Aurora Oil & Gas Limited - Quarterly Activities Summary for the Quarter Ended December 31, 2013
PERTH, Western Australia, Jan. 22, 2014 /CNW/ - Aurora Oil & Gas Limited ("Aurora") (ASX:AUT, TSX:AEF) is pleased to provide an update on corporate activities and progress with the development program of its Eagle Ford assets in the Sugarkane Field in South Texas.
Key quarter-on-quarter results:
- 9% increase in revenue from Q3 2013 (40% increase from Q4 2012).
- 15% increase in production volume (46% increase from Q4 2012).
- 15.6 new net wells were placed on production, including six Aurora operated wells.
- 11.8 net wells were spudded, including three wells on Aurora operated acreage.
Corporate, operational and production highlights
Revenue: Revenue from oil and gas sales was US$157 million for the quarter
(US$116 million after royalties), comprising 85% oil and condensate, 9%
natural-gas liquids (NGLs), and 6% natural gas.
Total production: Gross quarterly production was 2.27 mmboe (82% liquids on a boe
basis). Net to Aurora, after royalties, production was 1.68 mmboe. This
represented an increase of 15% on the previous quarter and
approximately 46% on the corresponding quarter in 2012. Gross
production for 2013 was 7.78 mmboe (5.74 mmboe net), a 100% increase
year on year.
Average production: Average gross production during the quarter was approximately 24,600
boe/d. Net to Aurora, after royalties, average production was
approximately 18,200 boe/d, an increase of 15% on the previous quarter.
Cash and funding: Available liquidity of US$342 million at the end of the quarter,
comprising US$42 million in cash and US$300 million available from the
existing undrawn revolving credit facility.
Capital expenditure: Total development capital expenditure, including accruals, for the
quarter totalled US$141 million. This represented development
undertaken at both operated and non-operated acreage during the
Well activity: 55 gross wells (15.6 net) were placed on production. 50 gross wells
(11.8 net) were spudded during the quarter, which includes three wells
on Aurora's operated acreage. In total, there were 387 gross wells
(103.2 net wells to Aurora) on production on Aurora's acreage at
- Drilling status: At the end of the quarter, drilling operations were underway on nine gross wells, 27 gross wells were awaiting fracture stimulation and two gross wells were being stimulated or were being prepared for test.
Operated acreage: Since the acquisition of a 100% working interest in Heard Ranch and
Axle Tree in March 2013, Aurora has spud 12 wells. During the quarter
six of these wells were placed on production which, together with the
two wells brought on in the third quarter and those on production at
the acquisition date, brings Aurora's operated well count to 19
producing wells at year end. A further two wells were brought on
production in early January 2014 at Heard Ranch. The first two wells
brought on production at Heard Ranch in September, 2013 reported
average 30-day IP rates of 821 boe/d. During Q4, 2013 two wells in the
Axle Tree area logged 30-day average rates of 745 boe/d per well. In
late December a three-well pad came on production at Axle Tree as well
as a three-well pad at Heard Ranch.
- Exploration: Aurora has secured a position in the Eaglebine play in East Texas which is regionally on trend with the Eagle Ford shale comprising approximately 14,000 net acres to date.
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 80,200 highly contiguous gross acres (22,200 net) that make up the field with four adjacent non-operated Areas of Mutual Interest ("AMIs") and two operated areas.
Within the Sugarkane Field, Marathon Oil EF LLC, a wholly-owned subsidiary of Marathon Oil Corporation (NYSE: MRO) ("Marathon"), operates approximately 77,400 gross acres (19,400 net) and Aurora is its largest non-operating working interest partner in this area. In addition, Aurora has a 100% working interest in, and is the operator of, ~2,800 acres within the Axle Tree Ranch and Heard Ranch areas in the Sugarkane Field.
Aurora has secured a position in the Eaglebine play regionally on trend with the Eagle Ford shale. At year end Aurora had approximately 14,000 net acres in the play and continues to look to consolidate its position. This position has been acquired at modest cost reported within past capital expenditures and is not planned to represent a material component of 2014 expenditure. Over the past year the activity level in the Eaglebine play has increased, and consistent with the strategy for de-risking the Sugarkane Field and bringing it to development, Aurora is evaluating various alternatives for its Eaglebine acreage, including potentially acquiring partners to participate in the next stages of project evaluation. Other companies with disclosed interests in the Eaglebine include EOG Resources Inc. and SM Energy Company.
Land and ownership interests
The varying levels of participation in the Sugarkane Field and Eaglebine prospect are outlined in the table below:
|Area||Working Interest||Gross Acreage||Net Acreage|
There were between 5 and 11 rigs drilling at any one time on Aurora's non-operated Sugarkane acreage during the reporting quarter and up to two rigs on Aurora's operated acreage. A total of 50 gross (11.8 net) wells were spudded, three of which were on operated acreage.
During the reporting quarter 55 gross (15.6 net) wells were placed on production including six Aurora operated wells. Aurora had an inventory of 29 gross wells at the end of the quarter awaiting commencement and/or completion of stimulation operations.
