AOG Aurora Oil & Gas Corp.

TRAVERSE CITY, Mich., Aug. 9 /PRNewswire-FirstCall/ -- Aurora Oil & Gas Corporation (AMEX:AOG) today reported revenues of $7.3 million for the quarter ended June 30, 2007, representing a 27% increase from the same period in 2006. Oil and natural gas production revenues topped $6.6 million on sales of 761 million cubic feet of natural gas equivalent (mmcfe) for the quarter. This equates to an average of 8.4 mmcfe per day, an increase of approximately 4% over the previous quarter ended March 31, 2007. The weighted average sales price of $8.68 for the period includes $0.6 million in realized gains on financial hedges which cover 5,000 mmbtu per day during the second quarter of this year. Other revenue increased to $461,245, primarily attributed to the sale of legacy mining claims. Expenses totaled $7.0 million, a 2% increase from the second quarter of 2006. This increase was largely driven by production and lease operating expense, which increased from $1.3 million in the second quarter of 2006 to $2.2 million in 2007, the result of Aurora's interest in 241 producing net wells at June 30, 2007 versus 169 producing net wells at June 30, 2006. Interest expense decreased from $2.0 million in the second quarter of 2006 to $1.1 million for same quarter in 2007, a result of the Company's change in estimating capitalized interest and a reduction in borrowing under the senior secured credit facility. The net income for the second quarter of 2007 was $0.2 million or $0.00 per basic and diluted share, as compared to a net loss of $1.2 million, or ($0.01) per basic and diluted share during the same period in 2006. Production increased from the first quarter of 2007, averaging 8.4 mmcfe per day during the second quarter of 2007. The Company continued to stabilize its daily production with infrastructure enhancements, which has improved the run-time for its Antrim Shale properties. Volumetric growth is expected to continue, primarily as a result of new drilling. Production will also increase as the wells dewater, enhancements are installed, workovers are performed, or water disposal wells are drilled and put into service. A summary of quarterly production for 2007 is provided below: Estimated Production by Q2 2007 Q1 2007 Play/Trend (net mcfe) Daily Daily Total Average Total Average Antrim Shale 709,155 7,793 675,353 7,504 New Albany Shale 12,548 138 10,344 115 Other 39,320 432 46,733 521 Total 761,023 8,363 732,430 8,140 Operated 572,414 6,290 531,799 5,909 Non-operated 188,609 2,073 200,631 2,231 Total 761,023 8,363 732,430 8,140 The following summary table shows the existing inventory of wells in which Aurora Oil & Gas has participated. The category, "Resource Assessment" has been added to designate those wells located in project areas undergoing assessment for future development: Antrim Antrim Well Status as of Operated Non-Operated June 30, 2007 Gross Net Gross Net Producing 182 172.65 275 54.68 Waiting on Hook-Up 27 27.00 30 6.46 Resource Assessment 3 3.00 4 0.87 Total 212 202.65 309 62.01 New Albany New Albany Well Status as of Operated Non-Operated June 30, 2007 Gross Net Gross Net Producing 0 0.00 21 1.05 Waiting on Hook-Up 1 0.31 3 0.28 Resource Assessment 13 7.39 4 1.80 Total 14 7.70 28 3.13 Well Status as of Other Total June 30, 2007 Gross Net Gross Net Producing 26 12.46 504 240.84 Waiting on Hook-Up 2 0.89 63 34.94 Resource Assessment 7 6.75 31 19.81 Total 35 20.10 598 295.59 During the second quarter of 2007, the Company participated in the development of 5 gross (4.38 net) wells in the Antrim Shale, 4 gross (4 net) wells of which were operated by the Company. As expected, Antrim Shale drilling activities in Michigan will accelerate during the second half of the year. The majority of New Albany Shale activity was also reserved for the second half of 2007, as Aurora participated in 12 gross (3.84 net) wells in the second quarter of 2007, 2 gross (1.49 net) wells of which were operated by the Company. Capital Expenditure Update Following the management changes announced in May of this year, the Company performed a strategic review of its portfolio of opportunities to ensure that its continued holdings and capital budgets are aligned with the Company's long-term strategic plan. As a result, the capital expenditure expectations for the second half of 2007 have been updated. Aurora's baseline budget, which does not include costs for leasehold interest (expected to be less than $2 million for the 6 month period beginning July 1, 2007), is summarized below: Actual January 2007 - June 2007 Gross Net Wells Wells Net Capital Play/Trend Drilled Drilled Expenditures Antrim 29 12.94 $7,150,000 New Albany 16 4.05 2,869,000 Other 12 10.93 2,425,000 Total 57 27.92 $12,444,000 Operated 21 19.20 $7,706,000 Non-operated 36 8.72 