Aurora Boosts Proved Reserves by 139%

Aurora Oil & Gas Corp. on Wednesday announced year-end proved reserves of 153 billion cubic feet of natural gas equivalent (Bcfe). This represents a 139% increase over year-end 2005.

William W. Deneau, President and CEO of Aurora Oil & Gas Corporation commented. "Our reserve growth demonstrates that this has been a wonderfully productive year for the Company. This is a direct result of executing our primary strategy of growth through the drill bit.''

Note: All financial and production information presented herein is unaudited and subject to change. The information will be presented in audited form in the filing of the Company's 10-KSB with the Securities and Exchange Commission, to be filed during the latter half of March, 2007.

Drilling Results

In the second half of 2006, the Company announced its intention to participate in 73.04 net wells from July 1 through December 31, 2006. Actual results exceeded these expectations, as the Company participated in 76.34 net wells during the final six months of the year, bringing the total annual participation to 209 gross (112 net) wells. The success rate reported for the full-year 2006 drilling program is 94%.

Nearly 75% of the net wells were operated by Aurora, giving the Company greater ability to control costs and direct drilling activities. As expected, the majority of 2006 drilling activity was concentrated in the Antrim Shale properties where 173 gross (98 net) wells were drilled. The New Albany Shale added another 26 gross (7.5 net) wells, with 10 gross (5.6 net) wells added in non-core locations.

Proved Reserves

The year-end 2006 net proved reserves increased substantially from year-end 2005 by 89 Bcfe to 153 Bcfe. A summary of year-end 2006 results, with comparison to year-end 2005 is provided below:



                                                     New
                               Antrim               Albany
 Year-end Net Proved            Shale               Shale
 Reserves (Bcfe)            2006      2005      2006      2005
 ---------------------     ------    ------    ------    ------
 PDP                         81.2      28.9       0.5       0.0
 PDNP                        22.9      15.3       0.3       0.0
 PUD                         45.3      17.5       1.5       0.0
 ---------------------     ------    ------    ------    ------
 Total Net
  Proved
  Reserves                  149.5      61.8       2.3       0.0
 ---------------------     ------    ------    ------    ------


 Year-end Net Proved          Other             Total         2006
 Reserves (Bcfe)          2006     2005     2006     2005    Change
 ---------------------   ------   ------   ------   ------   ------
 PDP                        0.3      1.2     82.1     30.1     52.0
 PDNP                       0.0      0.2     23.2     15.5      7.7
 PUD                        0.7      0.8     47.6     18.3     29.3
 ---------------------   ------   ------   ------   ------   ------
 Total Net
  Proved
  Reserves                  1.0      2.1    152.9     63.9     88.9
 ---------------------   ------   ------   ------   ------   ------

Changes to reserves, net of production, included a purchase of 22.3 Bcf of Antrim Shale properties completed in January of 2006, as well as the sale of 0.7 Bcfe of Louisiana properties in July of 2006. The Company will continue to manage its portfolio of properties to optimize the returns and operation of its properties. A net improvement to revisions of previous estimates and extensions also suggests that existing properties are showing improved reserve potential. The Company continues to review its drilling, completion and production methods to provide the best return on capital expended. A summary of the proved reserves reconciliation is provided below:



 Reconciliation of Reserves                         Proved Reserves
                                                         (Bcfe)
 ------------------------------------------------- ------------------
 Proved Reserves as of December 31, 2005                 63.9
 Revisions of previous estimates                          4.2
 Purchases of minerals in place                          22.3
 Extensions and discoveries                              65.7
 Production                                              -2.6
 Sales of minerals in place                              -0.7
 ------------------------------------------------- ------------------
 Proved Reserves as of December 31, 2006                152.9
 ------------------------------------------------- ------------------

Excluding the benefit of financial hedges, pre-tax PV-10 decreased to $139 million at year-end 2006, versus $199.5 million at year-end 2005. This is a direct result of the decline in the natural gas price deck used for this calculation and is similar to the decline experienced by other operators with natural gas properties. The Aurora price deck has declined from $9.89 at year-end 2005 to $5.84 for year-end 2006. If the benefit of financial hedges is included, PV-10 is improved by $10.3 million.

In 2006, capital expenditures for drilling were approximately $56 million. The estimated cost of proved reserves found/added for 2006 is approximately $0.85 per mcfe. These are excellent results and are below the three-year average for Aurora's peer group.

