Introduction
Aurora has established a substantial landholding position within Sugarkane Gas and Condensate Field, Texas, providing the Company with the opportunity to benefit from a multi trillion cubic feet equivalent (Tcfe) gas and condensate resource.

The Sugarkane Field, discovered in 2006, is a unique Austin Chalk and Eagle Ford Shale reservoir that lies some 20km south of the main Texas Austin Chalk trend and within the emerging Eagle Ford Shale play. The Sugarkane Field is over pressured and has a high condensate to gas ratio contributing to its commercial value.

The Sugarkane Field covers an identified area exceeding 200,000 acres. Aurora has been allocated a total of 391 Bcf and 72 mmbbls of certified 2C contingent resources by Netherland, Sewell and Associates as a net position as at 1st September 2009.

Aurora holds interests in three separate project Areas of Mutual Interest (“AMI”) within the Sugarkane Field with a combined gross land position of 51,791 acres (20,285 acres net to Aurora pre farmout):

• Sugarloaf Area (20%)
• Longhorn Area (50%)
• Ipanema Area (80%)

In late 2009 Aurora announced that it had farmed out its consolidated interests across the Sugarkane field in exchange for being carried for a significant work program that will result in Aurora having an interest in up to 10 producing wells within the Sugarkane field.

Fifteen exploration and appraisal wells had been drilled into the reservoir since discovery. Four of these wells are within Aurora’s area of interest and eleven wells had been drilled by ConocoPhillips in an AMI adjacent to Aurora’s area of interest.

Aurora’s acreage within the Sugarkane field lies in the middle of significant recent leasing and drilling activity along the Eagle Ford Shale trend in South Texas.

Sugarkane Field Summary
The Sugarkane Field is an exciting Austin Chalk/Eagle Ford gas and condensate field covering an identified area of in excess of 200,000 acres. The field is split into 5 separate AMIs where Aurora participates in three; the Sugarloaf AMI, the Longhorn AMI and the Ipanema AMI.

The field is unique as it is comprised of an over pressured Austin Chalk as well as a highly organic Eagle Ford shale horizon that forms a single continuous reservoir. The Texas Railroad Commission, the state authority for onshore oil and gas assets, has provided a ruling confirming that both horizons constitute a single reservoir. The Austin Chalk is a well established play type within the region with some 5 TCF of gas and 600mmbbls oil having been produced from the nearby Giddings and Pearsall fields alone. The Sugarkane field is an over pressured extension of the traditional trend and in its self represents a commercially viable proposition.

Early reports from Aurora’s Austin Chalk discovery well Sugarloaf #1 made reference to an underlying formation that also portrayed reservoir quality characteristics as well as having a high organic content. At the time the participants at Sugarloaf referred to this zone as being the ‘New Chalk’ because of the calcareous chalk inter-bedded with the organic shales that were seen in core and on electric logs taken whilst drilling. Rather than simply an over pressured Austin Chalk play, we now know it to be an over pressured resource play that requires development via fracture stimulated horizontal wells. This resource play is now commonly referred to as the Eagle Ford Shale.

The hydrocarbons found within the Austin Chalk are generated in the Eagle Ford shale, which is known as the source rock for the chalk. Over the last 12 months the Eagle Ford shale has become one of the most sought after shale plays in the USA. The Sugarkane field sits in the middle of this newly emerging trend and a number of large companies have demonstrated commercial production rates from the Eagle Ford shale.

Unconventional gas shale plays have become a very important gas supply source in North America. Drilling technology and completion techniques have developed over the past decade making a number of shale plays in North America viable commercial developments. The Eagle Ford shale has emerged as one of the most sought after shale plays because of the high expected ultimate recovery or reserves per well but more importantly, because of the very high condensate liquids ratio of the gas. The Sugarkane field has produced condensate at a ratio of between 75 to 300 bbl per mmscf of gas for the wells drilled in the field to date. In other words, on an energy basis, approximately 30% to 65% of the hydrocarbons produced is condensate (or light oil). On a revenue basis at current pricing, approximately 80% relates to condensate sales.

The Sugarkane Field was discovered in 2006 by Burlington (acquired by ConocoPhillips) with the Kunde #1 exploration well that intersected the Austin Chalk / Eagle Ford formation in the adjacent AMI to the Sugarloaf AMI. The Kunde #1 vertical well has been producing gas and condensate since September 2006. The same formation was encountered some 7 km away on the Sugarloaf #1 exploration well, whilst drilling to the primary exploration target at a deeper horizon. All of the known results from wells drilled to date and a number of historical wells have encountered a consistent, correlatable Austin Chalk / Eagle Ford formation across the field.

Aurora Land Position in the Sugarkane Field
Aurora has established a substantial landholding position within the Sugarkane Field, South Texas. The Sugarkane Field extends over an area of in excess of 200,000 acres, and Aurora has an interest in approximately 51,791 acres within the field structure.

Aurora holds interests in three contiguous AMIs within the Sugarkane Field; the Sugarloaf AMI, Longhorn AMI and Ipanema AMI.

Note the Sugarkane and Excelsior AMIs are also within the Sugarkane Field however Aurora does not have an interest in these project areas.

*Note: prior to royalty interests

Contingent Resource Certification
In October 2009, Aurora advised that it had completed an independent certification of its interests in the Sugarkane Gas and Condensate field in southern Texas. Aurora has been allocated a total of 391 Bcf of gas and 72 mmbbls of condensate 2C contingent resources for its working interests across the two horizons that constitute the Sugarkane reservoir. This work represents the first independent quantification of the recoverable resource potential and significant value of the acreage position held by Aurora in the Sugarkane field.

