Baytex Agrees To Buy Aurora Oil & Gas In C$2.6 Bln Deal

(RTTNews) - Aurora Oil & Gas Ltd. (AEF.TO, AOG) has agreed to be acquired by Canadian crude oil producer Baytex Energy Corp. (BTE_UN.TO, BTE) for A$4.10 per share in cash. The total consideration to be paid is about C$1.8 billion, plus assumed debt of around C$744 million for a total transaction value of C$2.6 billion.

A Scheme Implementation Deed or SID has been entered into, whereby a Baytex wholly-owned subsidiary would acquire 100 percent of Aurora. The offer price implies a market capitalisation of A$1.840 billion.

The offer price represents a 52 percent premium to Aurora's one-week volume weighted average price to February 6, being the last trading day before execution of the SID.

Australia-based Aurora is active in the over-pressured liquids rich region of the Eagle Ford Shale in Texas. It is engaged in the development and production of oil, condensate and natural gas in Karnes, Live Oak and Atascosa counties in South Texas.

Its primary asset is 22,200 net contiguous acres in the prolific Sugarkane Field located in South Texas in the core of the liquids-rich Eagle Ford shale. Aurora's fourth-quarter 2013 gross production was 24,678 barrels of oil equivalent per day of predominantly light, high-quality crude oil.

Baytex is focused on the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Williston Basin in the U.S. Around 89 percent of Baytex's production is weighted toward crude oil.

Through the deal, Baytex will acquire premier acreage in the core of the Eagle Ford. Baytex said the acquisition positions it in another world-class oil resource play and would provide its shareholders with exposure to low-risk, repeatable, high-return projects with leading capital efficiencies.

James Bowzer, CEO of Baytex, said, "This is a highly accretive transaction on a per share basis to reserves, production, and funds from operations. The Eagle Ford play provides not only exposure to light oil, but also to Gulf Coast crude oil markets with established transportation systems. A portion of the produced crude oil benefits from Louisiana Light Sweet based pricing, which currently trades at a premium to WTI."

Baytex has entered into a C$1.3 billion bought deal subscription receipt financing with a syndicate of underwriters co-led by Scotiabank and RBC Capital Markets.

Further, Baytex has committed to increase the monthly dividend on its common shares by 9 percent to C$0.24 from C$0.22 per share, subject to the completion of the acquisition. Based on the expected closing date of mid/late May, the dividend increase is anticipated to take effect for the dividend payable on or about July 15.

Aurora's directors unanimously recommended that its shareholders vote in favor of the deal. They intend to vote all shares that they control in favor of the scheme, if there is no superior proposal, subject to an Independent Expert concluding that the scheme is in the best interests of shareholders. The directors control around 5.5 percent of the total current Aurora shares on issue.

Aurora Executive Chairman, Jon Stewart said, "While as a Board we believe Aurora is well positioned and are confident in its future growth outlook, the Board has undertaken a thorough assessment of the proposal from Baytex and believes it represents an attractive opportunity for shareholders to realise value at a significant premium to the current share price."

Credit Suisse and Goldman Sachs are acting as Aurora's financial advisers and Gilbert+Tobin are acting as legal adviser.

AEF.TO closed down 0.8 percent on Thursday at C$2.63.

BTE settled up 1.2 percent at $37.62.