Calgary-based Baytex Energy Corp. is expanding into the lucrative Eagle Ford shale in Texas through the  $2.6-billion acquisition of Aurora Oil & Gas Ltd.

The deal, which was announced after markets closed Thursday, will add nearly 9,000 contiguous hectares in the Sugarkane Field in South Texas to Baytex operations.

Holders of  Perth, Australia-based Aurora will receive $4.10 Australian (about $4.07 Cdn) a share, a 56 per cent premium on Aurora’s closing price of A$2.62 yesterday

Aurora's production during the last three months of 2014 averaged 24,678 barrels of oil equivalent per day, which was mostly light, high-quality crude oil. The formation's proximity to the U.S. Gulf Coast — a massive refining market — means crude from there fetches strong prices.

Canadian oil producers have had to accept lower prices for their crude because of bottlenecks getting it to refineries.

"Baytex will acquire premier acreage in the core of the Eagle Ford, one of the leading shale oil plays in the U.S. The acquisition is an excellent fit with our existing business model and positions Baytex in another world-class oil resource play," CEO James Bowzer said in a release.

"The acquisition will provide our shareholders with exposure to low-risk, repeatable, high-return projects with leading capital efficiencies."

Once the deal closes, Baytex's core operating areas will include the Eagle Ford, Peace River oilsands in northwestern Alberta and Lloydminster heavy oil near the Alberta-Saskatchewan border. At that point, its total production is expected to be 85,000 barrels of oil per day.

With the Aurora assets in its arsenal, Baytex will be 53 per cent weighted toward heavy oil, 34 per cent toward light oil and 13 per cent weighted to natural gas. The current breakdown is 75 per cent heavy oil, 14 per cent light oil and 11 per cent natural gas.

Most of the Eagle Ford acreage included in the deal is operated by a subsidiary of Marathon Oil Corp., a company where Bowser was formerly vice-president.

Analysts said the deal may mark the return to large acquisitions in the oil patch, which has been quiet in the past two years. 

Aurora trades on the Australian and Toronto stock exchanges and its shareholders and Australian and U.S. regulatory authorities will need to OK the deal.

To help pay for the deal, Baytex has raised $1.3 billion in a bought-deal financing with a syndicate of underwriters co-led by Scotiabank and RBC Capital Markets.

Shares in Baytex, which announced the deal after markets closed, were up one per cent at $41.63 Thursday on the Toronto Stock Exchange.