The analysis was carried out by Netherland, Sewell & Associates, Inc (“NSAI”) who are one of the leading certification authorities in the world. The above table summarises the Contingent Resources certified by NSAI on a net position for Aurora across the Sugarloaf, Longhorn and Ipanema project areas.

The above figures are further sub-classified as ‘development pending’, they are before royalties and represent Aurora’s working interest as of 1st September 2009 of 51,791 gross and 20,285 net acres (pre farm-out interest). The work adhered to the definitions and guidelines set forth in the 2007 Petroleum Resource Management System approved by the Society of Petroleum Engineers.

NSAI provide certification of shale plays for many of the established US based unconventional resource specialists including Petrohawk Energy, Encana, Chesapeake Energy and Plains Exploration. They have independently derived the above estimates based on a regional knowledge of activity, access to the data from operations within which Aurora participates and a knowledge of technical and commercial requirements based on analogous fields.

Farm Out
Aurora was pleased to announce in September 2009 that it had successfully farmed out its consolidated acreage across the Sugarkane Gas and Condensate field to Hilcorp Energy Company (“Hilcorp”), estimated to be the 4th largest private E&P company in the USA.

The key elements of the farmout for Aurora are as follows:-

Aurora will be free carried for the drilling, completion and tie in of up to 7 new horizontal wells and the stimulation of the three existing Sugarloaf horizontal wells; Kennedy #1H, Kowalik #1H and Weston #1H. This will establish a total of 10 wells on production across Aurora’s acreage of which 6 will be located within the Sugarloaf AMI, 3 in Longhorn and 1 in Ipanema. Under the terms of the farmout this work program has a series of deadlines over the next 20 months.

The Farminee will earn an interest in Aurora’s acreage incrementally as each farmin activity is completed up to a maximum of 50% of Aurora’s interest in the Sugarloaf and Longhorn AMI’s and 5/8ths of the smaller Ipanema AMI.

Once drilled, the first well within each of the Longhorn and Ipanema AMIs will be considered as having met Aurora’s obligation well commitments within those AMIs.

Aurora believes that this additional activity within the Sugarkane Field, together with the considerable ongoing regional activity within the Eagle Ford Shale play will continue the process of demonstrating and establishing the considerable value of our holdings in the Sugarkane Field.

Eagle Ford Shale
The hydrocarbons found in the Austin Chalk were originally generated in an underlying shale system called the Eagle Ford Shale, which is known as the ‘source rock’ for this reservoir. Most shales have a high clay content which limits their efficiency as potential reservoirs but within a geological time frame these source rocks allow the hydrocarbons they generate to leak out and in classic chalk fields like Giddings they are captured in the overlying reservoir quality Austin Chalk.

During late 2008, all through 2009, and now into 2010, a number of large US and international companies have made announcements of a new shale play within which they have made substantial land investments. This shale play trend has been named the Eagle Ford Shale and Sugarkane is located centrally within it. Whilst it is still in an appraisal stage the reported results indicate that the trend may prove to be one of the premier shale systems in North America.

The Eagle Ford Shale has one clear benefit over most other gas shale play in North America; that is the very high gas condensate (light oil) ratios observed. The Sugarkane field appears to be a sweet spot within the Eagle Ford shale trend with condensate gas ratios observed between 75 and 300 bbl per mmcf of gas produced.

The map below illustrates the disclosed positions of a number of major US oil and gas companies who have made announcements regarding their participation in the Eagle Ford shale. Aurora’s acreage within the Sugarkane field is in the middle of significant leasing and drilling activity.

With some 50 wells having been drilled in the Eagle Ford shale by the end of 2009, drilling and completion techniques have been refined resulting in higher initial production rates, lower decline rates (increased recovery per well), and together with lower drilling costs, the overall commerciality of the play has improved.

Unconventional Resource Plays in North America
Unconventional gas production, including shale, Coal Bed Methane and tight gas plays is forecast to increase from 42% of total US production in 2007 to 64% by 2020 (The Energy Information Administration). Shale plays such as the Barnett Shale have become household names and it this unconventional resource alone accounts for the largest single producing gas field in the USA, with production accounting for 6% of all natural gas in the Lower 48 states.

Over the last few years other gas shale plays including the Fayetteville, Woodford, Marcellus and the Haynesville have become major development areas and each of these has been subject to significant investment by international upstream oil and gas companies such as Shell, BP, Norske Hydro, Repsol and British Gas. The logic behind these transactions is that huge resource bases are being acquired and unlike offshore developments where the majority of capital is committed prior to production, investment in the resource plays in the US can be scaled to match demand and commodity prices with a relatively short lead time. The US is the largest energy market in the world and infrastructure is well developed. The resource potential of the shale plays is huge and relatively well established therefore production can be ramped up or down by increasing or decreasing development drilling activity.

The key driver for unlocking the gas shale plays has been advances in technology allowing long horizontal wells to be drilled and the relatively poor reservoirs to be stimulated enabling recovery of the vast hydrocarbon volumes that are in place.

In the USA a number of shale plays have been developed, where differing geological composition and technology advances has allowed some of the source rocks to be developed as reservoirs in their own right. As industry understanding improves, the characteristics that allow any given shale to be developed as a reservoir are being better understood.

At the moment, the Eagle Ford Shale is considered one of the best resource plays in North America because these characteristics are showing that wells are producing strong initial rates and ultimate recovery of hydrocarbons per well within a cost structure that makes the play commercially attractive. The added benefit with the Eagle Ford shale is that a high proportion of the hydrocarbons produced are condensate liquids (or light oil) which attracts a significant premium over gas at current prices.