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ELK - Elk Petroleum

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Ken I take that back your going to be out of the money. First time ive been on this forum didnt see the latest posts. Your all missing the point. do some research on co2 recovery.
Cheers
 
Welcome to ASF oilbull. Could you please provide some justification/analysis for your 300cps figure. It'd be great if you could also help out and let everyone that's missing the point know exactly what it is they are missing.

Cheers in advance.
 
DoctorJ
I have posted it on a couple of forums under Davo22, however I joined this forum a long time ago and have the name oilbull.

EORI (enhanced oil recovery institute) joint producers meeting on june 26, released a presentation "co2 demand estimates for major oilfields in wyoming basins" In this presentation they had 2 pages devoted to gravity stable co2 injection, the technique that ELK are planning to use in the muddy formation at Greive. The EORI estimate recoveries of >70% for gravity stable production. Which would mean recovery rates of >30mil barrels for ELK. EORI are currently modelling greive so one assumes that they would attribute recovery rates >70% and therefor reserves to ELK of over 30mil barrels. They also had a graph based on the Muddy formation, it did not mention the field but it may well have been Greive. When co2 is contracted the reserves will move to 2p status.

At current useage only 10% of co2 reserves at La Barge would be used over the next 60 years. They are currently venting significant amounts into the atmosphere that they cannot sell. So co2 supply should not be a problem.

30mil barrels of 2p reserves would likely be valued at above $300mil by the market. current market cap $15mil

Great story, just waiting for the right announcements.

Cheers Davo
 
oil bull said:
DoctorJ
I have posted it on a couple of forums under Davo22, however I joined this forum a long time ago and have the name oilbull.

EORI (enhanced oil recovery institute) joint producers meeting on june 26, released a presentation "co2 demand estimates for major oilfields in wyoming basins" In this presentation they had 2 pages devoted to gravity stable co2 injection, the technique that ELK are planning to use in the muddy formation at Greive. The EORI estimate recoveries of >70% for gravity stable production. Which would mean recovery rates of >30mil barrels for ELK. EORI are currently modelling greive so one assumes that they would attribute recovery rates >70% and therefor reserves to ELK of over 30mil barrels. They also had a graph based on the Muddy formation, it did not mention the field but it may well have been Greive. When co2 is contracted the reserves will move to 2p status.

At current useage only 10% of co2 reserves at La Barge would be used over the next 60 years. They are currently venting significant amounts into the atmosphere that they cannot sell. So co2 supply should not be a problem.

30mil barrels of 2p reserves would likely be valued at above $300mil by the market. current market cap $15mil

Great story, just waiting for the right announcements.

Cheers Davo
Click to expand...

I have to say it sounds very good and It is a very interesting company. I have enough ELK in my holding. I believe the news in EORI will spread out gradually. Even if the story will not come true, we are holding a low risk one at current price 24c.
 
Here we go. Announcement is out. Co2 injection success.

The Company is pleased to advise that the initial runs of the
simulation of the Grieve Muddy reservoir by the EORI have
arrived at a forecast recovery of 23 million barrels of oil.
This represents an overall recovery factor of 71.1% from the
Grieve Muddy reservoir, with 30.8% being achieved from the
CO2 flood.
The EORI was engaged earlier this year to develop a
reservoir model to simulate a gravity stable carbon dioxide
(“CO2”) flood of the Grieve Muddy reservoir. A full field
simulation model has now been developed and a number of
simulations run to evaluate the impact of a CO2 flood.
Because of the long producing history in the Grieve Field a
very good history match of actual production to reservoir
pressures throughout the life of the field was able to be
achieved. This has given both the EORI and Elk
considerable confidence in the model.
 
In the next set of accounts it can be anticipated that the production increase to around 300 BBL/day will start to show up (average prod'n last year was 50 BBL/day). ELK state in their announcement of 28/2/07 that they are receiving AUD $42.57 BBL.
Click to expand...

Annual production will depend on how quickly the 23m BBL reported in the EORI report can be produced. Even assuming 500,000 BBL/yr which would mean the field would produce this amount - on average - for 46 years, is about five times the current production level. Current production around 300 BBL/day = 109,500 BBL/yr.

