* Baytex offers A$4.10 per share for Aurora Oil & Gas
* Aurora shares surge 56 pct after takeover offer
* Aurora's U.S. gas assets in high demand
By Scott Haggett and Maggie Lu Yueyang
CALGARY, Alberta/SYDNEY, Feb 7 Canadian heavy
oil producer Baytex Energy Corp has agreed to buy
Aurora Oil & Gas Ltd 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 (8,900
hectares) 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
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.
Some projections suggest producers will eventually recover
more than 25 billion barrels of oil equivalent and the growth of
shale oil has helped U.S. oil production rise to a 25-year high.
Aurora shares jumped as much as 56 percent on Friday to a
15-month high of A$4.09, and last traded at A$4.08 at 0127 GMT.
The share price is slightly below Baytex's offer, implying the
market expects the deal to proceed.
Aurora said its board had unanimously recommended the offer
in the absence of a superior proposal. Its shareholders are
expected to vote on the offer in April or May.
The deal could spur further interest in Aurora's
sought-after assets in Texas, Rivkin Securities director Shannon
Rivkin said in Sydney.
"My guess is that this could potentially put Aurora in play
even if it looks like it's a pretty good price," he said.
A banker close to the deal declined to comment on whether
there would be other bidders.
Aurora produces 24,678 barrels of oil equivalent per day,
less than half the 57,100 boepd Baytex produced last year.
"There is obviously quite a large disconnect between how the
Australian market has been valuing these companies, and what the
U.S. or North American corporates seem to be willing to pay,"
Bullen of Bank of America Merrill Lynch said, noting that Baytex
could use Aurora's assets to fill gaps in its portfolio.
Boosted by Aurora's rally, Australian energy producers AWE
Ltd and Karoon Gas Australia Ltd jumped 7.2
percent and 6.3 percent respectively.
Baytex shares rose 47 Canadian cents to C$41.63 before being
halted on the Toronto Stock Exchange late on Thursday. The deal
was announced after markets closed.
Baytex will fund the takeover in part with a C$1.3 billion
share issue underwritten by Scotiabank and RBC Capital markets,
while Aurora is advised by Credit Suisse and Goldman Sachs.