4,738,000 Total 57 27.92 $12,444,000 Budget July 2007 - December 2007 Gross Wells Net Wells Projected Projected Net Capital to be to be Expenditure Play/Trend Drilled Drilled Budget Antrim 49 41.29 $20,253,000 New Albany 28 17.23 15,881,000 Other 28 24.85 4,304,000 Total 105 83.37 $40,438,000 Operated 77 72.43 $35,656,000 Non-operated 28 10.94 4,782,000 Total 105 83.37 $40,438,000 Total January 2007 - December 2007 Gross Wells Net Wells Projected Projected Net Capital to be to be Expenditure Play/Trend Drilled Drilled Budget Antrim 78 54.23 $27,403,000 New Albany 44 21.28 18,750,000 Other 40 35.78 6,729,000 Total 162 111.29 $52,882,000 Operated 98 91.63 $43,362,000 Non-operated 64 19.66 9,520,000 Total 162 111.29 $52,882,000 Management has determined that evidence created by Aurora and other operators justifies increased drilling and construction activities in the New Albany Shale. Antrim activities will be devoted to infill drilling and development opportunities that offer near-term gas sales. For the second half of 2007, the Company expects to participate in 28 gross (17.23 net) New Albany Shale wells primarily located in two of Aurora's key operated project areas - the Wabash Project (Greene County) and the South Knox Project (Knox County). The capital expenditures for those areas also include construction of pipeline and facilities. Ronald E. Huff, President and Chief Financial Officer, remarked, "Our confidence is growing in this area as we drill and prove the statistical type curve, creating development opportunities and adding production and reserves to our portfolio. Our capital expenditure budget has been updated accordingly." Hedging Update The Company has also added additional financial hedges to protect against market price exposure. Specifically, Aurora executed four fixed swap transactions, selling an additional 2,000 Mmbtu per day at $8.41 for 2008, 7,000 Mmbtu per day at $8.72 for 2009, 7,000 Mmbtu per day at $8.68 for 2010 and the first quarter of 2011, and 7,000 Mmtbu per day at $7.62 for the second and third quarters of 2011. The current natural gas hedge portfolio is as follows: Period Mmbtu/day Instrument Price/Mmbtu April 2007 - December 2008 5,000 Fixed Swap $9.00 April 2007 - December 2008 2,000 Costless Collar $7.55 floor / $9.00 ceiling January 2008 - December 2008 2,000 Fixed Swap $8.41 January 2009 - December 2009 7,000 Fixed Swap $8.72 January 2010 - March 2011 7,000 Fixed Swap $8.68 April 2011 - September 2011 7,000 Fixed Swap $7.62 The pricing for all hedges executed to date includes the Michigan basis differential. These hedges effectively provide a weighted average floor price of $8.53 on 7,000 Mmbtu per day through September of 2011. Additional detail on the financial and operational results can be found in the Company's Form 10-Q filed August 9, 2007. This form can be retrieved from the Securities and Exchange Commission or via the Company website at http://www.auroraogc.com/SEC_Filings.htm. Selected historical financial data is provided for reference below. Conference Call Details The Company will be discussing second quarter results in a conference call scheduled for August 10, 2007 at 10 a.m. Eastern Time. Please see below "Conference Call Details" for call-in and webcast participation information. Call-In Information Aurora Oil & Gas invites interested persons to participate in the call by dialing 877-407-8035 (toll-free, domestic) or 201-689-8035 (international) prior to 9:55 a.m. Eastern Time. A digital replay of the conference call will be available within three hours following the call and will remain available until 11:59 p.m. Eastern Time on August 17, 2007. The replay can be dialed at 877-660-6853 (toll-free, domestic) or 201-612-7415 (international) and reference should be made to account number 286 and conference ID number 250672. Webcast Information The call will also be broadcast live via Internet webcast at http://www.vcall.com/IC/CEPage.asp?ID=119648. This link may also be accessed on the Company's website, http://www.auroraogc.com/, through the ``Investor Relations' page and the "Presentations & Webcasts" link. An archived webcast and podcast will be available for listening or download within three hours after the call and can be found under the links suggested above for up to 6 months following the event. Selected Financial Data The following table sets forth our selected historical financial data as of and for each of the periods indicated. The data for the year ended December 31, 2006 is derived from our historical audited consolidated financial statements for the periods indicated. The data as of and for the six months ended June 30, 2007 and 2006 is derived from our historical unaudited condensed consolidated financial statements for the interim periods indicated. The interim