Aurora Oil & Gas Limited - Quarterly activities summary for the quarter ended 31 March 2013 PERTH, Western Australia, April 29, 2013 /CNW/ - Aurora Oil & Gas Ltd ("Aurora") (ASX:AUT TSX:AEF) is pleased to provide an update on corporate activities and the progress of the development program of its Eagle Ford assets in the Sugarkane Field in South Texas, in accordance with ASX listing rules. On a quarter-on-quarter basis Aurora is pleased to report a: -- 14% increase in revenue. -- 10% increase in production volume. -- Further 8.0 new net wells put on production. Activities during the quarter ended March 31, 2013 have led to the following corporate, operational and production highlights: -- Revenue from oil and gas sales was US$128 million for the quarter (US$93 million after royalties) of which 87% was generated from oil and condensate sales and a further 7% from natural-gas liquids (NGLs). -- The cash balance at the end of the quarter was US$177 million and Bank secured credit facilities of US$200 million were undrawn. -- 36 gross new wells (8.0 net) were put on production and a total of 36 gross (8.9 net) new wells were spudded during the quarter. -- At the end of the quarter, drilling operations were underway on 10 wells, 14 wells were awaiting fracture stimulation and 2 wells were being stimulated or were being prepared for test. In total there were 252 gross wells on production (58 net wells to Aurora). -- Aurora's estimated total gross quarterly production was 1.68 mmboe (80% liquids on a boe basis). Net to Aurora, after royalties, total quarterly production was 1.24 mmboe, an increase of 10% compared to the previous quarter and approximately 280% on the corresponding quarter in 2012. -- The average gross Aurora production rate during the quarter was approximately 18,650 boe/d including NGLs. Net to Aurora, after royalties and including NGLs, average production was approximately 13,760 boe/d, which again equates to a 10% increase on the previous quarter. -- Aurora acquired a 100% working interest and operatorship in approximately 2,700 net acres near or adjacent to the Sugarkane Field. The two separate areas (located in Axle Tree Ranch and Heard Ranch) had existing production of net 1,620 boe/d (as at 31 December 2012) and proved reserves of 8.9 mmboe before royalties (6.7 mmboe after royalties). -- Aurora issued US$300 million of 7.5% pa senior unsecured debt notes due in 2020. -- Aurora increased the borrowing base of its senior secured revolving credit facility to US$275 million based on the 2012 year end reserves report. This was subsequently reduced to US$200 million following the issue of the senior unsecured debt notes. -- Independent engineers, Ryder Scott Company, L.P., provided reserve estimates for Aurora's working interest in the Sugarkane Field effective December 31, 2012 (which therefore does not include the recent acquisition) o Total proved developed producing (PDP) of 21.6 mmboe before royalties and 15.9 mmboe after royalties, an increase of 360%(1) on the previous year. o Total proved reserves (1P) of 94.7 mmboe before royalties and 69.9 mmboe after royalties, an increase of 23%(1) on the previous year. o Total proved plus probable reserves (2P) of 102.9 mmboe and 76.0 mmboe after royalties, an increase of 16%(1) on the previous year. (________________________________) (1) Calculation includes allowance for 2012 production Sugarkane Field - Eagle Ford Shale Aurora's primary asset is its interest in the Sugarkane Field in South Texas, which is located in the core area of the Eagle Ford shale. Aurora participates in approximately 79,700 highly contiguous gross acres that make up the field. The Operator of 77,100 gross acres is Marathon Oil EF LLC, a wholly-owned subsidiary of Marathon Oil Corporation (NYSE: MRO) ("Marathon") and Aurora is the largest non-operating working interest partner in this area. In addition Aurora has 100% working interest and is Operator of two further areas within the Sugarkane Field. Aurora's total acreage position in the Sugarkane Field is shown in the map above. At the end of the reporting period, Aurora had a net position of approximately 21,800 acres within four adjacent Areas of Mutual Interest ("AMIs") and two operated areas in the Sugarkane Field. The varying levels of participation are outlined in the table below and the AMIs are shown on the map above. ___________________________________________________________ | AMI |Working Interest|Gross