Aurora Oil & Gas's Production Increases in the First Quarter of 2014

May 2, 2014 Kirk Eggleston

Eagle Ford-focused Aurora Oil & Gas, which will soon be absorbed by Baytex Energy, had first quarter estimated gross production of 28,600 (21,100 net) boe/d. That's a 54% increase over the first quarter of 2013, and a 16% increase over Aurora's fourth quarter production in the play.

In February of 2014, Baytex Energy agreed to purchase Aurora for $2.6 billion. When the deal closes, it will include 22,000 net contiguous acres in the Sugarkane Field. The acreage is located in what is commonly referred to as the "sweet spot" or oil window of the Eagle Ford Shale.

Aurora Oil & Gas Eagle Ford Q1 2014 Operations Update

During the first quarter, 32 gross new Eagle Ford wells (8.6 net) were put into production for a total of 419 gross producing wells (111.7 net). A total of 57 gross new wells (15 net) were spudded during the first quarter of 2014, and at the end of the quarter, drilling operations continued on 10 wells, while 29 wells were awaiting fracture stimulation.

Aurora's net acreage covers Karnes, Live Oak and Atascosa counties. Revenue from oil and gas sales in the first quarter was $182 million.

Aurora Oil & Gas Eagle Ford Q1 Highlights

54% increase over Q1 2013 to 28,600 (21,100 net) boe/d
16% increase Q4 production
Baytex Energy agreed to purchase Aurora for $2.6 billion
32 gross new Eagle Ford wells (8.6 net) were put into production
57 gross new wells (15 net) were spudded
Revenue from oil and gas sales in the first quarter was $182 million

Baytex Energy - Aurora Deal for Eagle Ford Assets - ~$2.6 Billion

February 10, 2014 Kirk Eggleston

Canadian-based Baytex Energy agreed to buy Australian-based Aurora Oil and Gas for ~$2.6 billion dollars in early February 2014.

Aurora has approximately 22,000 net contiguous acres in the Sugarkane Field, located in the heart of the Eagle Ford Shale., with 97% held by production.

In March of 2013, Aurora purchased 27 net acres near the Sugarkane Field for $117 million.

The Sugarkane Field

Aurora’s fourth-quarter 2013 gross production was 24,678boe/d (82% liquids) of mostly light, high-quality crude oil from the Sugarkane Field.

“The Eagle Ford play provides not only exposure to light oil, but also to Gulf Coast crude oil markets with established transportation systems. A portion of the produced crude oil benefits from Louisiana Light Sweet based pricing, which currently trades at a premium to WTI.”

— James Bowzer, Baytex CEO

In addition to sustainable infrastructure, the deal was also appealing to Baytex because of reserves upside potential from well downspacing, improving completion techniques and new development targets in additional zones.

Marathon is the majority operator of the Eagle Ford acreage.

Baytex Added Reserves and 2014 Outlook

The deal adds proved reserves to Baytex of 106.7 million boe and proved plus probable reserves of 166.6 million boe. The company sees reserve upsides in other horizons such as the Austin Chalk and Upper Eagle Ford formations, through downspacing and improving completion techniques.

Prior to the purchase agreement, Aurora's forecasted production for 2014 was 29,000 boe/d to 32,000 boe/d. That's a 43% increase in production over 2013.

Baytex-Aurora Deal at a Glance

Early February 2014, Baytex agrees to buy Aurora for ~$2.6 billion
Aurora Oil acreage assets include 22,000 net contiguous acres in Eagle Ford
97% of Aurora acreage is held by production
Aurora's Q4 2013 gross production was 24,678boe/d (82% liquids)
Marathon is primary operator of acreage in the Eagle Ford
Forecasted production for 2014 is 29,000 boe/d - 32,000 boe/d

Aurora Spuds Its First Operated Eagle Ford Well

June 7, 2013 R.T. Dukes

Aurora Oil and Gas Operated Eagle Ford Acreage

In March of 2013, Aurora acquired operated acreage in the Eagle Ford and on May 31st the company spud its first operated well in the play.

A Nabors rig is being used on the company's Heard Ranch to drill the JP Heard Bower #19H. A total of three wells will be drilled from the surface pad.

A vertical pilot whole will be drilled first to log the Eagle Ford. The log will be used in determining placement of future horizontal wellbores.

“Initial development will include two horizontal wells spaced 330 ft apart (40-acre spacing). A zipper frac that completes alternating sections of the two wells will be used. ”

Aurora has an interest in 79,700 gross (21,800 net) acres in or near the Sugarkane field in the Eagle Ford. Aurora operates approximately 2,700 net acres at its Heard Ranch and Axel Tree prospects. Marathon Oil operates the majority of the company's non-operated acres.

A total of 14-19 operated wells and 30-32 non-operated wells will be drilled in 2013.

Aurora Oil & Gas Buys Eagle Ford Acreage for $117 Million

March 4, 2013 R.T. Dukes

Aurora Oil & Gas announced on Friday March 1st the company has acquired 2,700 net acres near the Sugarkane Field for $117 million.

Aurora will operate the acreage and now has over 21,800 net acres in the area. The company estimates the properties hold 6.7 mmboe of proved reserves of 14 mmboe of probable (2p) reserves. The Austin Chalk and Pearsall formations provide additional upside to those estimates.

The assets include average December 2012 production of approximately 1,620 boe/d net of royalties from 11 wells and associated interests in field infrastructure and related assets. The production comprises 84% liquids (70% oil), and represents a 12% increase to Aurora’s 2012 exit production.

Approximately 1,580 acres are located in the Heard Ranch in Atascosa County and a little more than 1,100 acres are part of the Axle Tree prospect that straddles Karnes and Live Oak counties.

Aurora Oil & Gas Testing 350 ft Eagle Ford Well Spacing

July 26, 2012 R.T. Dukes

Aurora Oil & Gas provided an operations update announcing it will participate in 11 wells testing tighter spacing across the company's acreage. Wells in the gas-condensate window of the play will be tested at 500 ft (~60-acre) spacing and wells in the volatile oil window will be tested at 350 ft (~40-acre) spacing. If successful, a 40-acre spacing test means there could be potential for as many as 16 wells drilled targeting the Eagle Ford on the best sections in the volatile oil window.

Ultimate recoveries normally fall when operators downspace in a field, but we're still in the early stages of determining optimal well design across the Eagle Ford. The best case scenario is that test proves successful without lowering per well recoveries significantly.

Highlights from Aurora's second quarter activity includes:

Acquired an additional 6% working interest in the Sugarloaf AMI
Acquired 75% of the outstanding shares of Eureka Energy
Produced ~560,000 boe
Construction began on three central processing plants in the Sugarloaf AMI
75% of Sugarkane Field acreage is now held by production
Havest 3 Rivers Pipeline came into service and Aurora is selling crude and condensate at the equivalent price of WTI+$6

Marathon Oil operates the majority of Aurora's acreage. You can read more about Aurora at aurora.com.au

How low do you think Eagle Ford acreage spacing will go? Share your thoughts in the comment section below.