of which shall be considered an original      but all of which together shall constitute one and the same      instrument.  In addition, facsimile or scanned email copies of      executed counterparts shall be conclusively regarded for all purposes as      originally executed counterparts pending the delivery of the      originals. |
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| Per:   | /s/ Bradley M. Colby         |   |
|--------|------------------------------|--------|
|   | Bradley      M. Colby        |   |
|   | Chief      Executive Officer |   |

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| AMERICAN      EAGLE ENERGY INC. |                 |
|---------------------------------|----------------------|
|                            |                 |   |
| Per:                            | /s/ Richard Findley  |   |
|                            | Richard      Findley |   |
|                            | President            |   |

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| Title      Documents                                                              |         | Lands                                                                                                              |
|-----------------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------|
|                                                                              |         |                                                                                                               |
| Lease      PN62328        Converted      from EL 00795(Block      4067) |         | 4-21      W2M: W/2 5 & All 6PNG      Surface To The Top of the Precambrian                                     |
|                                                                              |         |                                                                                                               |
| Lease      PN62329        Converted      from EL 00795(Block      4071) |         | 4-21      W2M: N/2 & SE 9, LSDs 5 & 6, 16, 17, 18 and W/2 21PNG      Surface To The Top of the Precambrian |
|                                                                              |         |                                                                                                               |
| Lease      PN61691        (Parcel      227)                             |         | 4-21      W2M: NE & S/2 4PNG      Surface To The Top of the Precambrian                                        |
|                                                                              |         |                                                                                                               |
| Lease      PN61692        (Parcel      228)                             |         | 4-21      W2M: NE 5PNG      To The Top Of The Precambrian                                                          |
|                                                                              |         |                                                                                                               |
| Lease      PN61693         (Parcel      229)                       |    | 4-21      W2M: 9 LSDs 3 & 4PNG      From The Top Of The Watrous Formation to the Top of the      Precambrian   |

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