Acreage|Net Acreage| |________________|________________|_____________|___________| | Sugarloaf | 28.0% | 24,300 | 6,700 | |________________|________________|_____________|___________| | Longhorn | 31.9% | 28,100 | 9,000 | |________________|________________|_____________|___________| | Ipanema | 36.4% | 4,500 | 1,600 | |________________|________________|_____________|___________| | Excelsior | 9.1% | 20,200 | 1,800 | |________________|________________|_____________|___________| |Operated acreage| 100% | 2,700 | 2,700 | |________________|________________|_____________|___________| | Total | | 79,700* | 21,800* | |________________|________________|_____________|___________| *Totals may not sum due to rounding Operations There were between 5 and 9 rigs drilling at any one time on Aurora's non-operated Sugarkane acreage during the reporting quarter. A total of 36 gross (8.9 net) wells were spudded and 36 gross (8.0 net) wells were put on production in this period. The following table provides an activity status within the non-operated Sugarkane field as at March 31, 2013. _________________________________________________________________ | |Sugarloaf|Longhorn|Ipanema|Excelsior|Total| |______________________|_________|________|_______|_________|_____| |Wells | | | | | | |______________________|_________|________|_______|_________|_____| | Producing| 66 | 112 | 7 | 67 | 252 | |______________________|_________|________|_______|_________|_____| | Stimulation Underway| 0 | 2 | 0 | 0 | 2 | |______________________|_________|________|_______|_________|_____| | Awaiting Stimulation| 3 | 10 | 0 | 1 | 14 | |______________________|_________|________|_______|_________|_____| |Drilling or Rigging up| 1 | 8 | 0 | 1 | 10 | |______________________|_________|________|_______|_________|_____| |Total* | 70 | 132 | 7 | 69 | 278 | |______________________|_________|________|_______|_________|_____| * Not including 4 farmout wells subject to payback provisions. In addition, a variety of well intervention operations have taken place across a number of wells in which Aurora has an interest. Operations carried out included tubing change outs and repairs as well as gas lift and pump installations. As anticipated the majority of drilling activity during Q1 2013 within the non-operated Sugarkane field utilised multiple wells 'pads', where 2 - 5 wells are drilled from the same surface location. This allows cost and efficiency savings by sharing infrastructure and avoiding lengthy rig and fracture stimulation equipment moves. Further efficiencies are expected with several pads undergoing batch drilling, whereby the vertical surface hole section of wells at a particular pad location are all drilled first, then all of the horizontal sections are drilled thereafter. This batch approach allows equipment and operations to be configured for a particular phase of the well drilling and then repeatedly used in that mode, again resulting in efficiency gains. During the reporting quarter, Aurora acquired a 100% working interest in approximately 2,700 net acres near or adjacent to the existing Sugarkane holdings and is operator of this position. The transaction closed March 29, 2013 and no activities will therefore be captured in this report. There are 11 producing wells on the acreage which are not included in the above summary. Details of activities carried out by Aurora in this new area will be reported on going forward and the Company anticipates commencement of drilling in mid-2013. 2013 Guidance At the end of the reporting quarter Aurora released its 2013 guidance and an update on anticipated activity levels for 2013. This update was based on further evolution of the non-operated drilling schedule and plans for the newly acquired operated Sugarkane acreage. Aurora advised that it:- -- Anticipates spudding 45 - 50 net wells during 2013, representing an increase of 25 - 30% on previous guidance, split into 30 - 32 net wells on the non-operated Sugarkane field and 14 - 19 net wells in the operated Sugarkane acreage. -- Expects to produce 7.2 - 8.0 mmboe (gross) during 2013 and projects a December 2013 average gross production rate of 23,000 - 25,000 boe/d. Aurora anticipates activities to be weighted to the second half of the year and our production growth profile during 2013 will reflect this bias. -- Forecasts capital expenditure for 2013 on drilling, completion and associated infrastructure expenditure of US$430 - 465 million. Down spacing