November 7, 2008

Aurora Oil & Gas Corporation Announces Third Quarter 2008 Results

TRAVERSE CITY, Mich., Nov. 7 /PRNewswire-FirstCall/ -- Aurora Oil & Gas Corporation today reported a net loss for the quarter ended September 30, 2008, of $16.7 million or ($0.16) per basic and diluted common share. The loss includes a write-off of goodwill in the amount of $16.0 million. Excluding this one-time charge, the net loss for the quarter totaled $0.7 million or ($0.01) per basic and diluted common share, as compared to a net loss of $3.3 million or ($0.03) per basic and diluted common share in 2007.

Financial Review

Oil and natural gas production revenues totaled nearly $7.7 million on sales of 737 million cubic feet of natural gas equivalent (Mmcfe) for the quarter. This represents a 13% increase in revenues and a 3% decrease in production from the second quarter of 2008. During the third quarter, the production decline was balanced by higher realized prices and unrealized gains in financial hedges classified as ineffective.

Other revenues increased substantially from the prior quarter, growing $0.6 million to over $1.7 million. This was driven by work performed by Aurora's wholly-owned subsidiary, Bach Services & Manufacturing Co., LLC. As Aurora has decreased its operated activities, Bach has successfully focused on providing oilfield services to third-party customers throughout Michigan and Indiana. Also, interest income increased as a result of interest earned on the outstanding note receivable established on the sale of Aurora's property in Oklahoma.

Several one-time items were recognized in third quarter expenses, growing total expense to over $26.0 million. Write-off of goodwill accounted for $16.0 million of additional expense. This goodwill was carried from the 2005 reverse merger with Cadence Resources Corporation. General and administrative expenses climbed 51% in the third quarter, a result of recognizing approximately $1 million in legal and consulting expenses and charge-offs related to the strategic alternatives process, refinancing efforts, costs associated with the terminated acquisition of Acadian Energy, LLC, and miscellaneous legal costs. Excluding these additional expenses recognized during the quarter, general and administrative expenses were reduced by approximately $0.1 million, due to lower personnel costs.

Mr. William W. Deneau, Chief Executive Officer, commented, "There are many moving parts in this quarter's results. The bottom line is that our team has been effective at cutting costs, keeping a strong cash position, and maintaining our production capacity. Though the global economic storm has taken a toll on our industry, we see this as an excellent opportunity to improve our business by managing our cost structure and operating with greater efficiency."

Additional detail on the financial results can be found in the Company's third quarter Form 10-Q filed November 7, 2008. This form can be retrieved from the Securities and Exchange Commission or via the Company website at . Selected historical financial data is provided for reference below.

Drilling Activities

During the third quarter of 2008, drilling activities were reduced as a result of limited capital availability and continued corporate restructuring efforts. Six (1.2 net) wells were drilled by Aurora's partners, concentrated in the Michigan Antrim shale. A summary of the Company's well inventory on September 30, 2008 is as follows:

                           Antrim    Antrim Non-  New Albany  New Albany Non-   Well Status as of      Operated     Operated      Operated     Operated   September 30, 2008   Gross    Net   Gross  Net   Gross  Net  Gross   Net    Producing             175   166.14   391   93.96   0   0.00   25   1.25   Waiting on Hook-Up      1     1.00    11    2.20   6   6.00    0   0.00   Res. Assessment         1     0.97    17    3.45   0   0.00    3   0.15   Total                 177   168.11   419   99.61   6   6.00   28   1.40     Well Status as of           Other             Total    September 30, 2008     Gross    Net     Gross     Net    Producing                 31     15.93   622      277.28   Waiting on Hook-Up         1      0.72    19        9.92   Res. Assessment           11      4.22    32        8.79   Total                     43     20.87   673      295.99      Production Activities  

Total company production during the third quarter of 2008 averaged 8,014 net Mcfe per day. This represents a 4% decline from the second quarter of 2008, as detailed in the summary below:

   Estimated Production by        Q3 2008                  Q2 2008   Play/Trend (net mcfe)     Total    Daily Average    Total    Daily Average      Antrim Shale           676,762        7,356      704,369        7,740     New Albany Shale        20,954          228       22,258          245     Other                   39,555          430       35,953          395   Total                    737,271        8,014      762,580        8,380     Operated               461,981        5,022      492,496        5,412     Non-operated           275,290        2,992      270,084        2,968   Total                    737,271        8,014      762,580        8,380    

During the third quarter, Aurora personnel continued their well enhancement efforts, though at a much slower pace. The efforts to date appear to have further stemmed the decline and have improved system run-time - a core principle in producing low-pressure unconventional natural gas reservoirs. Additional workovers and opportunities for improvement to compression systems and down-hole configuration, as well as installation of monitoring equipment have been identified, but are expected to be implemented on an as-needed basis.

