Aurora Oil & Gas Testing 350 ft Eagle Ford Well Spacing

Aurora Oil Gas Eagle Ford Acreage Map

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.

Is a Eureka Energy Bidding War Close?

Eureka Energy's board is rejected an offer from Aurora Oil & Gas, but could be near an agreement with Lonestar Resources. Details of a potential agreement will not be known until Eureka's board meets over the weekend. Aurora's offer is only good until June 15 and Australian regulations prevent the company from making a higher offer until after that date. Lonestar Resources is a private Fort Worth based company with interests in the Bakken, Barnett, and Eagle Ford shales.

Read more on the potential offer at wsj.com

Aurora Oil & Gas Adds Sugarloaf Acreage for $95 Million

Aurora Oil & Gas is continuing its quest to add acreage in the Sugarloaf field in South Texas. Just two weeks ago, Aurora made a bid for Eureka Energy, but Eureka's board wasn't excited about the proposal. This week, Aurora announced a deal that adds 1,440 net acres to the company's AMI in the Sugarloaf at a price tag of US$95 million.  Marathon Oil operates the property. Aurora will have a 21.8% non-operated interest in the field when the deal closes. If the company is able to close the Eureka deal, they would add an additional 6.25% interest in the AMI.

Eureka Energy's Board is Rejecting Aurora Oil & Gas' Offer

Eureka Energy Sugarloaf Map

Eureka Energy is advising shareholders not to accept the US$110 million offer that was made for the company by Aurora Oil & Gas on Monday.

Eureka asserts the offer is lower than their valuation of the company's flagship asset in the Sugarloaf Field and does not attribute any value to its Pan De Azucar/Black Jack Springs, or Bioche assets.

Eureka owns a 6.25% working interest in 24,743 gross (1,521 net) acres operated by Marathon Oil in Karnes County. In U.S. dollars, the offer is for $0.46 per share and Eureka believes the Sugarloaf field alone is worth US$0.56 per share or US$132.7 million.

If I'm doing the math correctly, that's $132,700,000/1,521 net acres = a valuation of $87,245.23/acre.

Read the entire recommendation at eurekaenergy.com.au

Aurora Oil & Gas to Acquire Eureka Energy

Aurora Oil & Gas Eagle Ford Map

Aurora Oil & Gas is bidding to add to its Eagle Ford position through a $107 million acquisition of Eureka Energy. Both are Australian companies that control non-operated acreage in the South Texas shale.

Eureka's assets include 24,743 gross (1,521 net) acres in the Sugarloaf Field in Karnes County.  Aurora has 24,033 gross (3,792 net) acres in the same area of the play. The acreage will add to Aurora's 76,989 gross (16,365 net) acres and increase the company's position to almost 18,000 net acres. The Sugarloaf field lies in the middle of the high rate condensate window of the Eagle Ford.

Marathon Oil operates assets in the area and Aurora expects drilling across the properties will double to as many as 150 wells in 2012.

You can read more about Aurora at www.auroraoag.com.au