Pilot Program Update Subsequent to the reporting quarter Aurora released preliminary results from the downspacing pilot program underway within the Sugarkane field. A summary of these preliminary results is: -- A total of 13 wells have at least 6 months of production history although there are now over 70 wells drilled at less than 80 acre spacing across parts of the field. -- The 13 wells show statistically comparable performance to the 80 acre type curves used by the independent engineers to generate the Aurora 2012 year end reserves report. -- The program has been extended to other parts of the Sugarkane field including the Austin Chalk horizon. -- Aurora is planning 40 acre development spacing on its recently acquired operated Sugarkane acreage. -- Aurora will provide a further update on the program and its results during H2 2013. Production During the reporting period, a total of 36 new gross (8.0 net) wells were brought on production. For the majority of the period there were between 1 and 3 frac crews active on Aurora's Sugarkane acreage. The following table provides details of the Aurora production during Q1 2013 which comprised of 80% liquids on a boe basis. _______________________________________________________________________________________________ | | Aurora Gross (WI) | Aurora Net (NRI) | |Qtr 1 |___________________________________________|___________________________________________| | Prod | Oil | Cond | Gas | NGL | BOE* | Oil | Cond | Gas | NGL | BOE* | | |(bbls) |(bbls) | (mscf) |(bbls) | (bbls) |(bbls) |(bbls) | (mscf) |(bbls) | (bbls) | |_______|_______|_______|_________|_______|_________|_______|_______|_________|_______|_________| | Jan |196,023|180,062| 670,969 |84,667 | 572,580 |144,292|132,953| 495,820 |62,539 | 422,421 | |_______|_______|_______|_________|_______|_________|_______|_______|_________|_______|_________| | Feb |181,387|151,308| 623,794 |85,491 | 522,152 |133,485|111,638| 460,914 |63,138 | 385,080 | |_______|_______|_______|_________|_______|_________|_______|_______|_________|_______|_________| | Mar |197,236|168,654| 709,293 |100,137| 584,243 |145,282|124,523| 524,260 |73,989 | 431,171 | |_______|_______|_______|_________|_______|_________|_______|_______|_________|_______|_________| | Total |574,646|500,024|2,004,056|270,295|1,678,974|423,059|369,114|1,480,994|199,666|1,238,671| |_______|_______|_______|_________|_______|_________|_______|_______|_________|_______|_________| |Average| | | | | | | | | | | | | 6,385 | 5,556 | 22,267 | 3,003 | 18,655 | 4,701 | 4,101 | 16,455 | 2,219 | 13,763 | |Daily | | | | | | | | | | | | Rate | | | | | | | | | | | |_______|_______|_______|_________|_______|_________|_______|_______|_________|_______|_________| Note totals may not sum due to rounding *The oil equivalent barrels per day production rate has been calculated on a 6:1 ratio of gas to oil. The graph at the top shows the quarterly production profile since the beginning of 2012. The figures shown at the base of each production bar show the incremental net wells added during that period. As indicated in the Company's 2013 guidance, Aurora anticipates activities to be weighted to the second half of the year and its production growth profile will reflect this bias. Year end 2012 reserves update The following reserve estimates were prepared by the Houston based team of Ryder Scott Company, L.P. in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook with the reserve definitions contained in the Canadian National Instrument 51-101 - Standards of Disclosure for Oil & Gas Activities. ___________________________________________________________________________ | | Aurora Gross Reserves | Aurora Net Reserves | | | (before royalty interests) | (after royalty interests) | |___________|_______________________________|_______________________________| | | |NGL and|Natural| | |NGL and|Natural| | | |L/M Oil| Cond | | BOE |L/M Oil| | Gas | BOE | | |(mbbls)|(mbbls)| Gas |(mbbls)|(mbbls)| Cond |(mmscf)|(mbbls)| | | | |(mmscf)| | |(mbbls)| | | |___________|_______|_______|_______|_______|_______|_______|_______|_______| | Proved| | | | | | | | | | Developed| 7,752 | 8,778 |30,133 |21,552 | 5,710 | 6,490 |22,258 |15,909 | | Producing| | | | | | | | | |___________|_______|_______|_______|_______|_______|_______|_______|_______| | Proved|23,694 |30,656 |112,722|73,137 |17,436 |22,653 |83,263 |53,967 | |Undeveloped| | | | | | | | | |___________|_______|_______|_______|_______|_______|_______|_______|_______| |Total |31,446 |39,433 |142,855|94,688 |23,146 |29,143 |105,522|69,876 | |Proved (1P)| | | | | | | | | |___________|_______|_______|_______|_______|_______|_______|_______|_______| | Probable| 1,433 | 3,595 |18,915 | 8,181 | 1,069 | 2,677 |14,091 | 6,094 | |___________|_______|_______|_______|_______|_______|_______|_______|_______| |Proved + | | | | | | | | | |Probable |32,879 |43,028 |161,769|102,869|24,215 |31,820 |119,612|75,970 | |(2P) | | | | | | | | | |___________|_______|_______|_______|_______|_______|_______|_______|_______| | Possible| 2,436 |36,702 |154,182|64,835 | 1,793 |27,166 |114,285|48,006 | |___________|_______|_______|_______|_______|_______|_______|_______|_______| | Proved +| | | | | | | | | | Probable +|35,315 |79,731 |315,952|167,705|26,008 |58,986 |233,897|123,976| | Possible | | | | | | | | | | (3P)(2)| | | | | | | | | |___________|_______|_______|_______|_______|_______|_______|_______|_______| _________________________ (2) Possible reserves are those reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will be equal or exceed the sum of the proved plus probable plus possible reserves. The updated reserve estimate captured material increases in all categories but in particular the PDP reserves which increased by 360% and 1P reserves which increased by 23% compared to the previous year allowing for 2012 production. For further detail please refer to the company announcement made on January 31, 2013. Regional Eagle Ford Shale activity The Eagle Ford shale is recognised by the industry as the one of the premier shale plays in the US. High liquids content, strong well performance (particularly in the core of the trend) and significant regional infrastructure drive attractive economics. As a result activity levels have remained high, with 226 rigs reportedly currently operating on the trend. Companies participating in the Eagle Ford continue to announce a range of results that conform to a broad economic trend but with superior economics through Live Oak, Karnes and DeWitt counties. Significant levels of corporate activity also continue with resultant consolidation. New infrastructure projects have been announced looking to capture both mid and downstream opportunities. These include oil and gas pipelines, refinery upgrades to process light oils, condensate and NGLs. Quarterly Revenue and Capital Expenditure Aurora's revenue from oil and gas sales for the first quarter of 2013 totalled US$128 million (US$93 million after royalties). Total capital expenditure including accruals for the quarter totalled US$222 million representing development undertaken at the Sugarkane field during the period and the acquisition cost of US$115 million (as adjusted) for approximately 2,700 net acres within the Sugarkane Field. The cash balance at the end of the first quarter was US$177 million. The Company's cash and liquidity increased during the quarter as a result of the US$300 million unsecured debt notes issue which provided funds for the Sugarkane operated acquisition and repayment during the quarter of the amount drawn under the Company's secured credit facility (US$60 million). In addition to existing cash reserves, the Company has further liquidity available from the Group's senior secured revolving credit facility. At the end of the first quarter this debt facility is undrawn with a balance of US$200 million available. Aurora anticipates the first quarter unaudited Interim Financial Report and Management's Discussion and Analysis, prepared in accordance with Canadian securities legislation requirements, will be filed on or about May 15, 2013. About Aurora Aurora is an Australian and Toronto listed oil and gas company active in the over pressured liquids rich region of the Eagle Ford shale in Texas, United States. Aurora is engaged in the development and production of oil, condensate and natural gas in Karnes, Live Oak and Atascosa counties in South Texas. Aurora participates in approximately 79,700 highly contiguous gross acres in the heart of the trend, including approximately 21,800 net acres within the Sugarkane Field in the overpressured and liquids core of the Eagle Ford. Technical information contained in this report in relation to the Sugarkane field was compiled by Aurora from information provided by the project operator and reviewed by I L Lusted, BSc (Hons), SPE, a Director of Aurora who has had more than 20 years experience in the practice of petroleum