Press release from CNW Group
Aurora announces a 150% increase in proved reserves.
Thursday, December 22, 2011
Aurora announces a 150% increase in proved reserves.00:01 EST Thursday, December 22, 2011PERTH, Western Australia, Dec. 22, 2011 /CNW/ - Aurora Oil & Gas Limited ("Aurora" or "Company") is pleased to provide the following update to its independent proved and probable reserves estimate for the Company's working interests in the Sugarkane Field with an effective date of 31 October 2011. The reserves estimate was completed by the Houston-based evaluation team at Ryder Scott Company L.P. ("Ryder Scott") in a report received today dated 19 December 2011 ("Reserves Report"). As the Reserve Report is intended to be used for a redetermination of the borrowing base under the Company's credit facility, only proved and probable reserve estimates were generated.The following gross Aurora reserve allocations have been made by Ryder Scott:Total proved (1P) reserves - 72.8 MMboe, which is comprised of 53.95 MMbbls of light oil, condensate and natural gas liquids ("NGLs") and 112.91 Bscf of natural gas. On a post royalty basis this equates to 53.79 MMboe and an NPV(10) of US$ 716 million1.Total proved plus probable (2P) reserves - 79.7 MMboe, which is comprised of 59.49 MMbbls of light oil, condensate and NGLs and 121.01 Bscf of natural gas. On a post royalty basis this equates to 58.87 MMboe an NPV(10) of US$ 768 million1.On a BOE basis, these figures represent a 150% increase in the 1P reserves and a 40% increase to the 2P reserves since the last reserves update as at 31 August 2011 (the "Prior Report"), and a 400% increase in 1P reserves and 167% increase in 2P reserves from the reserves estimates as at 31 December 2010.The results reflect a similarly conservative approach to that used in the Prior Report including similar recovery factors for each well location, the same assumption of 80 acre well spacing for the proved and probable reserve estimates, but does take a different view of the categorisation of reserves allocated to each future well location.Key pointsThe Reserves Report continues to demonstrate the rapid transition of the Company's reserves in to the 1P and 2P categories.At the effective date of the Reserves Report, Ryder Scott considers that 65 wells (9 of which are farmout wells) are in the PDP category, 749 future well locations can be considered proved undeveloped ("PUD") and 125 future well locations are in the probable reserves category.The Reserves Report utilizes four type curves across the Aurora acreage and they are broadly consistent with those provided previously.Reserve EstimatesThe 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.Aurora Gross Reserves(before royalty interests)Light and Medium Oil (Mbbls)NGLs and Condensate (Mbbls)Natural Gas (MMscf)BOE(Mbbls)Proved Developed Producing1,920.71,468.96,065.34,400.5Proved Undeveloped19,361.931,201.0106,849.668,371.2Total Proved (1P)21,282.632,670.0112,914.972,771.8Probable3,537.52,003.28,097.76,890.3Proved + Probable (2P)24,820.234,673.2121,012.679,662.2Aurora Net Reserves(after royalty interests)Light and Medium Oil (Mbbls)NGLs and Condensate (Mbbls)Natural Gas (MMscf)BOE(Mbbls)Proved Developed Producing1,412.41,081.54,463.43,237.8Proved Undeveloped14,256.623,118.879,085.650,556.3Total Proved (1P)15,669.024,200.283,549.153,794.1Probable2,597.21,484.05,983.45,078.4Proved + Probable (2P)18,266.225,684.289,532.558,872.5The tables below shows the net present value of future net revenue of the proved and probable reserves on an undiscounted basis and with a 5%, 10%, 15% and 20% discount being applied both before and after tax.Net Present ValuesBefore Tax Net Present Value (US$million)NPV(0)NPV(5)NPV(10)NPV(15)NPV(20)Proved Developed Producing163.7135.6116.9103.894.1Proved Undeveloped1,500.1927.0599.2398.7269.4Total Proved (1P)1,663.91,062.5716.0502.4363.6Probable129.981.352.033.420.9Proved + Probable (2P)1,793.81,143.7768.1535.8384.4Net Present ValuesAfter Tax Net Present Value (US$million)NPV(0)NPV(5)NPV(10)NPV(15)NPV(20)Proved Developed Producing110.2101.694.388.383.1Proved Undeveloped1009.6616.9392.6256.5168.8Total Proved (1P)1119.8718.5486.9344.8251.9Probable87.454.434.121.012.1Proved + Probable (2P)1207.2772.9521.0365.8264.0The estimated future net revenue values utilized in the disclosed net present values do not necessarily represent fair market value of the Company's reserves.Key Assumptions and MethodologyThe Reserves Report methodology remains consistent with the previous estimates and simply extrapolates a proved type curve across the PUD and probable well locations based on an 80 acre well spacing.Ryder Scott used the following additional assumptions within their model:Well cost estimates used in this report areUS$7.8 - $8.3 million for 2012US$7.5 million for 2013A long term estimate of US$7 million.Operating cost of US$20,000/well per month for 2012 and then a long term figure of US$15,000/well per month.Both the capital expenditure and the operating expenditure costs are escalated by 2% per year for the first five years then flat thereafter.The development plan used in this analysis assumes that 11 drilling rigs, taking an average of 26 days per well, will continue to operate on Aurora's acreage until the 2P program is complete.Forecast Commodity Pricing - NYMEX forward strip price on 31 October 2011 (the effective date of the updated reserves report) has been used and is shown below. The figures are then adjusted for quality, regional price variations and further adjustments are made for the calorific value of the gas.YearOil Price(US$/bbl)Gas Price(US$/MMbtu)201191.093.90201290.354.16201388.974.69201488.015.05201587.835.33201687.975.602017+88.045.94Abbreviationsbbl barrel of crude oil or natural gas liquids or condensatescf standard cubic foot of natural gasBoe barrels of oil equivalent, determined using a ratio of six Mscf of natural gas to one bbl of condensate or crude oilM Prefix "M" indicates thousandsMM Prefix "MM" indicates millionsB Prefix "B" indicates billionsAbout AuroraAurora 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 77,210 highly contiguous gross acres in the heart of the trend, including over 16,350 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 of 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 The evaluation of reserves in the Reserves Report has been prepared by Ryder Scott, an independent qualified reserves evaluator, in accordance with the Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities and the resource and reserves definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook.The Company 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" 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 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. 1 NPV(10) figures are net present value of future net revenue, before income tax and discounted 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. For further information: Level 20, 77 St. Georges Terrace, Perth, Western Australia 6000, GPO Box 2530 Perth, Western Australia 6001, T+61 8 9440 2626, F +61 8 9440 2699, E email@example.com, W www.auroraoag.com.au