Aurora Oil & Gas Ltd. is buying a 100% operated working interest in 2,700 net acres in South Texas in the liquids-rich area of the Eagle Ford Shale for $117.5 million.
The assets include average December 2012 production of 1,620 boe/d net of royalties from 11 wells and associated interests in field infrastructure and related assets. The production comprises 84% liquids (70% oil), and represents a 12% increase to Aurora's 2012 exit production, the Australian company said.
The assets consist of two consolidated blocks located within the liquids-rich zone of the Eagle Ford and are either adjacent to, or near Aurora's existing Sugarkane Field. The acquisition will increase Aurora's net core Eagle Ford Shale acreage by about 14% to more than 21,800 net acres. The acreage includes potential additional reserves in the Austin Chalk and Pearsall formations, the company said.
"This acquisition adds to our position in the highest-quality liquids-rich part of the Eagle Ford play," said Aurora Executive Chairman Jon Stewart. "Aurora is extremely selective around acquisition opportunities, and we firmly believe the purchase of this acreage will provide significant value and upside to our portfolio through its current production capabilities and reserves base."
The deal includes about 6.7 million boe of proved reserves (after royalties) of which 30% are categorized as proved developed producing reserves and 84% are liquids, according to Aurora estimates. The seller was not disclosed.
"This acquisition is a natural extension from Aurora's existing non-operated position within the 'sweet spot' of the Eagle Ford trend," said Aurora CEO Douglas Brooks. "The acquisition of an operated asset that is held by production offers us considerable flexibility in the timing and methodology of development, adds materially to current production and includes upside to the reserves to be booked through higher density drilling and the evaluation of additional formations."
Aurora will become the operator of the asset with its Houston-based team. The purchase price and associated development capital needs are expected to be satisfied through existing and new debt facilities. The acquisition is expected to close by March 29 with an effective date of March 1.
Aurora is active in Karnes, Live Oak and Atascosa counties in South Texas (see Shale Daily, July 6, 2012). The company reported revenue of $285 million for last year, representing an increase of nearly 300% from 2011, on increased production from the Eagle Ford.