42.57 * 500,000 = AU $21.3m = AU 34.9c/share *

Presumably the field would produce more in the earlier years and tail away in the later years - this is a real back of the envelope calculation. This calculation takes no account of tax etc of course. Looking at a presentation on the EORI website, it seems that from a real-world example, the post CO2 flood production peaked at about 1/3 of the original field production rate, before tailing away with a similar rate of drop to the original production curve.


*61m shares on issue, about 3m options.
 
Annual production will depend on how quickly the 23m BBL reported in the EORI report can be produced. Even assuming 500,000 BBL/yr which would mean the field would produce this amount - on average - for 46 years, is about five times the current production level. Current production around 300 BBL/day = 109,500 BBL/yr.

42.57 * 500,000 = AU $21.3m = AU 34.9c/share *

Presumably the field would produce more in the earlier years and tail away in the later years - this is a real back of the envelope calculation. This calculation takes no account of tax etc of course. Looking at a presentation on the EORI website, it seems that from a real-world example, the post CO2 flood production peaked at about 1/3 of the original field production rate, before tailing away with a similar rate of drop to the original production curve.
Click to expand...

The oil at Grieve is light sweet (as opposed to SDS which is heavy oil) and attracts WTI price less about $5-$10 discount. My guess at current prices about $US70+ per barrel.

Yesterday's announcement of 23M BBLS is about double what was previously thought to be recoverable. Based on company's estimates peak production was to have been 4,000BOPD, now it could be as much as 8,000BOPD. At $US70per BBL. That could be gross revenue of $US560,000 per day once peak production is achieved.

CO2 supply is still being negotiated and once that is secured the 23M BBLS should be booked as 2P reserves. A valuation of $10 per BBL values the reserve at $230M, $15 per BBL is $345M. Elk owns 100% of the feld and has 61M shares on issue.

A final report is expected mid-Oct with production profile and forecasts. See link below.

Next steps will be CO2 supply and JV partner.

http://www.uwyo.edu/news/showrelease.asp?id=17743
 
I bought some ELK due to hype. I am nervous now because it is not my area of expertise (well what is lol) but I am reading left right and centre trying to value this and getting all sorts of mixed signal. I followed the trading today and seemed many day traders and panic selling but does nothing to say what the market will value ELK at. Sounds very good to me and somehow I have 80c in my brain but cannot substantiate at all. I really appeal to any oil expert to step in here and give honest talk about a stock well clouded in hype atm.

Cheers and ty
 
Yesterday's announcement of 23M BBLS is about double what was previously thought to be recoverable. Based on company's estimates peak production was to have been 4,000BOPD, now it could be as much as 8,000BOPD. At $US70per BBL.
Click to expand...

Even better then: ((8000 * 365) * 70) = US $204m = AU $230m = (23000c / 61m shares) = AU $3.78 / share *

I'd be a happy camper if this scenario played out!



*Using 88c AUD/USD. 61m shares, undiluted.
 
Hi mate, I feel very strange why market only give 40c for elk today. I expect it will shoot above $1 in a day on news like this. In addition, I find Citibank was actually selling their shares before announcement. It is very suspicious. Are they stupid? or Am I too greedy? I am out today and waiting for more information coming out.
 
Spaghetti said:
Sounds very good to me and somehow I have 80c in my brain but cannot substantiate at all
Click to expand...

Why?

ta2693 said:
I expect it will shoot above $1 in a day on news like this.
Click to expand...

Why?

Do I have to remind everyone constantly that posted price targets must be backed up with some analysis? What purpose does it serve to throw around price targets that are simply plucked out of thin air? Absolutely none, of course, other than to ramp up the stock.

Posts containing price targets without any analysis will be removed from the forums.

See this thread for more details: https://www.aussiestockforums.com/forums/showthread.php?t=4118
 
Joe Blow
quite simply-
The current market cap puts approx $1 of value per barrel of oil. The oil is as good as proven oil, due to the fact that it is an old field that has some 50years of production history behind the reserve estimates. They are using technology that has been proven for the last 4 decades.

The market in general attributes upwards of $15 a barrel for 2p reserves, which these will be once the co2 is acquired. So it would appear that 15x yesterdays close is on the cards sometime in the not to distant future. As for the price this week or next week fundamental analysis is irrelevant as it is anyones guess where the market wants to take it.

The news released by the company was not new news as such rather an upgrade, however the market had chosen to ignore the old estimates anyway and this announcement jolted it back in to their minds.

