whats going on, page-7

Hello all,

Just to add to what adam smith has said, I think you really only need to read between the lines of this week's announcement regarding management changes to form the conclusion that they didn't have the square pegs in the right holes. Mr Cook is moving into a more operational role and the fellow in Wyoming who has left the firm clearly wasn't focusing on ELK's core strategy initially articulated in the IPO.

We have been led to believe from very early on that the ELK team would work over the Grieve Field to extract greater oil production & the acqusition of Sand Draw South so early after the IPO was also designed to ramp up oil production and add cash flow.

NO doubt about it: management became distracted by other opportunities and - after reading the clarifying statements in this week's release - we are led to believe those new opportunities are in no way whatsoever diminished as a result of the 2 tests using old wells. However....the ELK team have now committed to ramping up the SDS production to boost cash flow and this process should - in the fullness of time - reassure the market that this is a stock that has a promising future.

The new management team - including moving Mr Cook into an operational role (his area of expertise) and Mr Wood's more hands on involvement as the CEO plus Dr Power's arrival - now have a opportunity to move the company forward.

A couple of important points I would like to empasise at this point are as follows:

The guys running this operation are no shonks. They are extremly credible and experienced operators with an excellent pedigree. One of the hardest things in stock picking amongst the minnows is finding a stock whose management are committed to the cause - that is to say, they are not snake oil salesman, spruikers, charlatans and professional con men. Having honest hard working management on board won't guarantee you success but it will guarantee you that they will work hard & diligently for shareholders. I believe we have that on board at ELK.

The next point I'd like to make is in regard to the stock itself.

They listed last year with a $5m capital raising and just the Grieve Field as their asset. On the back of that - and prior to acquiring Sand Draw South - the shares rose to over 50c.

Well, the shares are currently UNDER 40c and yet they now have over $10m in the bank PLUS Sand Draw South PLUS the Grieve Field and its initial reserves PLUS the Upper Sands anomalies that hint of more oil.

The workovers of those Upper Sands didn't go too well in the 2 holes thus far and management copped a justified wrap over the knuckles for not clearly communicating the context of those failures - that being that they tried to do it ina cost efficient way by doing tests via two OLD wells. Further tests of the Upper Sands will need to be done by drilling new holes rather than workovers but we are led to believe that there is definitely something worth persuing amongst the Upper Sands. But in the meantime, the focus (before the onset of the Northern Winter) will be the workover of the Sand Draw South fields to boost the oil production significantly (and thus, cash flows). So really, compared to where the stock was at 50/60c last year, and where we are now with double the cash reserves and more field assets (not to mention boosting Grieve P1 reserves), perhaps we have seen the worst of the share porice for now.

This is no "dead in the water" stock by and margin and while I do not expect any sudden surge in sahre price until the SDS workovers are successfully complete, I do think we have seen a bottom.

I am sticking with this one - I have held since the IPO and whilst disappointed by the tangents & side tracks that have occurred to date I am willing to give the team a chance to fix the problems.

I genuinely believe the patient among us will be rewarded.

Coop