letter

As sent to ELK this morning....

To the Directors of ELK

As a shareholder in ELK it concerns me that ELK are heading down the same path that led them to raise funds at a fraction of the value ELK was worth 4 months ago, with the result being that around 80% of shareholders were massively diluted......That went completly against the company strategy that had been put forward prior to that (to acheive growth through JV and revenue).....
If action is not taken now it will be too late in a couple of months winter will be here and it would be a significant failure on managements behalf if they were to run to market again, especially after the previous raising showed that approx 80% of shareholders did not support the raising........

ELK needs to focus on putting time and effort into low risk, low cost well workovers that can increase revenue and also have the potential to be JVd to provide development funds, or partially sold to release cash......We should be in a position to spend some money here as, ELK raised approx $350k after they stated they had enough money to get us through to FID and higher oil prices will see an extra $600k (approx) that ELK would not have budgeted in their numbers for the period ending 30sept....not to mention any money spent now on low risk projects is likely to be recovered in the form of revenue very quickly and put ELK in a position to borrow a small amount of money for the short term if they find themselves short (underpinned by extra production)......

The prioritys in the short term should be.......
1- re entering former producing wells at Ash creek, silmiliar fashion to SDS......start with one and if it proves successful move to the next......In the quarterly ELK mentioned JV Ash Creek and drilling a new well....surely it is far less risk to workover old producing wells and move the company forward rather than sit back and hope a JV partner will come forward....not to mention the extra risk involved in drilling a new well and the handing over a significant portion of the field.....
2- enter Kakadu Hereford#1 well and find out exactly what ELK have there.....which hopefully would allow you to book significant reserves...
3- find out what you have at Grieve in the formations above the Muddy, surely there is a significant chance that whatever formation was responsible for producing oil in those abandoned wells has a very good chance of being economically productive......

ELK have been unable to source JV partners so they need to grow by themselves for the time being............. Winter is fast approaching and if you do not move now it will all be put off for another year......Chris Mullen's talent is presently being wasted as ELK dont do anything to let him start to grow the company.......

The number of announcements that ELK release that are incorrect or have major errors is unacceptable.....prime example being last weeks appendix 5B......Common sense / anyone with an understanding of ELK, would see that these errors are incredibly obvious......ELK need to improve their professionalism in this area......

Cheers