Why the surge yesterday? Well when people started to buy it created a rush. End of next week 50c or $4 it could go anywhere. Posting on another chat site I can tell you that the hype being generated there has the potential to carry this straight to $6.Which would equate to $15 a barrel and put it at the low end of where companies are valued. It is being seriously ramped but until it goes over $20 a barrel really it is not overvalued. so at these low prices it is purely a matter of guessing who will reign, new buyers or profit takers. Analysis is irrelevant. Those price targets you mention may be able to be put in the category of downramping as they may well prove to be misleadingly low,.
Elk has been completely ignored for a long time, i think it just became a market darling. If you are unsure take a look at the INP chart.
Cheers
 
Spaghetti said:
I bought some ELK due to hype. I am nervous now because it is not my area of expertise (well what is lol) but I am reading left right and centre trying to value this and getting all sorts of mixed signal. I followed the trading today and seemed many day traders and panic selling but does nothing to say what the market will value ELK at. Sounds very good to me and somehow I have 80c in my brain but cannot substantiate at all. I really appeal to any oil expert to step in here and give honest talk about a stock well clouded in hype atm.

Cheers and ty
Click to expand...

Spag',

I'm no expert by any stretch of the imagination but I've included an excerpt from ELK's ann early last year (Feb') regarding the suspected recoverable resource from the Grieve sands.

I've tacked a chart on so you can see the impact on the shareprice.

Something that should remain uppermost in everyones mind (imo) is that the data being quoted are all from computer models.

CO2 flooding is also a lot more technical and intricate than oil exiting under its own steam (forgive the pun). Who knows how the depleted field is going to react to megatons of CO2 being forced into every nook and crannie.

That being said if we ignore crazy valuations, 90c to a dollar a share would still cap the company around a conservative 60mil and may present a happy medium between upside and unproven performance.

"NEW HYDROCARBON RESERVOIRS
IDENTIFIED
The Company is very pleased to announce the identification of
new hydrocarbon reservoirs located within the Upper Sand Units
at the Grieve Oil Field in Wyoming USA. The Company has
received an independent report from MHA Petroleum
Consultants, Inc (MHA) of Denver, Colorado confirming the
Company’s belief that significant volumes of hydrocarbons are
present within the Upper Sand Units. MHA has estimated the
original oil in place (OOIP) in four of the Upper Sand Units of
approximately:
51.4 Million Barrels.
The OOIP is derived from recently completed RST well logs
(with carbon-oxygen mode run on selected identified zones of
interest), in conjunction with the re-analysis of historic well logs.
Confidence in this assessment is enhanced by hydrocarbon
shows reported in the Upper Sand Units during the drilling of
historic wells, production in these horizons in nearby oil fields,
and by recent oil shows observed by the Company in a number
of temporarily abandoned wells.
The Company will now undertake an appraisal programme to
define proven recoverable reserves for the Upper Sand Units.
The historic oil recovery from the currently producing Muddy
Formation OOIP is approximately 35% with total production
from the Muddy Formation of approximately 30 million barrels
of oil. Equivalent recovery rates in the Upper Sand Units
reviewed by MHA would result in recoverable oil of
approximately 18 million barrels of light sweet crude".
 

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jtb,

This extract relates to the upper sands in the Grieve field. These have had some testing but much more is needed to substantiate if the 18m BBLS exist.

The Grieve field has been producing from the Muddy formation for over 50 years and primary/secondary extraction has produced about 30m BBLS. The company had planned all along to inject CO2 as a tertiary recovery method and had estimated that 12m BBLS could be recoverable. Thursday's announcement by EORI has now upgraded that estimate to 23m BBLS and that in itself makes the whole project so much more attractive.

The use of CO2 as an EOR method is proven and has been around for about 40 years. Anadarko is a big producer of oil by this method and spent alot of money 3 or 4 years ago to build a 126 mile pipeline to carry the CO2 to its oil firelds. It is making big money now from this activity.

Elk needs to secure the CO2 supply (most likely from Anadarko) and that will really make this project take off. Anadarko's pipeline runs about 3 miles from Grieve so it will be inexpensive and quick to build a spur line from it.

Yesterday's increase in sp values Elk at $25m. Don't forget it has 1m BBLS proven at SDS (say at $15 / BBL) which is producing about 240 BOPD and about $3m in cash. That means the 23m BBLS at Grieve is valued by the market at about 30 cents /BBL.

