Aurora Gas Receives Approval for Three Mile Creek Unit

Aurora Gas, LLC, is pleased that the Alaska Division of Oil and Gas expeditiously approved formation of the Three Mile Creek Unit in record time. The Unit includes two State leases comprising 5,541 acres, and two CIRI leases comprising 2,560 acres. Aurora and Forest Oil Corporation are partners in the 8,101 acre unit with Aurora holding 79 percent and Forest 21 percent Unit Interests.

Randall Jones, CPL, Aurora's Manager of Land & Negotiations, said, "Given the fact our Application was submitted in December, 2003, we are favorably impressed with the quickness with which the State and CIRI proposed reasonable modifications during the Holiday period. Their responsiveness in a very conscientious and professional manner allowed the Unit Agreement and Plan of Exploration (POE) to be modified slightly so that the Unit could be approved prior to the leases expiring on January 31, 2004." Since two natural gas prospects are identified within the Unit area, the three-year POE allows the acquisition of not less than 27 line miles of new seismic data over the entire Unit area, or drilling of an exploration well, possibly in each prospect. The first exploration well will be drilled to the base of the Beluga Tsuga 2-4 interval with the bottom hole location within ADL-338233. Failure to perform will result in payments to the state of liquidated damages for the expired State acreage. If after drilling the first exploration well and acquiring seismic, the parties may elect not to drill the second exploration well in the third year.

Aurora Gas has contracted with Veritas DGC to acquire and process approximately 100 miles of 2D seismic data on the west side of Cook Inlet with work due to start in March, 2004. The seismic program is designed to better delineate Aurora's next generation of gas prospects with drilling due to start as early as mid-2004.

Andy Clifford, Aurora's Executive Vice President of Exploration said, "Aurora is very excited by its upcoming drilling and recompletion program with a new well planned for the Kaloa Prospect, recompletions at Lone Creek, Moquawkie and Nicolai Creek Fields, plus a re-entry well at another prospect. The seismic program will assist with the evaluation of our Aspen, Olsen Creek and Three Mile Creek Prospects. We are glad to have Forest Oil with us as a partner on the latter two prospects. Aurora, together with Veritas DGC, has been instrumental in getting the use of mini-mulchers approved for use in seismic acquisition in the State of Alaska for the first time. This technology will be another example of Aurora bringing state-of-the-art technology to Cook Inlet, whilst helping to reduce costs of seismic acquisition."

Aurora met its production target of 20 MMCFGD by the end of 2003 by bringing on production from the Nicolai Creek Unit 1B, 2 and 9 Wells, which account for about half of this production, along with the Lone Creek No. 1 well, which has been on line since August 2003. Aurora's production target for 2004 is to reach a daily production of 40 MMCFGD by year-end by bringing the Moquawkie No. 1 well on stream in June 2004 plus successful completions as a result of the aforementioned recompletion and drilling campaign.