Stock Symbol: CDNR
Exchange: OTCBB
Basic Shares Outstanding: 81.3 million
http://www.auroraogc.com
1
Disclaimer
In this slide presentation, statements regarding our goals and objectives, our
expected methods of operation and development strategies, our expected and
potential production volumes, the volume of potential reserves, anticipated oil and
gas prices, anticipated market growth, potential drilling locations, the timing of
drilling activities, when wells will begin producing, how many wells will be drilled,
potential new development theatres, the spacing of wells, drilling and operating
costs, and other statements that are not historical facts, contain predictions,
estimates and other Forward-Looking Statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Although we believe that our expectations are based on reasonable assumptions, we
can give no assurance that our goals will be achieved. Important factors that could
cause our actual results to differ materially from those included in the Forward-
Looking Statements include the timing and extent of changes in commodity prices for
oil and gas, changes in market demand, drilling and operating risks, the availability of
drilling rigs, uncertainties about the estimates of reserves, the availability of
transportation pipelines, changes in laws or government regulations, unforeseen
engineering and mechanical or technological difficulties in drilling the wells,
operating hazards, weather related delays, the loss of existing credit facilities,
availability of capital, and other risks more fully described in our filings with the
Securities and Exchange Commission, including Form 10-KSB filed on March 31,
2006. We may also change our business focus as new opportunities arise. All
Forward-Looking Statements contained in this presentation, including any forecasts
and estimates, are based on management’s outlook only as of the date of this
presentation and we undertake no obligation to update or revise these Forward-
Looking Statements, whether as a result of subsequent developments or otherwise.
2
Executive Summary
Low-risk development of unconventional gas
reserves in the Antrim and New Albany Shale
Over 460,000 net acres with ~3,196 potential drilling
locations and ~2.7 Tcf in potential reserves
Rapidly growing proved reserves and production
~150 gross wells drilled in 2005 with ~95% success
2006 Outlook:
200 well drilling program
Proved reserves expected to reach 100 Bcf by mid-year
Net production expected to reach 15 million cf/d in Q4’06
AMEX listing targeted in 1H’06
3
The Company
Cadence/Aurora - reverse merger October 31, 2005
~$482 million pro forma market capitalization (1)
Aurora has been actively acquiring acreage in the
Antrim Shale (Michigan) and New Albany Shale
(Indiana / Kentucky) for ~10 years
$100 million BNP Paribas senior credit facility with $40
million borrowing base
$50 million TCW Mezzanine drilling facility in place
(1)
Fully diluted using Treasury Stock Method.
4
Summary Acreage Position
The Company has ~3,196 potential drilling locations
with ~2.7 Tcf in estimated total potential reserves.
Acreage potential does not currently translate into Proved Reserves.
Generating Proved Reserves will require successful drilling.
5
GROSS
NET
GROSS
NET
GROSS
NET
Leasedhold Position (acres)
(1)
214,319
85,288
681,230
374,810
895,549
460,098
Well Spacing (acres/well)
100
100
160
160
Implied Total Potential Wells
(2)
2,143
853
4,258
2,343
6,401
3,196
Est. Recoverable Reserves/Well
(bcfe)
(3)
0.5
0.5
1.0
1.0
IMPLIED TOTAL POTENTIAL
RESERVES (bcfe)
1,072
427
4,258
2,343
5,330
2,770
(1)
Potential Shale Acres as of 3/31/06.
(2)
Calculated as total acres divided by well spacing (acres/well).
(3)
Company estimates.
ANTRIM SHALE
NEW ALBANY SHALE
TOTAL
Antrim and New Albany Shale Plays
Relatively shallow
blanket shale formations
High-upside, lower-risk
development potential
6
Antrim and New Albany Shale Plays
Antrim Shale (~19% of net acreage)
Well-developed, low-risk “resource play”
~8,000 wells drilled to date in the play w/ ~95%
historical drilling success rate
Focus of 2005 / 2006 drilling program to provide low-
risk source of production / cash flow
New Albany Shale (~81% of net acreage)
Emerging shale play with significant upside potential
Horizontal drilling key to unlocking potential of NAS
5-well pilot program yielding encouraging results
Schlumberger Holditch reservoir engineering indicates
1bcf+ horizontal wells on 160-acre spacing
7
Antrim Shale Well Economics
Vertical Well Cost: ~ $300,000
Well Depth: 250 – 1,500 ft.
Reserves / Well: ~0.5 bcf (avg.)
Peak Production: ~ 150 mcf / day avg.
Time to Peak: 6-12 mo. (de-watering period)
Decline Rate: ~ 7% / yr.