It seems to me that it is undervalued at the moment and when CO2 is secured it will be grossly undervalued at these levels.
 
jtb, just about every oil field development now undergoes computer modelling to evaluate reserves and production forecasts. The parameters used in the modelling are all attained during drilling. Everyone thinks flow testing is the main criteria for oil field evaluation but it is only one part. Have you noticed that many oil wells are never flow tested? Logging plays a very big part in evaluation.

Secondly, CO2 injection is a proven technology. It makes the oil thin and moves easily through the reservoir. Letting a field flow under it's own steam often encounters problems. Pressure may quickly drop, sand flow may clog the well or waxy residues in the oil can build up and reduce flow rates. In my research these problems do not occur with CO2 injection. In fact flow rates increase over time as the field becomes repressurised.

Another interesting point I was thinking of was the value of carbon credits. Has anyone done any research on this?
 
Robert_Q said:
jtb, just about every oil field development now undergoes computer modelling to evaluate reserves and production forecasts. The parameters used in the modelling are all attained during drilling. Everyone thinks flow testing is the main criteria for oil field evaluation but it is only one part. Have you noticed that many oil wells are never flow tested? Logging plays a very big part in evaluation.

Secondly, CO2 injection is a proven technology. It makes the oil thin and moves easily through the reservoir. Letting a field flow under it's own steam often encounters problems. Pressure may quickly drop, sand flow may clog the well or waxy residues in the oil can build up and reduce flow rates. In my research these problems do not occur with CO2 injection. In fact flow rates increase over time as the field becomes repressurised.

Another interesting point I was thinking of was the value of carbon credits. Has anyone done any research on this?
Click to expand...

G'day Rob,

Yes I'm aware of the value of modelling but in this instance (being an old field) I personally would like to see some flowrates (1000's of bopd) actually coming out of ground- call me old school:)

Also what sort of costs would you expect for CO2 infrastructure/consumption?

As you mention CO2 increases the mobility of the crude and we can assume that that would be due to saturating it with CO2- thus decreasing its density?

I assume we then also require stripping technology of some type?
This will be a negative cost benefit I imagine as opposed to say stripping condensate out gas?

My post was more a reply for spag's benefit on what the market may price this most recent ann' at.
We can also see the impact of the market losing interest over time.

I agree, I think ELK are undervalued @ 25M and some forward progress will definitely rectify this.

As ta said though, why would Citibank sell 1% of the company 2 days before the ann' for such a low price:cautious:.
 
hi jtb,

Elk put a summary of NPV for Grieve in one of their presentations a few months ago. They calculated total capex over the life of the project at $28M and cost of production at about $18/BBL (that includes CO2 costs). They used a long-term oil price of $US45 / BBL and the NPV was about $150m. I would expect it to be signicantly more now with oil price and reserves much higher and more than offsetting the change in exchange rates.

CO2 does make the oil less dense and the oil unsticks from the source rocks so more of it flows to the well. That's why in a gravity stable flood (like Grieve) high recovery rates can be achieved.

The CO2 will be injected into the reservoir and most will be sequestered (carbon credits would be a by-product and additional revenue) but some will be produced with the oil and re-injected. You are right that this is not revenue enhancing like condensate, but it is a very simple process to separate from the oil. Many oil wells produce some natural gas and this is usually re-injected into the reservoir...same process with CO2.

EORI will come out with forecasts on production rates around mid-Oct. I suspect many investors will get set in Elk before that report and interest will continue for at least the coming weeks.

When CO2 is contracted, I would expect Elk to have a value around $4 ps

This is how I calculate it:

23m BBLS at Grieve @ $10 / BBL $230m
1m BBLS at SDS @ $10 /BBL $10m

$230m / 61m shares = $3.93 ps
 
My apology to Joe Blow, thought I had made it clear I had no clue what I was doing though:). Was quite silly to buy in without DYOR and I advise all and everyone never to do this, makes for nervous times! At the very least I have learned a little about oil in a very short space of time. I thank those contributors that have shared there knowledge. Still have a way to go before I can contribute anything of any value but am working on it. Looks like I may have jumped in the deep end on winner, so may come out unscathed this time but will not be in a hurry to repeat the experience. Out with the research for me.;)

Cheers and good luck to everyone for the following days, weeks or however long it takes for ELK to find it's market value.

And thanks for those who responded to my panic.
 

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