Company management recognizes that enhancement work on the Antrim shale properties is not complete. However, considering the challenging economic climate, management has identified that the primary objective in the near-term is cash conservation. Going forward, it is expected that Aurora will continue to spend an appropriate amount of capital on its producing projects, carefully balanced with the corporate objective of capital conservation.

Update on Acreage

Driven by the sale of its Woodford shale acreage, Aurora's acreage portfolio has decreased from June 30, 2008. Following is a summary of the Company's acreage inventory on September 30, 2008.

   Acreage by Play/Trend               September 30, 2008                                     Gross            Net    Michigan Antrim shale             287,296        134,278   Indiana Antrim shale              15,837          15,837   New Albany shale                  779,210        440,861   Other                              85,062         64,094   Total                           1,167,405        655,070     Update on Asset Optimization Efforts  

Aurora has interest in a number of different properties and businesses, all of which are being evaluated for sale, farmout, joint venture, or another means of creating value for shareholders. Those assets which are considered the chief drivers of value for the Company include:

-- Operated Antrim shale properties producing approximately 5,000 net Mcf of natural gas per day.

-- Non-operated Antrim shale properties producing approximately 2,300 net Mcf of natural gas per day.

-- Over 130,000 net acres of operated and non-operated acreage located in and around the Antrim shale fairway, of which approximately 66% is currently undeveloped.

-- New Albany shale properties operated by El Paso (Aurora owns 5% working interest), which produce approximately 150 net Mcf of natural gas per day. Over 190,000 gross (9,500 net) acres are included in the area of mutual interest, which includes 25 producing wells and an obligation to carry Aurora in the drilling of approximately 15 additional wells.

-- New Albany shale properties operated by Atlas Energy Indiana, LLC, which includes 121,000 gross (78,000 net) acres. Aurora retains an overriding royalty interest, receives a "spud fee" for each well drilled, and has the right to participate as a working interest owner of up to 25%. Atlas is responsible for future lease obligations and must drill at least 20 wells annually to maintain the farmout. In this same location, Aurora has approximately 65% working interest in several wells which are awaiting production infrastructure.

-- 48,000 gross (48,000 net) acres in the Illinois Basin are included in a farmout with Presidium Energy, LC. The primary targets of this farmout are shallow formations other than the New Albany shale. Aurora receives a carried working interest until production commences and has the right to acquire up to 20% additional working interest.

-- 119,000 gross (77,000 net) acres in the Illinois Basin are included in a farmout with Corona Resources, LLC. The primary targets of this farmout are shallow formations other than the New Albany shale. Aurora retains an overriding royalty interest and has the right to participate as a working interest owner of up to 25%.

-- New Albany shale properties of 780,000 gross (440,000 net) acres of which 659,000 gross (362,000 net) acres have not been employed for New Albany shale development via farmout or other means. Of this remaining acreage, approximately 293,000 gross (293,000 net) acres are 100% owned and operated by Aurora and cover six distinct areas in the play.

-- Overriding royalty interest (3%) in approximately 67,000 gross acres targeting the Woodford shale in Oklahoma. An interest-bearing promissory note (9% annually) in the amount of $12 million was also received on the sale of this property, completed in September 2008.

-- Non-operated interest in northern Texas oil properties producing approximately 65 net barrels per day from approximately 14 net wells. The leases in which Aurora has an interest offer a number of identified future drilling opportunities.

-- Equity ownership (93.6%) in a mid-stream business servicing Aurora's Antrim shale properties in northern Michigan. This business owns and controls approximately 26 miles of pipeline infrastructure, facilities to strip CO2 and H2S, and appropriate compression systems to deliver natural gas into regional distribution pipelines.

-- Wholly-owned subsidiary (Bach Services & Manufacturing Company, L.L.C.) which provides oilfield services such as equipment manufacturing and installation, pipeline installation, facility construction, and field maintenance and repair.

Mr. Deneau commented, "Earlier this year, as we began to work through our financial challenges, we also began a rigorous review of all assets held in our investment portfolio. It was clear that our portfolio was extensive, crossing several basins, and in the case of the New Albany shale - captured the largest acreage position in that play. It was also clear that we have more assets than we are capable of growing or managing internally. As a result, we have been working to create value in a time where micro-cap E&P companies are disadvantaged. With lots of undeveloped assets begging for investment, we believe Aurora represents an outstanding opportunity for companies to intelligently invest their capital and put their experienced exploration teams to work.

