ELK - Elk Petroleum

[ta2693]

ELK is not a takeover target so it doesn't really matter how much others are willing to pay for an inground oil well, that is not producing.

ELK has got a possible 12 million barrels of oil that they can sell for $50 a barrel. Potential there for 600 million dollars in revenue.

Obviously there are just gearing up, and its not all going to get pumped out in one hit.

ELK has no political risk, which is also another positive.

31 cents is still a long way off old highs, but I guess you could say its 20 per cent higher than where it was a few weeks ago.

Only proven reserve and easy to explore reserve can be sold at $50 a barrel.
The crude oil price on market is only $60 a barrel.
The reserve like ELK 's fair value is 51c a barrel instead of $50/barrel.

Where is the indicator that takeover is going to happen? I agree it is a potential takeover target but there are a lot takeover targets on market, we can not speculate on just potential.

 

[Robert_Q]

Oil reserves are classified as P1, P2 and P3. P1 being commercially extractable with a high degree of confidence.

The bulk of ELK's reserves in Grieve are classified as P3 because they are not able to be extracted commercially at the moment. Hence the valuation at less than $1 per barrel.

When the company secures the CO2 supply it moves a step closer to commerciability and the P3 reserves can be ultimately reclassified as P2 and P1.

The going market value of oil inground in the US is about USD16 per barrel. Do the sums and the long-term view is there is alot of upside in this field if and when the CO2 is secured and injection begins.

 

[Alien]

Only proven reserve and easy to explore reserve can be sold at $50 a barrel.
The crude oil price on market is only $60 a barrel.
The reserve like ELK 's fair value is 51c a barrel instead of $50/barrel.

Where is the indicator that takeover is going to happen? I agree it is a potential takeover target but there are a lot takeover targets on market, we can not speculate on just potential.

But we can compare ELK to what Rancher is paying for Leases that meet the criteria for CO2 injection in the Wyoming area i.e. Strong Reserves, close to CO2 pipeline, also ELK have done studies with University of Wyoming on the makeup of Grieve. If Rancher paid US$25,000,000 for Big Muddy then a 50% JV for Grieve would surely be enticing at a fraction of the price. And they have said that they want to expand there footprint within the Wyoming area.

A JV partner would send the SP nothward very quickly. In the meantime ELK can continue being cash flow positive from their earnings at SDS of 300+BOPD. Plus the potential of Grieve Upper Sands next week. All together with their $20mil market cap.

 

[Ken]

I dont think its a takeover target.


Either way I hold, and theres some buying going on at the moment. So obviously someone is keen on it. Definitley some momentum at the moment.

Its up in a down market. and there are very few shares on offer now, so the price movements are going to be substantial either way.

 

[ta2693]

I have to agree with you robert q, Alien. Based on elk's performance and your analysis, I think you are right. I got it at 32.5c, hopefully it is not too expensive.

 

[Robert_Q]

Welcome on board Ta. I've bought a few times and my average price is about where it is now.

I was a bit disappointed with today's reports. Reserves at SDS less than I expected and the presentation didn't give anything new. I guess the next big announcement will be the well into the upper sands. If it is succesful they have already planned 3 appraisals, so that would put a rocket under the shares.

There was a lot of support today and you're right Alien, market down but ELK up. Let's hope it keeps going in the right direction!

 

[Ken]

up 4 cents nothing to sneeze at!

It has traded in a range of 30 to 40 cents for sometime, so i really think a break above 40 cents would signal a real uptrend. June is set to have a few announcements with there drilling program, as stated in the investor update,

The last time ELK went from 30 cents to 80 cents it happened in one day, and it soon went to $1.20. so with the sector running hot in oil and gas.

any views on where we will end up with the elker!

 

[quarky]

this looks interesting...
reading the 07 June 2007 Investor Report now - here
but i don't think the share price will rise above 0.40 after the announcements as they're still some studies going on and negotiating a CO2 supply.

yet, they plan to increase production through well optimisation...so that could be the rise this share needs.

