15/05/2012 - 10:39

Aurora makes play for more Eagle Ford acreage

15/05/2012 - 10:39

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Aurora makes play for more Eagle Ford acreage
Drilling work at Aurora's acreage in the Sugarkane gas field.

ASX and Toronto-listed Aurora Oil and Gas has beefed up its holding in the highly-prospective Sugarloaf shale gas field in the United States, snapping up a 6 per cent stake for $US95 million ($95.3 million).

The Sugarloaf area is located within the Sugarkane Field in the liquids-rich area of the Eagle Ford shale gas formation in Texas.

Aurora’s acquisition will take its working interest in Sugar Loaf to 21.8 per cent.

The transaction is considered to be the first solid valuation of Sugarloaf field.

International oil and gas major Marathon Oil, which holds the remaining acreage at Sugarloaf and is the project’s operator, plans to drill more than 65 wells this year, ramping up to a 250 well program between 2012 and 2016.

“This acquisition builds Aurora’s already strong presence in the Sugarkane Field, growing out portfolio of Eagle Ford interest within out key focus area and in line with our stated strategy,” chief executive Jon Stewart said.

“It also further aligns our interests with Marathon.

“This is one of a growing number of opportunities we see within our key focus area where acreage holders are willing to realise clear and certain value for interests that require access to additional capital.”

The acquisition follows Aurora’s $107 million on-market takeover bid for Perth-based Eureka Energy, which holds a 6.25 per cent working interest in the Sugarloaf field.

Eureka’s board of directors have recommended shareholders reject the offer, claiming it undervalues the company.

Also today, Aurora has announced plans to boost its coffers through a global offering of its shares.

In Canada, Aurora will conduct a prospectus offering, while in Australia it will launch a share placement.

Pricing of the share offering was not announced, while Euroz Securities and TD Securities will act as joint lead managers.

The funds will be used to fund development costs associated with the increased acreage, potential

Aurora said its acquisition of the additional acreage today, and its bid for Eureka, were fully funded from existing cash reserves.

The company’s stocks went into a trading halt today, having last traded at $3.88.

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