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Aurora Plans U.S. Drilling, Debt in ‘Ambitious’ 2011

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Dec. 24 (Bloomberg) -- Aurora Oil & Gas Ltd., the best performer in Australia’s 200-member benchmark index this year, plans to raise as much as $100 million in debt next year as it hunts for further Texas shale acquisitions.

The company, which has $95 million in cash, intends to participate in drilling about 60 new wells in 2011, Jon Stewart, chairman of the Perth-based explorer, said by phone. Aurora is weighing more Eagle Ford Shale transactions after the completion today of a $120 million cash purchase of interests in the Sugarkane field.

“We have an ambitious outlook,” he said. “We think there are further opportunities for us and want to stay fairly close to home. We’re very interested in staying in the Eagle Ford Shale and in the part we understand and have experience in.”

Producers are tapping into shale rock formations seeking new supplies of gas, oil and petroleum liquids across the U.S. and Canada. Chesapeake Energy Corp., the second-biggest U.S. natural gas producer, completed the sale last month of a $1.08 billion stake in its Eagle Ford shale project to Cnooc Ltd.

Aurora, whose shares have risen eightfold to A$2.15 from 27 cents at the start of the year, was added to the S&P/ASX 200 Index earlier this month, Stewart said. Aurora was up 3.9 percent at 1:58 p.m. in Sydney, while the benchmark index dropped 0.5 percent. JPMorgan Chase & Co. owns about 8 percent of Aurora, and Stewart’s family has about 5 percent, he said.

“No one had heard of us several months ago.”

North American Listing

Aurora may raise between $50 million and $100 million in debt, potentially through a bond sale, he said.

The funding plans depend on possible acquisitions of U.S. shale stakes, said Stewart. “If the opportunities are accretive to us on reserves, we’re interested in looking at them.” Aurora doesn’t currently have any debt.

The Australian company aims to convert its possible reserves into the proven and probable category over the next 12 months and seeks to have its shares trade on a North American exchange early next year, in addition to the Australian listing, Stewart said.

The Sugarkane acquisition boosts its proven, probable and possible reserves 50 percent to 84 million barrels of oil equivalent, the company said in a statement today. A stronger Australian dollar made the transaction more attractive, he said.

The shares were downgraded to “reduce” from “hold” on Dec. 3 by Hartleys Ltd. Perth-based analyst David Wall, according to data compiled by Bloomberg. Wall couldn’t be reached by telephone today.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.