unaudited information was prepared on a basis consistent with that used in preparing our audited consolidated financial statements and includes all adjustments, consisting only of normal and recurring items, that we consider necessary for a fair presentation of the financial position, results of operations and cash flows for the unaudited periods. Operating results for the six months ended June 30, 2007 are not necessarily indicative of results that may be expected for the entire year 2007 or any future periods. You should review this information together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and unaudited condensed consolidated financial statements and related notes included in our Form 10-Q for the period ending June 30, 2007. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Statement of operations data Revenues: Operating revenues $6,602,429 $5,524,354 $12,532,005 $10,941,220 Pipeline transportation and marketing 157,664 130,533 286,932 242,299 Field service and sales 60,084 - 249,602 - Interest and other 461,245 70,580 474,758 181,631 Total revenue 7,281,422 5,725,467 13,543,297 11,365,150 Expenses: Production taxes 303,871 231,666 566,969 445,825 Production and lease operating expense 2,200,807 1,313,485 4,126,700 2,853,374 Pipeline operating expense 64,382 72,204 177,802 137,484 Field service expense 45,824 - 200,096 - General and administrative expense 1,973,358 1,676,019 4,233,701 3,242,713 Oil and natural gas depletion and amortization 776,595 1,068,417 1,523,460 2,010,383 Other assets depreciation and amortization 573,498 546,032 1,142,104 1,013,783 Interest expense 1,068,871 1,970,019 2,050,403 3,564,154 Taxes (refunds), other 25,129 27,694 (53) 29,361 Total expenses 7,032,335 6,905,536 14,021,182 13,297,077 Income loss before minority interest 249,087 (1,180,069) (477,885) (1,931,927) Minority interest in income of subsidiaries (19,610) (5,119) (32,957) (17,919) Net income (loss) $229,477 $(1,185,188) $(510,842) $(1,949,846) Net income (loss) per common share - basic and diluted $0.00 $(0.01) $(0.01) $(0.03) Weighted average common shares outstanding - basic and diluted 103,735,539 81,693,808 101,602,875 70,265,281 Cash flow data Cash provided (used) by operating activities - - $5,411,775 $3,607,502 Cash used by investing activities - - (32,016,909) (61,497,361) Cash provided by financing activities - - 25,590,236 49,504,174 As of As of June 30, December 31, 2007 2006 Balance sheet data Cash and cash equivalents $720,498 $1,735,396 Other current assets 9,006,600 11,038,360 Oil and gas properties, net (using full cost accounting) 184,249,398 162,715,946 Other property and equipment, net 9,306,214 9,221,228 Other assets 25,116,848 27,407,825 Total assets $228,399,558 $212,118,755 Current liabilities $11,121,242 $17,771,645 Long-term debt, net of current maturities 79,187,004 54,538,138 Minority interest in net assets of subsidiaries 85,828 77,873 Shareholders' equity 138,005,484 139,731,099 Total liabilities and shareholders' equity $228,399,558 $212,118,755 About Aurora Oil & Gas Corporation Aurora Oil & Gas Corporation is an independent energy company focused on unconventional natural gas exploration, acquisition, development and production with its main operations in the Michigan Antrim Shale and New Albany Shale of Indiana and Kentucky. Cautionary Note on Forward-Looking Statements Statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results, including number of wells to be drilled, anticipated capital expenditures, and plans for future growth through drilling and production are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although we believe that the forward-looking statements described are based on reasonable assumptions, we can give no assurance that they will prove accurate. Important factors that could cause our actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, drilling and operating risks, the availability of drilling rigs, changes in laws or government regulations, unforeseen engineering and mechanical or technological difficulties in drilling the wells, operating hazards, weather-related delays, the loss of existing credit facilities, availability of capital, and other risks more fully described in our filings with the Securities and Exchange Commission. All forward-looking statements contained in this release, including any forecasts and estimates, are based on management's outlook only as of the date of this release and we undertake no obligation to update or revise these forward-looking statements, whether as a result of subsequent developments or otherwise. DATASOURCE: Aurora Oil & Gas Corporation CONTACT: Jeffrey W. Deneau, Investor Relations, Aurora Oil & Gas Corporation, +1-231-941-0073 Web site: http://www.auroraogc.com/

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