ELK - Elk Petroleum

[Robert_Q]

Good luck to you too spag,

I am hoping tomorrow will see a lift in sp. This is usually a very illiquid stock yet 50% of issued shares were traded on Friday. There may not be as many quick traders tomorrow and if that is the case then sellers (like citigroup) may have dried up and sp will break out.

I think more good news will follow in Oct re JV and production forecasts.

 

[jtb]

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

Cheers bro, yes the numbers are compelling aren't they
Will be watching with interest, onwards and upwards hey?

 

[jtb]

Gee a big vote of support from those in the know today isn't it

Two substantial shareholders bailing out and a director quitting

 

[mark70920]

Gee a big vote of support from those in the know today isn't it

Two substantial shareholders bailing out and a director quitting

50 million shares have changed hands today (only 60 million on issue). Someone had to be selling so all this buying could happen, I hope to see some notices concerning new substantial shareholders either today or tomorrow. Its all good I'm still well in the black on this one.

 

[exgeo]

I guess the instos are kicking themselves now!

Citigroup ceased to be a substantial shareholder on 4th Oct 2007
Baker McKenzie ceased to be a subs shareholder on 9th Oct 2007 (date of last trade 4/10/07).

The EORI study was released to the market after close of trading on 4/10/07. At least it shows that ELK doesn't have any newsleaks.

 

[exgeo]

An email I wrote to ELK, and the reply I received:

Hi,

I am a pretty substantial shareholder in ELK. The announcement of the EORI study is interesting, but I guess most shareholders are going to be more interested in what the likely impact will be on daily production rather than final recoveries. I guess you could probably produce at 2BBL/Day for thousands of years, to take a silly example.

Regards,

James Pearson


Jim,

Thank you for your support.

The EORI work is still continuing and they are investigating the optimum number of CO2 injection wells and producing wells as well as various rates of CO2 injection which all impact on the production profiles but for the various runs they have done to date, do not affect the ultimate 23 MMBbls recovery. Once they had advised us of that figure and were prepared to endorse it, it was market sensitive information that we were aware of and hence, obliged to release to the ASX. The production profile for various well combinations and CO2 injection rates will be included in the EORI report which we expect later this month. As we have indicated in earlier investor advice on the subject, once first oil production is seen from the CO2 injection, the production rate will climb quickly to rates that are in the order of 1,000’s BOPD. You can look at Denbury’s West Mallalieu Field and Anadarko’s Monel (or Patrick Draw) results where the field production pre-CO2was in the 10’s BOPD and is now multiple 1,000’s BOPD and rising.

Regards,

Bob Cook
Executive director

 

[Robert_Q]

Thanks Exgeo,

That's a very interesting reply, although it just confirms my belief in this company.

The day traders have been playing with Elk for the last few days. I hope now it consolidates, ready for a run up when the study comes out.

 

[greenfs]

Does anyone know the story behind Mr Richard Wood's recent resignation from his position as Chief Executive & Director?

Whilst I am now a holder of this stock and have a medium term bullish outlook, unless we know why the resignation eventuated I will remain a little concerned (something is not right in Denmark and/or sinking ship etc).

 

[oil bull]

What do shareholders get for their $26.4 mil market cap?

$2mill in cash. rough guess.

SDS
1mill barrel of 2p reserves producing and creating revenue around $1mil per quarter. Upside in the potential to investigate other sands, potential for new well locations. Further exploration potential in an adjoining 1900 acres at 25% WI.

Greive
When co2 is contracted and Ryder Scott confirm reserves, Elk should have 23mill barrels of 2p reserves. NPV of $155mil based on 12mil barrels and $45 oil price. Compare that to 2p reserves held by large companies and you will get the idea this will have a dramatic impact on the SP. Potential to bring in JV to fund costs.

Of 8 upper sands, only the top 4 have been tested (only 1 was contained in the MHA report). The lower 4 are yet to be tested and 3 of those 4 are the sands that MHA assessed to have 51mil barrels of OOIP,
March 2006 update......"Oil observed flowing at pressure to surface from 4 wells. 3 were
temporarily abandoned and the 4th had a cast iron bridge plug." this gives a strong indication at least one sand will be commercial. Range between 3.5-6.3mil barrels recoverable per sand.

Deeper sands- A couple of sands hold interest,including the cloverly formation, updip from where they previously tested it.

Ash Creek..... 50% WI in a field that produced 8mil barrels, was shut in while still producing 30bopd work over potential of original sand, with a couple of higher sands to be tested. similiar to SDS where ELK worked over the Tensleep and brought the undeveloped Phosphoria online. Also not too far from the sempra proposed co2 pipeline (could this be on the cards later on).

2 x 10,000acre exploration acreage, ELK has previously added properties with potential for good upside hopefully these 2 acquisitions will prove to be the same. Annual report mentioned drilling a well before the end of the year.

