The original NPV presented by ELK was based on 12M BBLS and an average price of $45 and this came to about $2.50 per share.
The oil at that stage was only an estimate (as it still is) so RS was engaged to certify the oil as reserves. Hopefully, the 23M BBLS will be certified as 2P.
If they do prepare an NPV, it is likely to be substantially higher because of:
1. 23M BBLS of oil against 12M originally 2. Long-term oil price of say $80 (to be conservative) against $45 originally 3. 80% of the oil to be extracted during the first 6 years against a longer production profile originally.
This will be tempered by higher production and capital costs, but I don’t think they will be much higher because it will be spread across a higher production rate of 8,000 bopd.
My estimate is that NPV will be substantially higher than the $2.50 per share and it will put ELK in a strong bargaining position to get a JV on good terms.
Using CO2 for oil recovery is much better understood and appreciated in the US and I think the sp will reflect that once we get RS, CO2 and a JV.
ELK Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
