Supposedly the purpose of a corporation is to pool investors...

Supposedly the purpose of a corporation is to pool investors funds, apply those funds in an economic enterprise and by use of those aggregate funds and expertise of the BOD and management to multiply them to make a profit for those entities that have entrusted their funds to the corporation. How has Elk done?

The share price:

Elk listed on the ASX in June 2005 at 20 cents per share. Fast forward to just over 6 years: Elk's share price is still 20 cents.

Cash in a cash management account would have grown to just over 25 cents.

Elk has failed to grow investors funds. It is a failure in this area.

Dilution:

Elk listed with some 38 million shares after the offering and upon listing. Today there are some 114 million shares. Each share in 2005 now finds it has two others with it or in other words the oil backing Elk from the Grieve Field has been cut by 2/3's.

Shareholders have been diluted. This is a failure to grow asset backing per share. Another failure.

The operating results:

From the period 2005 to 2010 Elk has never had an operating profit after tax. In fact Elk has had a string of 6 annual losses after tax in row. The amount of these losses over the 6 years total $14.9 million dollars.

From an operating point of view Elk is also a failure.

The Directors' and Key Management Compensation.

When Elk listed the compensation for the above group of individuals was $125,000 for 2005. In 2010 this amount grew to just over $1 million. During the period 2005 to 2010 the above group pulled in just under $4 million. As Elk's operating losses exploded, the above group's income also exploded.

Somehow increasing the above group's compensation at the same time losses increase is to me somehow counterintuitive.

I rate that as a failure to match actual results with actual compensation.

This compensation excludes share based compensation, options, and other perks and benefits not identified i the compensation area of the Elk Annual Reports.

Administration Costs:

During the period Elk reported in its Annual Reports a total of $8.6 million of administration or other costs (2008 and 2009 only had 'other').

These administration costs are huge when looked at the size of the company, the number of employees, and the director's and key managment salaries.

This amount indicates that Elk has been unable to keep this area of costs under control and IMO it appears that this area is a 'black box' with no details of what those costs were.

Another failure.

Past Projects & Recent activities.

Mention has been made by the company of the MD to relocate to the USA to 'focus on identification and pursuit of new USA based projects'.

Well, first let's look at two past projects.

Ash Creek.

The history of this project is well known. The ASX announcements are there for all to see and track. The prior announcments and actual results don't match. The March 2011 Quarterly stated that results would take "about three months". Ash Creek started in February 2011.

There was no update on Ash Creek in May. None in June, and so far none in July.

Where is the update?

Even the data for Ash Creek is available from the State of Wyoming. This data shows that the Field is still only producing at stripper well status of 10 barrels of oil per day.

Silence from the company.

Kakadu and Hereford Well.

How many years has this project been going? It took years to drill. It was drilled and now we have another one of those famous 'studies' in the pipeline. 21 months have gone by since the appraisal testing was released. When is this project going to actually accomplish something.

Funds:

based on the amount of cash on hand at Elk IMO it is impossible for Elk to pursue any new projects.

And now Grieve:

Prior to the anouncement of the Joint Venture with Denbury the Elk share price was traig in the high 30 cent range at 37 cents per share.

As of Friday's close of 20 cents Elk has lost 46% of its value as a result of having undertaken this joint venture. Shareholder have seen just under $20 million of market cap disappear from their portfolios.

Contrast this with two other oil companies that have announced joint venture or land sales. One is up over 3 times and the other announced this week is up over 40%.

Another failure on the part of Elk to bring a successful project into operation, failure to complete a past project, and more failure on the part of Elk to accrue benefits to shareholders from a joint venture with Denbury.

A summary of the above facts: over six years of poor performance, operating losses, outsized compensation,and lack of information show that Elk has been a failure.

I have a small shareholdering and my sentiment has not changed one bit since I last posted about Elk.