NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
PERTH, Australia, March 20, 2012 /CNW/ - Aurora Oil & Gas Limited ("Aurora") (ASX:AUT,TSX:AEF) is pleased to provide details of the independent reserves estimates for Aurora's working interests in the Sugarkane Field with an effective date of 31 December 2011. The reserve estimates were compiled by the Houston based team at Ryder Scott Company, L.P. ("Ryder Scott") in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook and in accordance with Canadian National Instrument 51 - 101.
The following gross Aurora reserve allocations have been estimated by Ryder Scott:
- Total proved (1P) reserves of 80.4 mmboe, comprising 76% liquids, having a pre-tax NPV(10) of US$982 million.
- Total proved + probable (2P) reserves of 92.0 mmboe and a pre-tax NPV(10) of US$1,028 million.
- Total proved + probable + possible (3P) reserves1 of 124.1 mmboe and a pre-tax NPV(10) of US$1,285 million.
The following key points should be noted when reviewing the information provided with these reserve estimates:
- The proved and probable estimates are based on an 80 acre development of the Eagle Ford horizon and Aurora recently announced details of the 2012 Pilot program which will investigate 40 and 60 acre well spacing in the Eagle Ford.
- These figures equate to a 450% increase in 1P reserves and a 209% increase in 2P reserves from Aurora's last annual reserves report effective 31 December 2010.
- The ongoing transition of our reserves into proved and probable categories is a product of the maturing of the asset base and greater confidence in the recoverable volumes from the reservoir.
- The 3P reserves have increased by 11% during 2011 and this represents some modest recognition of the layered upside in the acreage.
- Ryder Scott have also allocated a further contingent resource of 15.6 mmboe (net) which acknowledges additional limited elements of upside.
1 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 following tables provide summaries of the reserve estimates generated by Ryder Scott using forecast prices and costs. The first shows the gross Aurora estimates, i.e. before royalty deductions, and the second shows the net Aurora estimates, i.e. post royalty deductions.
Table 1: Aurora Gross Reserve Estimates
| Aurora Gross Reserves
(before royalty interests)
| Light and
| NGLs and
|Proved Developed Producing||2,126||1,516||6,325||4,697|
|Proved Developed Not Producing||700||106||908||957|
|Total Proved (1P)||30,352||30,649||116,296||80,383|
|Proved + Probable (2P)||34,913||34,977||133,157||92,083|
|Proved + Probable + Possible (3P)2||34,913||50,654||231,421||124,137|
Table 2: Aurora Net Reserve Estimates
| Aurora Net Reserves
(after royalty interests)
| Light and
| NGLs and
|Proved Developed Producing||1,531||1,102||4,586||3,397|
|Proved Developed Not Producing||516||78||670||706|
|Total Proved (1P)||22,256||22,441||85,238||58,903|
|Proved + Probable (2P)||25,601||25,610||97,597||67,478|
|Proved + Probable + Possible (3P)2||25,601||37,160||169,988||91,092|
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 tables below shows the net present value of future net revenue of Aurora's reserves on an undiscounted basis and with a 5%, 10%, 15% and 20% discount being applied, both before and after tax.
Table 3: Net Present Value before tax3
|Net Present Values||Before Tax Net Present Value (US$million)|
|Proved Developed Producing||180.6||140.9||116.7||100.6||80.2|
|Proved Developed Not Producing||35.9||27.2||21.8||18.2||15.6|
|Total Proved (1P)||2,185||1,420.8||982.2||708.4||526.0|
|Proved + Probable (2P)||2,597.6||1,549.2||1,028.2||727.0||534.3|
|Proved + Probable + Possible (3P)||3,222.0||1,929.9||1,285.2||911.2||670.5|
Table 4: Net present value after tax
|Net Present Values||After Tax Net Present Value (US$million)|
|Proved Developed Producing||118.7||100.6||89.2||81.2||75.0|
|Proved Developed Not Producing||23.6||19.2||16.4||14.3||12.8|
|Total Proved (1P)||1,435,7||933.8||649.3||472.8||354.4|
|Proved + Probable (2P)||1,706.8||970.2||632.5||446.9||330.3|
|Proved + Probable + Possible (3P)||2,117.1||1,211.8||794.3||563.8||418.4|
3 NPV(10) figures are net present value of future net revenue, before income tax and discount at 10%. The estimated future net revenue values utilized in the disclosed net present values do not necessarily represent the fair market value of Aurora's reserves
The estimated future net revenue values utilized in the disclosed net present values do not necessarily represent fair market value of Aurora's reserves.
