AOG Aurora Oil & Gas Corp.

TRAVERSE CITY, Mich., Nov. 8 /PRNewswire-FirstCall/ -- Aurora Oil & Gas Corporation (AMEX:AOG) today provided an operational update of drilling and production activities for the third quarter of 2007. William W. Deneau, Chairman and Chief Executive Officer, stated, "We have been focused on delivering positive drilling results in the New Albany Shale and growing our production in the Antrim Shale. During the third quarter, we have achieved each of these goals and have created opportunities that will propel us into 2008." The Company's drilling activities have been focused primarily in the New Albany Shale of southwestern Indiana and the Antrim Shale of northern Michigan. During the third quarter of 2007, the Company drilled or participated in 35 gross (26.21 net) wells with a 92% completion rate. A summary of third quarter drilling activity is provided below. The category, "Resource Assessment" has been provided to designate those wells located in project areas undergoing assessment for future development: Drilling Activities Operated Non-Operated Total - Q3 2007 Gross Net Gross Net Gross Net Producing 13 13.00 5 1.57 18 14.57 Waiting on Hook-Up 6 6.00 6 2.66 12 8.66 Resource Assessment 2 0.98 0 0.00 2 0.98 Dry 1 1.00 2 1.00 3 2.00 Total 22 20.98 13 5.23 35 26.21 Total company production during the third quarter averaged 9.1 net million cubic feet of natural gas equivalent (mmcfe) per day, a 9.4% improvement over the previous quarter. The exit rate for the quarter was in excess of 10.5 net mmcfe per day. A summary of production from the third and second quarters of 2007 is provided below: Estimated Production by Q3 2007 Q2 2007 Play/Trend (net mcfe) Total Daily Average Total Daily Average Antrim Shale 780,834 8,487 709,155 7,793 New Albany Shale 14,361 156 12,548 138 Other 46,551 506 39,320 432 Total 841,746 9,149 761,023 8,363 Operated 608,959 6,619 572,414 6,290 Non-operated 232,787 2,530 188,609 2,073 Total 841,746 9,149 761,023 8,363 New Albany Shale Projects During the third quarter, Aurora drilled or participated in 9 gross (5.13 net) horizontal wells. Three of the wells, in which the Company has a 5% carried working interest, were drilled by El Paso Production Company. The remaining 6 wells were drilled by Aurora in 2 project areas known as "South Knox" and "Wabash". A summary of the third quarter New Albany Shale drilling activities is provided below: New Albany Shale Drilling Activities - Q3 2007 Operated Non-Operated Total Gross Net Gross Net Gross Net Producing 2 2.00 1 0.05 3 2.05 Waiting on Hook-Up 2 2.00 2 0.10 4 2.10 Resource Assessment 2 0.98 0 0.00 2 0.98 Dry 0 0.00 0 0.00 0 0.00 Total 6 4.98 3 0.15 9 5.13 The South Knox project area is 100% owned and operated by Aurora. It was the target of 4 horizontal wells drilled during the third quarter and 1 horizontal well drilled in early October. All of these wells were recently flow-tested and the results of those tests, in chronological order of the spud date, are 50, 30, 200, 700, and 850 mcf per day, respectively. This equates to a per well average of approximately 366 mcf per day, which is 20% above the average initial production rate expected by the Company. This is expected to result in an average estimated ultimate recovery of over 1 billion cubic feet (bcf) of natural gas per well. On the last 3 wells drilled, the test rate averaged over 580 mcf per day, which is substantially above the type curve and strongly supports the economic potential of the New Albany Shale in this area. These wells were drilled using a new technique which appears to not only provide better production results but is less costly than previously employed methods. Mr. Deneau commented, "The recent changes to our drilling strategy in this play are allowing us to prove what we have believed all along - we can economically drill and produce natural gas from the New Albany Shale. Our South Knox project includes 40,000 net acres, which may offer up to 125 well sites for full-scale development." The first 2 South Knox wells were placed into production for a short time during the third quarter, flowing directly to a grain processing facility via a local pipeline operator. However, after September 30, the local pipeline operator ceased operations, so the wells were shut-in with the other South Knox wells and are now awaiting hookup to an interstate pipeline. In the Wabash project area the Company drilled 2 horizontal wells during the quarter. In this project, Aurora is the operator and owns 48.75% working interest. Of the 2 wells drilled in this project, only 1 well was flow- tested. The "Corbin C4-10 HD", which has been discussed in previous public communications, exhibited a test rate in excess of 700 mcf per day. Antrim Shale Projects During the third quarter, the Company targeted 2 new northern Michigan projects, known as Chandler and Black Bear East, for its Antrim Shale drilling