Moody's might lift Aurora USA Oil

Moody's Investors Service said it placed Aurora USA Oil & Gas, Inc.'s B3 corporate family rating, B3-PD probability of default rating and the Caa1 rating on the company's senior unsecured notes on review for upgrade.

The SGL-2 liquidity rating remains unchanged.

This action is in response to the announcement that Baytex Energy Corp. (Ba3) will acquire Aurora Oil & Gas Ltd., Aurora's parent, in a transaction valued at roughly C$2.6 billion ($2.35 billion) including Aurora debt of roughly $665 million. The transaction is expected to close before June 2014.

"The acquisition is favorable for Aurora's creditors as the unsecured notes are now likely to benefit from the credit profile of a higher rated acquirer, Baytex, which is rated Ba3," Moody's assistant vice president and analyst said.

"Aurora has exhibited positive momentum in its production and reserves growth, but the better credit profile of Baytex is the catalyst that calls for a ratings review."

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