Methodology and Assumptions
- Aurora provided Ryder Scott with a development plan across all of the Sugarkane Field that is based on 660ft horizontal separation and well lengths between 4,000 and 6,000ft. (Note: a 5,000ft lateral is equivalent to 80 acre spacing with 660ft horizontal separation between well bores). The development plan honours all of the proposed unit boundaries and conforms to both lease and legislative obligations. This equates to 811 gross (168 net) well locations and the remaining 5 - 10% of undeveloped acreage will be subject to swaps or further pooling and is presently not captured in these estimates.
- Ryder Scott allocated a proved and then a probable production profile to these locations. The probable profile is identical to the proved profile in early well life but then assumes a slower long term decline. The Ryder Scott probable profile generates an EUR that remains 30% below the expectation estimates provided by the field Operator for 5,000ft laterals.
- The possible reserves estimate considers an Austin Chalk development across approximately half of the acreage (covering parts of Longhorn, Sugarloaf and Ipanema Areas of Mutual Interest) on a 160 acre spacing and using a type curve taken from the Austin Chalk production in the Weston #1H well. This generates an additional 151 gross (33.7 net) well locations and these are scheduled for the reserve report to be developed with four dedicated rigs starting in 2013.
- Well costs were based on estimates provided by the Operator and adjusted for horizontal well length. Future cost deductions consistent with ongoing and planned cost initiatives. The following well costs were used by Ryder Scott in this report:-
| Horizontal Well
|4,000ft||$7.1 million||$6.4 million|
|5,000ft||$8.1 million||$7.3 million|
|6,000ft||$9.1 million||$8.2 million|
- Operating Costs for the proved reserves comprise of a fixed component of $6,000/well/month and $2.50/boe with the probable and possible reserve categories assuming $5,700/well/month and $2.25/boe for these figures.
- The drilling schedule assumes approximately 11 rigs operating within the Eagle Ford Shale horizon on the Aurora acreage and 4 rigs operating within the Austin Chalk in the possible case.
- Forecast Commodity Pricing - NYMEX forward strip price on 31 December 2011 (the effective date of the updated reserves report) has been used and is shown below. The figures are then adjusted for quality, regional price variations and further adjustments are made for the calorific value of the gas.
|Year|| Oil Price
| Gas Price
Additional Resource Estimate
Ryder Scott also prepared an evaluation of contingent resources attributable from Aurora's interests in the Sugarkane Field effective as of December 31, 2011, in accordance with the COGE Handbook. Ryder Scott has assigned a 3C net estimate of 15.6 mmboe in respect of Aurora's working interests in its Sugarkane acreage, comprising oil, NGLs, condensate and natural gas. The contingencies which currently prevent the classification of the resources as reserves are demonstration of commerciality of Austin Chalk production in the volatile oil window and confirmation of additional recovery from the volatile oil Eagle Ford wells in the future.
Aurora will host a briefing conference call to discuss the 31 December 2011 reserves report. The call will be hosted at the following time:-
Australia: Wednesday 21st March 2012 9 am EST / 6 am WST - Australia
North America: Tuesday 20th March 2012 6 pm ET Canada / 5 pm CT - USA
To access the briefing call please use one of the following numbers:-
From the USA: Operator Assisted Toll Free Number: 1 (888) 231-8191
From outside the USA International Dial in Number: +1 (647) 427-7450
Conference ID: #64036930
Please connect approximately 10 minutes before the call to ensure participation.
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. The company 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 over 76,000 highly contiguous gross acres in the heart of the trend, including over 16,300 net acres within the liquids rich zones 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 19 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 presents 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.
All evaluations of future net revenue in this release are after deduction of royalties, development costs, production costs, local taxes and well abandonment costs but before consideration of indirect costs such as administrative, overhead and other miscellaneous expenses.
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" and "resources" 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 and resource 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.
Continent resources are those quantities of petroleum estimated as of a given date to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. There is no certainty that it will be commercially viable to produce any portion of the contingent resources described herein.
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.
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