operations. Each of these projects is an offset to currently producing units, which the Company believes increases the potential for developing immediately productive sites. A summary of the third quarter Antrim Shale drilling activities is provided below: Antrim Shale Drilling Operated Non-Operated Total Activities - Q3 2007 Gross Net Gross Net Gross Net Producing 11 11.00 4 1.52 15 12.52 Waiting on Hook-Up 4 4.00 1 0.38 5 4.38 Resource Assessment 0 0.00 0 0.00 0 0.00 Dry 1 1.00 0 0.00 1 1.00 Total 16 16.00 5 1.90 21 17.90 As noted in the summary, 15 gross (12.52 net) of the drilled wells were put into production. In addition, approximately 10 net wells which were previously waiting for hookup by Aurora or other operators were also put into production. As a result, over 22 net wells were put into production during the third quarter. Another addition to Aurora's production was a purchase of non-operated working interest, effective September 1, 2007. This purchase included interest in over 33 net wells generating nearly 500 net mcf per day. Two other operated project areas known as Arrowhead and Tomahawk are located along the northern rim of the Antrim Shale trend. Previously the Company reported that this was an area which was not expected to be a sizable contributor to production in the near-term due to its extensive natural fracturing which results in extended dewatering requirements. As of September 30, 2007, that expectation has not changed. At this time, the Company has installed sufficient water disposal capacity and other infrastructure necessary to evaluate these projects. More information will be provided on these projects as testing is completed. Woodford Shale Project Since the announcement of Aurora's ownership of acreage in the Woodford Shale, the Company has continued acquiring acreage in the same locale. During the third quarter, the acres under lease in this project area increased by 22% to a total of 35,858 gross (31,950 net) acres. Other Projects Another project in which additional wells were drilled is a non-operated oil-producing prospect located in northern Texas. This project area has provided a completion rate of over 80%. During the third quarter, 3 gross (2.18 net) oil wells were successfully drilled. These new wells are expected to increase Aurora's production to nearly 100 net barrels of oil production daily. The Company has agreed to participate in 5 wells per quarter on this project with a potential drilling inventory of up to 50 locations. Near-Term Development Expectations On September 19, 2007, the Company announced that its board of directors had retained Johnson Rice & Company L.L.C. ("JRCO") to evaluate the Company's strategic alternatives. As a result of this process, the Company anticipates reducing its drilling activities and postponing significant asset divestitures, but intends to maintain current operations pending the outcome of the evaluation process. The Company is currently in the middle of the process and will communicate as its board of directors and advisors deem appropriate. During the fourth quarter, the Company expects to complete the South Knox project infrastructure and initiate production by year end. This is expected to add over 1,500 mcf per day to the Company's total net production. Mr. Deneau stated, "Though we will experience a temporary slowdown in drilling activity, we have two exciting catalysts in the next 3 months that will be very important to our Company. First, we expect to see our first 100% owned and operated natural gas sales to a major market from the New Albany Shale. Secondly, Johnson Rice & Company will conclude their evaluation of strategic alternatives and report to our board of directors. We have high expectations for each of these exercises." Earnings Release Date and Conference Call Information The Company will file its Form 10-Q for the period ended September 30, 2007 with the Securities Exchange Commission (SEC) on November 14, 2007. At the recommendation of its advisors, the Company will not be hosting a quarterly conference call. All questions may be directed to the Investor Relations contact provided below. 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 primary operations in the Antrim Shale of Michigan, the New Albany Shale of Indiana and Kentucky and the Woodford Shale of Oklahoma. Cautionary Note on Forward-Looking Statements Statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results, including a strategic evaluation, anticipated capital expenditures, drilling results, 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. Contact: Aurora Oil & Gas Corporation Jeffrey W. Deneau, Investor Relations (231) 941-0073 http://www.auroraogc.com/ DATASOURCE: Aurora Oil & Gas Corporation CONTACT: Jeffrey W. Deneau, Investor Relations of Aurora Oil & Gas Corporation, +1-231-941-0073 Web site: http://www.auroraogc.com/

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