Cheers

 

[Wilson!]

oil bull, thanks for the quality update and info on what ELK has going.
I think its important to see, so we have a complete picture.

This weeK should be interesting, and looking forward to the ryder scott report due out any time now.

 

[oil bull]

Such a good story, DYOR has a big future ahead. Oil prices set to rise significantly over the next few years. Oil field discovery has been in decline since the 1960s. Tertiary recovery is at the beggining of massive growth within the industry.
Cheers

 

[oil bull]

This is a report by the US Department of Energy on Co2 EOR in the Rockies. They estimate that with a high oil price of ....wait for it......$40 and high cost co2 that 2080mill barrels would be economically recoverable in the Rockies using state of the art co2 technology such as gravity stable production.


"Five significant EOR Field projects are
currently underway, one in Colorado (Rangely Field), two in Utah (ex. Greater Aneth
Field) and two in Wyoming (ex. Lost Soldier Field)." So the boom is only just about to begin. Elk will be there at the begining.

They also named a list of their favourite fields for co2 flooding and guess which fields are there........Greive + Ash Creek.


This is a must read for anyone interested in ELK......

http://www.fossil.energy.gov/programs/oilgas/publications/eor_co2/Rocky_Mountain_Basin_Document.pdf

When people read reports like this and start to understand the process the Elk shareprice will be in the $$$$$.

Cheers

 

[oil bull]

Some people are worried about ELK getting, if you look at the facts it would appear to be a dead certainty. And that will allow reserves to move into the 2p category.

1- Pipeline runs within 2miles of Greive

2- plenty of pipeline capacity. 2006 average 50mmcfd..pipline capacity 290mmcfd.

3- La Barge alone has reserves greater than 100TCF. At current rates it would take 60 years to use 10%.

4- Sempra have planned an extension of the pipeline up through the powder river basin through Montana and into North Dakota.

5- There are a number of other sources expected to be added as there is a demand.

6-Exxon currently venting 200mmcfd into the atmosphere.

7-Strong government support within the state of Wyoming.

8- Elk will be ready for early offtake.

A few good presentations on the co2 in wyoming and planned pipelines.

http://www.wyopipeline.com/information/pre...files/frame.htm

http://eori.uwyo.edu/downloads/Boylesscoping.pdf

http://www.wyopipeline.com/information/pre...July 2006.ppt

Cheers

 

[oil bull]

Companies that use CO2-EOR to extract stranded oil:

Amerada Hess (HES)
Anadarko Petroleum (APC)
Apache Corporation (APA)
Cano Petroleum (CFW)
Chevron (CVX)
ConocoPhillips (COP)
Denbury Resources (DNR)*
Devon Energy (DVN)
EnCana (ECA & ECA.TO)
Energen (EGN)
Enhanced Oil Resources (EOR.V)*
Evolution Petroluem (EPM)
ExxonMobil (XOM)
Kinder Morgan Energy Partners (KMP)*
Occidental Petroleum (OXY)*
Rancher Energy (RNCH)
Royal Dutch Shell (RDS.A & RDS.B)
Statoil (STO)
Whiting Petroleum (WLL)
XTO Energy (XTO)

 

[ta2693]

Anyone here know where is Healey, Robert Anthony and associates from?
that are the biggest shareholder of ELK now.

 

[ta2693]

Anyone here know where is Healey, Robert Anthony and associates from?
that are the biggest shareholder of ELK now.

another 10%, what they are going to do? M&A?
anyone knows Healey? are they involved in M&A business?
their appearance looks very suspicious. I think they must want ELK to do something.

 

[oil bull]

R Healey is very successful private investor....I did a google search and came up with over $100mil worth of speccy stock top 20s such as Oxiana and Paladin (from memory over 10% in PDN).... Can only assume he is worth hundreds of millions once you add the blue chips and property portfolios....He is at the limit of how many shares he can have without making a takeover bid, even if he did he would never get the company as too many shares are tied up by people who beleive the company has significant upside.......still it would be a nice way to increase his shareholding........It is certainly a strong endorsement of the companies potential. I beleive he has been a holder since the float, obviously thinks now is the time it is all going to happen.
Cheers

 

[ta2693]

It is very hard for me to get back something at 70c which I kicked off at 50c.
But time has changed, I am very bullish on ELK now.

 

[petervan]

Elk has recieved final report confirming 23 million barrels of recoverable oil. Production rate of 8000-12000 barrels of oil per day. Full production in just over 2 years.Been buying the last few days and should be an interesting ride tommorow morning.

 

[oil bull]

This sets up the next rise in shareprice. Surely will break $1 tomorrow. I was very impressed that 80% of the oil or 18mil barrels will be recovered within the first 8.5 years. That is an average of about $200mil revenue per annum for those 8 years. $1.6bill over the next 8years.....for a $42mil dollar company....add co2 and I would expect the NPV from Ryder to be $5+ per share.....exciting times.
Cheers