NEWS BULLETIN

October 20, 2002 --- Vol. 8, No. 107October 2002

Aurora Gas acquires Moquawkie, all of Anadarko's Cook Inlet holdings

Aurora Gas LLC said today that it acquired the 50 percent working interest and leasehold held by ConocoPhillips Alaska Inc. at Moquawkie on the west side of the Cook Inlet in a transaction that closed Oct. 3.

Aurora also said it has reached an agreement with Anadarko Petroleum Corp. to acquire Anadarko's entire Cook Inlet lease holdings, which include the remaining 50 percent at Moquawkie and approximately 40,000 acres on the Kenai Peninsula.

Purchase price was not disclosed for either transaction.

The Moquawkie Area holdings include approximately 43,000 acres on the west side of the Cook Inlet and includes the Lone Creek No. 1 discovery well drilled in late 1998 by ARCO Alaska Inc. (now ConocoPhillips) and Anadarko. ConocoPhillips and Anadarko subsequently entered into a gas sales agreement with Enstar Natural Gas Co., a division of Semco Energy, Inc., and Aurora will take over the rights and obligations pursuant to that contract.

“Obviously, this is a very significant acquisition for Aurora Gas and another step towards our goal of becoming the premier, low-cost natural gas producing company in Southcentral Alaska,” Aurora President G. Scott Pfoff said in a statement.

“As we have stated publicly before, we see shallow, conventional gas sands, particularly on the west side of Cook Inlet, as a real niche for our company. As with our Nicolai Creek Unit, we believe the Moquawkie Area acreage contains significant amounts of relatively shallow gas reserves, many of which had already been discovered while looking for deeper oil reserves during the exploration frenzy of the late 1960’s.”

Andrew C. Clifford, Aurora’s executive vice president of exploration, said: “In addition to the tremendous developmental potential in the Moquawkie Area, which includes the shut-in Moquawkie and Kaloa fields in addition to the Lone Creek discovery, we have identified numerous exploration prospects. We plan to shoot additional seismic, both 2-D and 3-D, to enhance our knowledge and select the best locations for drilling. We consider this to be one of the most promising areas in Cook Inlet for both oil and gas exploration.”

Aurora Gas also announced that it had completed the well work associated with its 2002 Nicolai Creek unit development program. The company re-completed the NCU No. 2 and subsequently re-entered and sidetracked the NCU No. 1A well, which has now been designated NCU No. 1B. Both wells tested commercial quantities of natural gas, but the wells will be tested more extensively before the company will release details of the results. Aurora had planned to drill a new well, the Nicolai Creek No. 8; however, Aurora has decided to defer that well until 2003.

J. Edward Jones, Aurora’s executive vice president operations, said: “The company is evaluating several alternatives for tying these wells into the Cook Inlet Gas Gathering System and plans to have this gas on stream early in 2003.”


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