Two new wells on the Axle Tree Ranch have reached 30 day cumulative production averaging 745 boepd / well. An additional six wells from two pads drilled during the quarter have come on stream with 24 hour rates as indicated below:
|Three Well Pad||
Average 24 Hour Test
|Heard Pad 6||1,403||7,707||29|
|Axle Tree Pad 3W||854||5,285||20|
These initial production rates are encouraging but Aurora considers 30-day rates to be a better reflection of early production and these will be released in the normal course.
The following table details activity status within the Sugarkane Field as at December 31, 2013:
|Sugarloaf||Longhorn||Ipanema||Excelsior||Axle Tree||Heard Ranch||Total|
* 8 rigs active at 12/31/2013
A variety of planned well intervention operations have taken place across a number of wells in which Aurora has an interest. Artificial lift installations took place in 29 wells across Aurora's non-operated acreage. These are routine planned operations implemented as individual well reservoir pressures drop. In addition, Aurora has commenced a workover program on its operated properties with the installation of artificial lift on three wells as of year-end.
Multi well pad drilling has increased throughout the 2013 development of Sugarkane Field. During the fourth quarter 81% of wells were drilled in sequence from the same surface pad location at various locations including Aurora's operated wells. Multi well pad drilling offers cost and efficiency savings as a result of shared infrastructure and avoidance of potentially lengthy rig and fracture stimulation equipment moves. Further efficiencies are being delivered with several pads undergoing batch drilling, whereby the vertical surface hole section of wells at a particular pad location are all drilled first, followed by all of the horizontal sections. This batch approach allows equipment and operations to be configured for a particular repeatable phase of operations resulting in efficiency gains.
Down Spacing and Austin Chalk Update
During December the operator of Aurora's non-operated Sugarkane Field acreage presented successful results of downspacing pilots. These pilots indicated that downspacing will continue to add value across the acreage held by Aurora as a result of observed reservoir performance, together with continued cost reductions and completion optimization. Aurora expects most of its non-operated Sugarkane acreage to be developed on 40 acre spacing based on these results. The operator is now initiating 30 acre spacing pilot programs which, if successful, would add further value to the development of the Sugarkane Field. Aurora is continuing to develop its operated Sugarkane acreage under a 40 acre development plan.
Aurora continues to evaluate several previously announced pilot studies being undertaken by the operator in both the Eagle Ford and Austin Chalk reservoirs. These pilot programs will consider multiple lateral placements within the two reservoirs.
The following table provides details of Aurora's production during the quarter, which comprised 82% liquids on a boe basis.
4th Quarter 2013 Production
*The oil equivalent barrels per day production rate has been calculated on a 6:1 ratio of gas to oil.
Aurora exited 2013 with estimated average daily gross production in December of 26,450 boe/d (19,500 boe/d net), an increase of 41% from the average production rate in December 2012.
The graph at the top shows the quarterly production profile for the past 5 quarters. The figures shown at the base of each production bar reflect the incremental net wells added during that period. As indicated in Aurora's 2013 guidance, activities were weighted to the second half of the year and production has increased accordingly.
*Includes 11 existing producing wells acquired as part of the Heard Ranch/Axle Tree Acquisition in March, 2013
Quarterly Revenue and Capital Expenditure
Aurora's revenue from oil and gas sales for the fourth quarter of 2013 totalled US$157 million (US$116 million after royalties) and US$562 million for the 12 months ended December 31, 2013.
Total development capital expenditure, including accruals for the quarter totalled US$141 million representing development undertaken at the non-operated acreage within the Sugarkane Field and at the adjacent operated Axle Tree and Heard Ranch acreage. For the 12 months ended December 31, 2013 development capital expenditure, excluding acquisitions, totalled US$494 million.
At December 31, 2013, Aurora had available liquidity of US$342 million, comprising US$42 million in cash and US$300 million available from the existing undrawn revolving credit facility.
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 80,200 highly contiguous gross acres in the heart of the trend, including approximately 22,200 net acres within the Sugarkane Field in the over-pressured and liquids core of the Eagle Ford.
|Technical information contained in this report in relation to the Sugarkane Field was compiled by both Aurora and its operating partner and was reviewed by Michael L. Verm, Chief Operating Officer of Aurora. Mr. Verm has more than 30 years' experience in the practice of petroleum engineering. Mr. Verm 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; changes in the rate and/or location of future drilling programs on our acreage by our operator(s), 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.
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.
SOURCE Aurora Oil & Gas Limited
Image with caption: "Sugarkane Field (CNW Group/Aurora Oil & Gas Limited)". Image available at: http://photos.newswire.ca/images/download/20140121_C9950_PHOTO_EN_35716.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/20140121_C9950_PHOTO_EN_35715.jpg
For further information:
+61 8 9380 2700
Douglas E Brooks
Chief Executive Officer
+1 713 402 1920
+61 8 9485 8888
Level 1, 338 Barker Road, Subiaco, WA 6008, Australia
PO Box 20, Subiaco, WA 6904
T +61 8 9380 2700, f + 61 8 9380 2799, e email@example.com
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1200 Smith Street, Suite 2300, Houston TX 77002-5500
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