Aurora Oil & Gas Ltd - Quarterly Activities Summary for the Quarter Ended 31 December 2012
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
PERTH, Australia, Jan. 31, 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. Aurora's audited annual results are expected to be issued at the end of February 2013.
On a quarter on quarter basis Aurora is pleased to report a:
- 32% increase in revenue.
- 35% increase in production volume.
- Further 10.5 new net wells put on production.
Activities during the quarter ended December, 2012 have generated a number of corporate, operational and production highlights, which are summarised below:
- Revenue from oil and gas sales was US$112 million for the quarter (US$83 million after royalties) of which 86 % were generated from oil and condensate sales and a further 8% from natural-gas liquids (NGLs). The cash balance at the end of the quarter was $68 million.
- An updated reserves estimate as at 31 December 2012 was prepared by Ryder Scott Petroleum Consultants and released to the market on 31 January 2013. Ryder Scott allocated Aurora total gross proved (1P) reserves of 94.7 mmboe and 102.9 mmboe of proved plus probable (2P) reserves.
- On a boe basis, these figures represent a 23% increase in 1P reserves and 16% increase in 2P reserves from the reserves estimate as at 31 December 2011 allowing for 2012 produced volumes.
- 47 gross new wells (10.5 net) were put on production and a total of 31 gross new wells were spudded during the quarter.
- At the end of the quarter, drilling operations were underway on 7 wells, 12 wells were awaiting fracture stimulation and 8 wells were being stimulated or were being prepared for test. In total there were 216 gross wells on production (50 net wells to Aurora).
- Aurora's estimated total gross quarterly production was 1.56 mmboe. Net to Aurora, after royalties, total quarterly production was 1.15 mmboe, an increase of 35% compared to the previous quarter and approximately 300% on the corresponding quarter in 2011.
- Quarterly average gross Aurora production rates were approximately 16,900 boe/d including NGLs. Net to Aurora, after royalties and including NGLs, average production for the quarter was approximately 12,470 boe/d, which, again equates to a 35% increase on the previous quarter.
- All 3 central processing facilities in Sugarloaf are now operational bringing the total to 9 central facilities across the field. Considerable additional in field infrastructure has been installed throughout the AMIs.
- Aurora estimates that approximately 90% of its acreage is now held by 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 77,000 highly contiguous gross acres that make up the field. The Operator of all of these interests is Marathon Oil EF LLC, a wholly-owned subsidiary of Marathon Oil Corporation (NYSE: MRO) (Marathon).
At the end of the reporting period, Aurora had a net position of approximately 19,100 acres within four adjacent Areas of Mutual Interest (AMIs) in the Sugarkane Field. The varying levels of participation are outlined in the table below and the AMI's are shown on the map above.
|AMI||Working Interest||Gross Acreage||Net Acreage|
*Totals may not sum due to rounding
By the end of the fourth quarter, Aurora estimated that approximately 90% of leases were held by production (HBP). The remaining leases typically have a longer period during which drilling has to occur and so the emphasis has moved from HBP drilling to pad drilling with multiple wells on the same surface location. Aurora anticipates that this will lead to capital and operating expenditure efficiency savings.
Rig activity remains buoyant in the Eagle Ford Shale trend and the rig count at the end of the fourth quarter 2012 was estimated to be 231. At the end of the reporting period Marathon had 7 rigs and 2 fracture stimulation crews operational in the Sugarkane field having varied between 5 and 14 drilling rigs during 2012.
There were between 7 and 10 rigs drilling at any time on Aurora's Sugarkane acreage during the reporting quarter. A total of 31 gross wells were spudded and 47 gross wells were put on production in this period. The following table provides an activity status within the Sugarkane Field as at 31 December 2012.
|Post Farmout Wells|
|Drilling or Rigging up||4||3||0||0||7.0|
* 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.
During 2012 Aurora participated in 160 newly spudded gross wells. This brought the total count of wells in progress or producing to 243 by the end of the fourth quarter. Due to the sequential nature of operations the producing well count will always lag the drilling well count. By the end of Q4 2012 there were a total of 216 gross (50 net) wells on production of which 149 (38.5 net) were new wells added during 2012.