Productive Life: ~ 40 years
Avg. W.I.: 46%
IRR: ~30%+ @ $5.00 gas
8
Antrim Shale Production Profile
~ 7% / yr.
Source: Schlumberger Holditch.
9
New Albany Shale Well Economics
Horizontal Well Cost: ~ $750,000
Well Depth: 500 – 2,500 ft.
Reserves / Well: ~0.7 – 1.2 bcf
Peak Production: ~ 200-300 mcf / day
Time to Peak: 6-12 mo. (de-watering period)
Decline Rate: ~ 5% / yr.
Productive Life: ~ 30 years
Average W.I.: 43%
IRR: ~45% @ $5.00 gas
10
New Albany Shale Production Profile
Source: Schlumberger Holditch.
1bcf+ wells, drilled and completed for $750,000.
11
Natural Gas Price Differentials
Source: Bloomberg.
(06/30/04 – 2006 YTD)
12
Unconventional Gas Growth
Unconventional gas sources are expected to be the key
source of domestic production growth.
Source: JP Morgan.
13
Proved Reserves
Proved reserves 12/31/05 64 Bcf
Proved reserves acquired 1/06 24 Bcf
Reserve reports prepared by:
Schlumberger: Data & Consulting Services
Netherland, Sewell & Associates, Inc.
Ralph E. Davis Associates, Inc.
Note: Reserve reports do not include New Albany Shale
By 1H’06, a number of factors are expected to increase
proved reserves to ~100 bcf:
Continued drilling activity (200 gross wells targeted for 2006)
New Albany Shale: Proved Reserves
14
Production Profile
A large inventory of drilling prospects and an aggressive development
program have the potential to provide for years of strong production growth
15
Aurora’s Low Impact Natural
Gas Production System
Low Pressure and Safe
Small modular style compression facilities
100% Electrified and Quiet
Stainless steel pumps
Fiberglass tubing
Poly pipeline systems (no decay or leaking)
Improved production of shale natural gas
Properly designed flow systems (oversized pipelines to
guarantee maximum gas flow)
Closed system of disposing water (no tanks)
16
Cost-Efficient Production
Technology is Key
Advantages of Aurora’s low pressure
system of producing wells
reduces development costs
increases production rates
extends commercial life of wells
facility capacity maximized over life of wells
17
Traditional
Large
Central
Compressor
Unit
Aurora’s
Skid-
mounted
Compressor
and
Separator
18
10" Poly Pipe used as flow lines for gas and water
19
20
Management Team
The 4 key members of Aurora’s management team each
have between 16 – 24 years of experience in oil & gas.
William Deneau (Chief Executive Officer)
22 yrs. experience in oil & gas industry
19 yrs. experience in Antrim shale
CEO of Aurora since 1997
John Miller (VP, Exploration & Production)
18 yrs. experience in oil & gas industry
Focused on Michigan / Indiana shale E&P since 1994
Current role at Aurora since 1997
Thomas Tucker (VP, Land & Development)
24 yrs. experience in oil & gas industry
Focused on Land Acquisition and Drilling
Current role at Aurora since 1997
Lori King (Chief Financial Officer)
Trained as CPA to oil & gas clients
16 years experience in the oil and gas industry
Current role at Aurora since 2001
21
Partners
Samson Resources - Tulsa, OK
El Paso Production Company –
Houston, TX
Rex Energy – College Park, PA
Aurora has a number of drilling joint ventures with
industry leaders that allow it to more effectively leverage
its asset base, spread development risks and cost:
22
Key Operating Statistics
Total Net Acres: 460,098
Total Net Wells (12/31/05): 182
Proved Reserves: 88 Bcf (total thru 1/31/06)
Avg. Operating Cost (2005): $2.73 / Mcf
Average F&D Cost
$0.60 / Mcf (Antrim Shale)
$0.75 / Mcf (New Albany Shale)
23
Key Financial Statistics
Current Stock Price (03/28/06): $5.46
Common Shares (2/07/06): 81,298,683
Warrants: 2,249,500 ($1.71 exercise price)
Options: 3,165,776 ($0.75 exercise price)
Pro Forma Net Debt (3/31/06): ~$83 million
24
Summary
Company Focus:
Develop Significant Acreage in Shales
Multi-year Drilling Inventory:
2 TCF potential
Proved Reserves Expected to Grow:
To 100 BCF in 2006
Rapid Production Growth:
15 million cf/d target by year end
25
Stock Symbol: CDNR
Exchange: OTCBB
Basic Shares Outstanding: 81.3 million
http://www.auroraogc.com
Investor Relations Contact:
Jeff Deneau: (231) 941-0073
26