"Our financial challenges are not over. At this time, our banks are allowing us to execute our strategies and work for the global benefit of our employees, lenders and our shareholders. We continue to be focused on de- leveraging the company, making the sale of certain assets a key focus of our optimization strategy. With success, we believe these efforts will lead Aurora to be a profitable business."

Selected Financial Data

The following tables set forth Aurora's financial information as of and for each of the periods indicated. You should review this information together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included in Aurora's Form 10-Q for the quarter ended September 30, 2008 and/or the consolidated financial statements and related notes included in Aurora's Form 10-K/A for the year ended December 31, 2007.

                                                   For 3 months ended   Statement of Operations Data               Sept. 30, 2008  Sept. 30, 2007   Revenues:     Oil and natural gas sales                     $7,657,965     $6,957,069     Pipeline transportation and marketing            215,540        181,441     Field service and sales                        1,280,206         66,878     Interest and other                               205,983         28,655       Total revenues                               9,359,694      7,234,043    Expenses:     Production taxes                                 376,381        262,127     Production and lease operating expense         2,557,330      2,091,066     Pipeline and processing operating expense        179,977         82,986     Field services expense                           977,235         58,000     General and administrative expense             2,770,028      1,834,718     Oil and natural gas depletion and amortization   874,426        721,585     Other assets depreciation and amortization       265,040        628,983     Interest expense                               2,023,411      1,244,363     Goodwill impairment                           15,973,346              -     Loss on debt extinguishment                            -      3,448,520     Taxes (refunds), other                            29,005         95,773       Total expenses                              26,026,179     10,468,121   Gain (Loss) before minority interest           (16,666,485)    (3,234,078)   Minority interest in income of subsidiaries        (28,385)       (20,216)   Net Income (Loss)                             $(16,694,870)   $(3,254,294)   Net loss per common share-basic and diluted         $(0.16)        $(0.03)   Weighted average common shares outstanding    - basic and diluted                           103,282,788    101,629,673                                                        For 9 months ended   Cash Flow Data                            Sept. 30, 2008   Sept. 30, 2007   Cash provided by operating activities           $4,352,396     $9,281,886   Cash used in investing activities              (10,651,021)   (52,123,646)   Cash provided by financing activities           13,975,785     41,752,564                                                      As of          As of                                                 Sept. 30,     December 31,   Balance Sheet Data                               2008           2007    Cash and cash equivalents                      $10,102,838     $2,425,678   Other current assets                             8,551,409      8,901,774   Oil and natural gas properties, net    (using full cost accounting)                  196,501,056    205,260,103   Other property and equipment, net               14,527,508     14,923,840   Other assets                                    18,889,218     23,160,273       Total assets                              $248,575,029   $254,671,668    Current liabilities                          $ 128,515,767    $ 8,580,990   Long-term liabilities, net of    current maturities                              5,343,749    113,835,028   Minority interest in net assets    of subsidiaries                                   475,114        112,661   Shareholders' equity                           114,240,399    132,142,989       Total liabilities and        shareholders' equity                     $248,575,029   $254,671,668      About Aurora Oil & Gas Corporation  

Aurora Oil & Gas Corporation is an independent energy company focused on unconventional natural gas exploration, acquisition, development and production with its primary operations in the Antrim shale of Michigan and the New Albany shale of Indiana and Kentucky.

Cautionary Note on Forward-Looking Statements

Statements regarding future events, occurrences, circumstances, activities, performance, outcomes, beliefs and results, including future revenues and production, relationship with its existing lenders, restructuring of existing credit facilities, the procurement of new credit facilities, anticipated capital availability, anticipated capital expenditures, ability to remediate production shortfalls, and the sale or farmout of existing assets are 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 the forward-looking statements described are based on reasonable assumptions, we can give no assurance that they will prove accurate. 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, drilling and operating risks, the availability of drilling rigs, 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. All forward-looking statements contained in this release, including any forecasts and estimates, are based on management's outlook only as of the date of this release and we undertake no obligation to update or revise these forward-looking statements, whether as a result of subsequent developments or otherwise.

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Aurora Oil & Gas Corporation

CONTACT: Jeffrey W. Deneau, Investor Relations of Aurora Oil & GasCorporation, +1-231-941-0073

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