Max,the very junior partner, Empyrean, has been paying back debt...

Max,

the very junior partner, Empyrean, has been paying back debt out of cash flow (from its share of Sugarloaf). Aurora should be similarly placed with the MRO operated business. We cannot form a view on the self-operated activities yet. However, even taking account of the surge of capex in relation to the self-operated activities, the turnaround to positive cash flow should not be too many quarters away unless MRO significantly ramps up its drilling (no indication of that in the public statements made by MRO recently)

Added to which, all of AUT's planning would have been on the basis of a lower oil price. From slide 29 of the 27 August presentation, an increase of £10 from $90 to $100/barrel for WTI produces an increase of $4.07/barrel in 'funds from ops', which is 12% increase on the figure for $90/b. WTI has been trading at least $6 above the 2nd qtr average, so cash generation (net) will be at least 7% higher than Q2 2013. MRO is also progressively reducing the costs of the wells. To put that in perspective, interest expense was about 18% of net cash generated in Q2 (before interest) and so the additional revenues might pay the greater part of the increased borrowing costs relating to the new debt.

I'm not concerned about the MRO operated portfolio with its short payback period.

The jury is still out on the self-operated wells though.