The provisional 2013 drilling schedule for the Sugarkane Field is to spud approximately 39 net wells during the year. During 2012, Marathon demonstrated its commitment and capability to bring additional rigs and frac crews into the area when required.
Spacing Pilot Program Update
During Q3 and Q4 2012, 20 wells formed part of a pilot program designed to investigate:
- Horizontal well separation - (60 and 40 acre spacing)
- Vertical placement of horizontal wells within the Eagle Ford section
- Fracture stage design and spacing along the length of the horizontal wellbore
Aurora plans to provide further detail on the observed results during Q1 2013. During Q4 2012 Aurora announced that the pilot program is being expanded to include the overlying Austin Chalk, with the wells scheduled to be spudded in Q1 2013 adjacent to the existing Weston #1H, which is an Austin Chalk well.
During Q4 2012, the vertical section of the McCoy Egbert 2H Eagle Ford development well was deepened to allow the appraisal of the deeper Pearsall shale. This horizon was first observed in the original exploration well, Sugarloaf #1, which was drilled in 2006. Nearby operators have been achieving encouraging results from their Pearsall tests, and this vertical test well allowed logs and sidewall cores to be taken so that the prospectivity of this horizon can be assessed on Aurora acreage.
During the reporting period, a total of 47 new gross (10.5 net) wells were brought on production. For the majority of the period there were between 2 and 3 frac crews active on Aurora's Sugarkane acreage. 13 new wells commenced production or well test during January 2013, subsequent to the quarter. The following table provides details of the Aurora production during Q4 2012.
|Qtr 4 Prod||Aurora Gross (WI)||Aurora Net (NRI)|
|Oil (bbls)||Cond (bbls)||Gas(mscf)||NGL (bbls)||BOE*(bbls)||Oil (bbls)||Cond (bbls)||Gas(mscf)||NGL (bbls)||BOE*(bbls)|
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.
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 over 230 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.
A number of major new infrastructure projects are underway or have been announced. These include oil and gas pipelines, refinery upgrades and service companies opening local operations bases.
Quarterly Financial Results
Aurora's revenue from oil and gas sales for the fourth quarter totalled US$112 million (US$83 million after royalties), and US$295 million for the 12 months ended 31 December 2012 (US$217 million after royalties).
Total capital expenditure including accruals for the quarter totaled US$130 million representing development undertaken at the Sugarkane field during the period. For the 12 months ended 31 December 2012, development capital expenditure, excluding acquisitions, at the Sugarkane field totaled US$427 million.
The cash balance at the end of 2012 was US$68 million with further liquidity available from the Group's senior secured revolving credit facility. At year end US$30 million had been drawn from this debt facility with an undrawn available balance of US$120 million. The amount available will be re-determined in the first quarter of 2013 based on the increase in production and the associated proven reserves that occurred in the second half of 2012.
Aurora anticipates the 2012 audited Annual Financial Report and the Annual Financial Management Discussion and Analysis, which incorporates Q4 2012, prepared in accordance with the Canadian securities legislation requirements, will be filed on 28 February 2013. Market guidance for the Company's 2013 production and capex will be provided at this time.
Aurora is an Australian and Toronto listed oil and gas company active exclusively 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 77,000 highly contiguous gross acres in the heart of the trend, including approximately 19,100 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.
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 license's 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.
Image with caption: "Sugarkane Field Location (CNW Group/Aurora Oil & Gas Limited)". Image available at: http://photos.newswire.ca/images/download/20130130_C2013_PHOTO_EN_23142.jpg
Image with caption: "The graph above shows the monthly production growth Aurora has achieved since the beginning of 2012, representing a gain of 290% between December 2011 and 2012. (CNW Group/Aurora Oil & Gas Limited)". Image available at: http://photos.newswire.ca/images/download/20130130_C2013_PHOTO_EN_23145.jpg
SOURCE: Aurora Oil & Gas Limited
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