In 2007, the Company expects capital expenditures of approximately $100 million to participate in over 400 gross (200 net) wells. This is approximately a two-fold increase in drilling activity from 2006. The majority of this budget will be allocated to the development of Antrim Shale properties. By the end of 2007, Aurora expects add over 100 Bcfe of proved reserves through the drill bit.

The proved reserves for year-end 2006 have been prepared by Schlumberger Data & Consulting Services and are consistent with calculations required by the Securities Exchange Commission.

Production Results

For the last quarter of 2006, the Company produced 671 thousand net mcfe, averaging 7.3 thousand net mcfe per day and exiting the year at 8.6 thousand net mcfe per day. The quarterly production is in line with Company guidance and the exit rate shows a 250% improvement in production from year-end 2005. In 2007, the production growth has continued, climbing to an average of 8.7 thousand net mcfe per day for January, with an exit rate of 9.2 thousand net mcfe per day.

A summary of production for the fourth quarter and full-year 2006 is provided below:



 Estimated                  Q4 2006                     2006
  Production                       Daily                      Daily
  by Formation          Total      Average        Total       Average
   (net mcfe)
 ----------------    ---------   ---------     ---------   ---------
   Antrim Shale        619,872       6,738     2,353,691       6,449
 ----------------    ---------   ---------     ---------   ---------
   New Albany Shale     11,994         130        28,517          78
 ----------------    ---------   ---------     ---------   ---------
   Other                39,731         432       271,219         743
 ----------------    ---------   ---------     ---------   ---------
 Total                 671,597       7,300     2,653,427       7,270
 ----------------    ---------   ---------     ---------   ---------

 Estimated                 Q4 2006                    2006
  Production by                   Daily                     Daily
  Operator             Total      Average        Total      Average
   (net mcfe)
 ----------------    ---------   ---------     ---------   ---------
   Operated            486,785       5,291     1,963,860       5,380
 ----------------    ---------   ---------     ---------   ---------
   Non-operated        184,812       2,009       689,567       1,889
 ----------------    ---------   ---------     ---------   ---------
 Total                 671,597       7,300     2,653,427       7,270
 ----------------    ---------   ---------     ---------   ---------

The Company is disappointed, however, with the production growth during 2006. Production has been hampered by curtailments on a non-operated processing facility and delays on getting wells into production. Recently, Aurora completed and began selling Antrim Shale production via an alternative outlet which the Company built into the Great Lakes Pipeline. This will alleviate the impact of the curtailments experienced to date and allow the Antrim Shale properties to steadily de-water and increase production.

As seen in the summary table below, 42 gross (41.21 net) operated wells are waiting for hookup in the Company's Antrim Shale properties as of December 31, 2006. The majority of these wells are waiting for pipeline easements and right-of-ways granted by state regulatory agencies. The Company is working closely with these agencies and legislators to minimize the delayed approvals which have notably increased over the past year.



 
 Well Status as of                           Antrim
 December 31, 2006      Antrim Operated    Non-Operated
 ------------------
                       Gross     Net     Gross     Net    
                      ------   ------   ------   ------   
 Producing               164   155.00      249    43.86   
 Waiting on Hook-Up       42    41.21       40     9.96   
 ------------------   ------   ------   ------   ------   
                         206   196.21      289    53.82   
                      ------   ------   ------   ------   
        


 Well Status as of      New Albany        New Albany
 December 31, 2006       Operated        Non-Operated      
 ------------------                                        
                      Gross     Net     Gross     Net      
                      ------   ------   ------    ------    
 Producing                0      0.00       14      0.70    
 Waiting on Hook-Up       12     6.21        8      0.65    
 ------------------   ------   ------   ------    ------    
                          12     6.21       22      1.35    
                      ------   ------   ------    ------ 
                 

 Well Status as of 
 December 31, 2006       
 ------------------       Other 
 Total                              
                     Gross     Net     Gross      Net   
                     ------   ------   ------    ------ 
 Producing               28    13.70      455    213.26 
 Waiting on Hook-Up       3     1.34      105     59.38 
 ------------------   ------   ------   ------   ------ 
                         31    15.04      560    272.64 
                     ------   ------    ------   ------

Mr. Deneau commented, ``We are very pleased with the quantity and quality of our 2006 drilling campaign. Our proved reserves continue rapid growth through the drill bit and we continue to prove up undeveloped locations on our extensive leasehold. Our cost control has resulted in some of the lowest finding costs in the industry. Today we are focused on adding to our drilling successes and getting existing and future wells online and adding cash flow as quickly as possible.''

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 western Kentucky.

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