ash creek npv

I’m expecting University of Oklahoma to present their preliminary report in the next month or so for chemical flooding and they should include NPVs for both Grieve and Ash Creek.

I had a bit of free time this morning so I calculated my own NPV for Ash Creek based on a chemical flood. I calibrated my model to the NPV provided by RS for Grieve and I used the following parameters:

- Long-term oil price $US85/bbl
- Long-term exchange rate 0.85
- Discount rate 10%
- Oil recovery from chemical flooding, 15% X 21MBOOIP = 3MBO
- Production to start within six months, peak production in third year, 3MBO produced over 12 years
- Capital costs at $US15M, staggered over 3 years.
- Production costs at $US35/bbl

NPV comes to $68M or about $1.10 ps for Ash Creek redevelopment. This values the inground oil at $23/bbl.

If the recovery rate turns out to be 25%, then NPV jumps to $120M.

Just something to consider because I think this would be a fantastic option. ELK can get started on Ash Creek first. Develop it well by well and get a strong cash flow with minimal capital cost requirements and keep Grieve as a longer term development with the pursuit of CO2.