Based on the earlier Madden-Lost Cabin history, the new Elk acquisition looks capable of providing a steady cash flow (from January 2017) which is likely to be enhanced in the immediate future by increasing USA gas prices as more USA natural gas is directed to LNG exports. Assuming a steady 22.5 MMSCFD of sales gas to Elk for the next 20 years and gas prices continuing to increase from the current USA price of US$3.40-US$3.50 per thousand cubic feet (MCF), the new acquisition should ensure added value to Elk’s current share price (ignoring contributions from the sulphur and CO2 sales).
It will be interesting to see where and how long Brad Lingo takes to find the next 1.0 MMboe per year to reach the 3.0+ MMboe target and achieve the eight fold increase in Elk’s sp.
Newblood
ELK Price at posting:
7.6¢ Sentiment: Buy Disclosure: Held
