approaching the dying zone, page-35

to all who are holding for the long term in ELK.

I have continued to hold ELK since the fantastic news and the unrealistic and unexpected downward slide in share price since then (partly due to unfulfilled expectations for some and the general market decline). I have not posted since then given that posting is a pointless exercise as the market, and i loosely use the words, given that it is moved by a small minority of individuals who sell out at any sign of general weakness in the market overall, causing others to react. The underlying fundemetals have not changed yet some take a chart as gospel and proceed to follow its directions.

This minority seems to pride themselves as all knowing and seems to beleive that they can predict the market. To me given the small volumes associated and the lemming mentality it becomes a self fulfilling proficacy for these individuals. and effects the majority.

These individuals then try to justify that the company is hopeless etc has no prospects, running out of money, to further depress the price and hopefully buy back in again

I like many others are disappointed, and have been disappointed since the 'good' news.

To put some balance into the postings, many have either been negative about ELK's prospects or down right pointless comments of disallisionment, here are some factual matters that need to considered:

Cash positon.
some have pointed out that ELK has no cash and will need to do a fund rising. As at 30 June 2008 it had some $2.021m. during the year it spent some $4.533m on expenditure and some $0.685m on administration and all funded by oil revenue. Based on current oil prices, which will on average be higher than those in 2007/08 will give ELK an effective self funding operation for 2008/09 even with the oil price falling.

overall ELK reduced its cash position by some $1.188m due to capital expenditure.

So we have an 'explorer' which produces enough revenue to continue its exploration with out calling upon shareholders. How many 'explorers' have such a revenue stream. Technically, ELK has earnings per share. So if it stoped exploration, it would be making a profit. hopefully this revenue stream could be used to leverage off some of the current weakness including the 'rancher' prospects.

No prospects.

The RS report placed a $305m NPV on the grieve field, subject to the CO2 being pumped in. It seems that even in a greening world access to CO2 isnt as easy as once thought or alternatively at the right price. personally i beleive that the CO2 suppliers are playing hardball and are trying to get maximum price for the CO2 ie 100% of the profit potential, leaving ELK with a fraction of the profit potential. The announcement that chemical flooding, again another proven technology, is being considered should highlight the options ELK has got. This study will be avaialble in 4Q 2008. hopefully other events will allow ELK to announce some positive news

ELK are also drilling elsewhere, again using funds from internal sources. It has Ash Creek and the potential of shannon. also another potential for chemical flooding and a report is being done on this. At $100 a barrel, even a small deposit of say 1m barrels is extremely valuable

It also has the newly acquired 'crow lands'. so with cash from internal sources it can fund exploration in these areas

It is a shame that ELK like many other quality 'explorers' have been hit so hard by the current lack of confidence in the market.

This post is not meant to ramp the stock but to put in perspective what makes ELK a good investment in todays market. While the price may go down further given 'deseparte sellers' who belive they are smarter than the rest, ELK will remain a good holding.

Good luck to all the holders holding similar positive and more importantly realistic views on ELKs prospects. ELKs prospects are not 'wishful' thinking but rather 'realistic.

i have other shares which again have good potential but are languishing to say the least. It is a shame that there are not additional funds to invest in some other stocks in this period of no confidence.