Baytex to buy Australia's Aurora Oil & Gas at big premium

Thu Feb 6, 2014 9:01pm EST
 
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By Scott Haggett and Maggie Lu Yueyang

CALGARY, Alberta/SYDNEY (Reuters) - Canadian heavy oil producer Baytex Energy Corp (BTE.TO: Quote) has agreed to buy Aurora Oil & Gas Ltd AUT.AX for C$2.6 billion ($2.4 billion) including debt, targeting the Australian company's Texas shale oil assets and driving its shares to a 15-month high.

Baytex is offering A$4.10 for each share of the Perth-based oil producer, a 52 percent premium to its average price in the past week, valuing the company at A$1.84 billion ($1.65 billion), Aurora said in a statement.

Baytex said it would pay C$1.8 billion for the shares and assume C$744 million of Aurora's long-term debt.

"The deal looks very good ... very healthy premium, and obviously on a number of multiples looks very attractive for Aurora shareholders," Bank of America Merrill Lynch analyst James Bullen said in Sydney.

The acquisition is the largest in Baytex's 20-year history and broadens the company beyond its focus on conventional heavy oil from reserves in Western Canada and its emerging light oil output from the Bakken shale field in North Dakota.

It will give Baytex access to Aurora's 22,200 acres of exploration lands and 166.6 million barrels of reserves in the Sugarkane field in south Texas, which Baytex says lies in the heart of the Eagle Ford region.

"Baytex will acquire premier acreage in the core of the Eagle Ford, one of the leading shale oil plays in the (United States)," James Bowzer, Baytex's chief executive, said in a statement.

Shale oil is rapidly emerging as a low-cost new unconventional energy in the United States. Eagle Ford ranks as one of the largest oil-and-gas developments in the world based on capital invested and has over 200 rigs running.   Continued...