Pity Elk had to hedge 4000 bopd of Aneth production at $US 50 as part of the finance for the purchase.
Also, once the deal is signed in the next few days the tab is clocking up $40000 per day for the deferred acquisition payment. One way to look at this is Elk are paying 40000/6000 or about about $ 6.70 per Aneth barrel per day to Resolute for each day oil is over $52.50 for a maximum 250 days from the anniversary of deal close.
Thankfully the Grieve production only has downside protection below US 45 and Elk gets access to all the upside....Elk also gets full exposure to the 2000 BOPD of unhedged Aneth production.
The deferred payment is a pain in the ass however, Elk would not have won the field without it and it appears that the private equity firm that missed out on Aneth included a similar component in their winning bid for Chaparrel"s EOR fields.
Cheers
Dan
ELK Price at posting:
6.2¢ Sentiment: Buy Disclosure: Held