 

[Robert_Q]

I agree with you Ken, a bit of good news and this will run up fast.

The appraisal well into the upper sands at Grieve should spud this week and take a week to drill and another 2 weeks to assess. Being a specifically drilled well and located after reassessment of seismic this seems to have a good chance of success. These sands all produce in nearby fields in Wyoming and I think the chance would be reasonably good that at least one will have oil.

A flow of 100 or 200 bopd would easily push ELK up to last year's levels. Appraisal drilling would follow quickly I think and production could be quite substantial on success.

Grieve EOR will fall into place soon I'm sure, so I am holding for the medium term.

 

[Ken]

Up in a down market is a positive sign.

Very tempted to book profits with ELK. 36 cents was my target, as it was in the range ELK was trading at before the sell off, but with so much going on, I am continuing to hold long on to this as I still reckon its under valued.


Its easy to buy a stock, its easy to sell a stock, can be harder to hold.

Dont want greed to get the better of me though.



Sticking with ELK.

 

[Robert_Q]

I think the price will stay strong while they are drilling their new well over the next week or two.

I still think there is a good chance of oil in those upper sands so I will also hold longer term.

We know from last year that these shares can surge on good news.

 

[Robert_Q]

The new well spudded last thursday and there should be some initial result next week.

If there are oil shows during drilling the price will go up and testing will probably follow over the next 2 weeks.

I'm taking a punt on this one, payoff could be high if successful.

 

[Ken]

Looks like its pay day!!!

Nothing better than a fast moving low liquid stock on the rise...

Dont need the big volume for good returns.

If it breaks 42 cents we will be away.

 

[Robert_Q]

This is one of the announcements we've been waiting for.

Closed at 38.5 traded upto 40. Oil shows in 3 zones so this confirms there's oil in those upper sands and this one might race up if testing confirms volumes and rates. They plan 3 appraisals if this is successful so they could get production up quickly and cheaply. This well only cost $300K to drill.

This stock is not so liquid so you are right Ken it can move up fast. I'm holding on for the ride.

We've seen some small oilers have their market cap shoot up recently, eg. CVN $160M, MAE $300M, SAE $80M. ELK is only valued at $24M so plenty of blue sky.

 

[Lachlan6]

(ELK) caught my attention recently and I thought I'd post a few technicals on it. I am going to look at the weekly perspective as there is significant resistance at $0.41 and if this is broken then that will susequently be the completion of this very nice loking double bottom formation. It tried to today, getting up to 45c before sellers came back in. However signs are looking good that it will eventually break up, look at the big positive divergence with MACD and the recently weeks huge volume. Watching closely.

 

[Robert_Q]

I don't know much about the charts but if testing on the current well at Grieve comes up with the goods it will really break out.

Only 60M shares on issue and it owns 100% of the field so it is very leveraged to success.

Anyone have any guess on how far it will go? I've done some analysis based on asset valuation and earnings and I am sitting tight.

 

[quarky]

Only 60M shares on issue and it owns 100% of the field so it is very leveraged to success.

leveraged to success?
price dropped to $0.22 today.
stark contrast to it reaching 0.41 yesterday.
that's a ~40% drop

 

[Hawkeye]

Bad news Announcement has really sent ELK plummeting - a pity...they're a great little company and with no luck in the Upper Grieve - we might not see this one climb out of todays hole until next year.

 

[Ken]

There was never any support in the mid 30's. Went up too fast for my liking.

The market depth to me looked thin....

I think the run was overdone.

Still good value. but for me change in approach leaves me out of elk.

22 cents is its 52 week low.

Funny how it got there again and bounced...

Someone could be sitting on some big gains today...

 

[oil bull]

Ken you are on the money, ELK has huge potential. A good chance of $3+ by xmas if they can contract the co2.
Cheers