engineering. Mr. Lusted consents to the inclusion in this report of the information in the form and context in which it appears. Cautionary and Forward Looking Statements Aurora may present petroleum and natural gas production and reserve volumes in barrel of oil equivalent ("BOE") amounts. For purposes of computing such units, a conversion rate of 6,000 cubic feet of natural gas to one barrel of oil equivalent (6:1) is used. The conversion ratio of 6:1 is based on an energy equivalency conversion method which is primarily applicable at the burner tip and does not represent value equivalence at the wellhead. Readers are cautioned that BOE figures may be misleading, particularly if used in isolation. Numbers in the tables above may not add due to rounding. References herein to "Sugarkane" or the "Sugarkane Field" are references to the Sugarkane natural gas and condensate field within the Eagle Ford and includes the two contiguous fields designated by the Texas Railroad Commission as the Sugarkane and Eagleville Fields. Statements in this press release which reflect management's expectations relating to, among other things, target dates, Aurora's expected drilling program and the ability to fund development are forward-looking statements, and can generally be identified by words such as "will", "expects", "intends", "believes", "estimates", "anticipates" or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions that some or all of the reserves described can be profitably produced in the future.These statements are not historical facts but instead represent management's expectations, estimates and projections regarding future events. Although management believes the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are based on the opinions, assumptions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include risks related to: exploration, development and production; oil and gas prices, markets and marketing; acquisitions and dispositions; competition; additional funding requirements; reserve estimates being inherently uncertain; incorrect assessments of the value of acquisitions and exploration and development programs; environmental concerns; availability of, and access to, drilling equipment; reliance on key personnel; title to assets; expiration of licences and leases; credit risk; hedging activities; litigation; government policy and legislative changes; unforeseen expenses; negative operating cash flow; contractual risk; and management of growth. In addition, if any of the assumptions or estimates made by management prove to be incorrect, actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this document. Such assumptions include, but are not limited to, general economic, market and business conditions and corporate strategy. Accordingly, investors are cautioned not to place undue reliance on such statements. All of the forward-looking information in this press release is expressly qualified by these cautionary statements. Forward-looking information contained herein is made as of the date of this document and Aurora disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, except as required by law. Jon Stewart Aurora Executive Chairman +61 8 9440 2626 Douglas E Brooks Group Chief Executive Officer +1 713 402 1920 Jane Munday FTI Consulting +61 8 9485 8888 +61 488 400 248 Aurora Oil & Gas LimitedABN 90 008 787 988 HEAD OFFICE Level 20, 77 St. Georges Terrace, Perth, WA 6000, Australia GPO Box 2530 Perth, WA 6001, Australia t +61 8 9440 2626,f +61 8 9440 2699,firstname.lastname@example.org HOUSTON Aurora USA Oil & Gas, Inc. a subsidiary of Aurora Oil & Gas Limited 1111 Louisiana, Suite 4550, Houston, TX 77002 USA t +1 713 402 1920,f +1 713 357 9674 www.auroraoag.com.au Image with caption: "Sugarkane Field Location (CNW Group/Aurora Oil & Gas Limited)". Image available at: http://photos.newswire.ca/images/download/20130429_C9406_PHOTO_EN_26097.jpg Image with caption: "Aurora Quarterly Net and Gross Daily Production 2012 / 2013 (CNW Group/Aurora Oil & Gas Limited)". Image available at: http://photos.newswire.ca/images/download/20130429_C9406_PHOTO_EN_26098.jpg SOURCE: Aurora Oil & Gas Limited To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/April2013/29/c9406.html CO: Aurora Oil & Gas Limited NI: OIL FIELD -0- Apr/29/2013 09:18 GMT
Aurora Oil & Gas Limited - Quarterly activities summary for the quarter ended 31 March 2013
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