Sydney, July 12, 2017 AEST (ABN Newswire) - Elk Petroleum Ltd (ASX:ELK) (OTCMKTS:EKPTF) ("Elk" or the "Company") is pleased to advise that it has made the final US$5.5m milestone payment of a total acquisition price of US$17.5m to acquire a ~14% working interest in the Madden Gas Field, the Madden Deep Unit Gas Field and the Lost Cabin Gas Plant ("Madden") in Wyoming, USA from subsidiaries of Freeport-McMoRan Inc. ("FCX"). Elk has no further payment obligations to Freeport-McMoRan in relation to its Madden interest.

- Elk has made the final US$5.5 million acquisition payment to Freeport-McMoRan

- Madden/Lost Cabin current production is 25.4 MMCFD/day (4,240 BOEPD) net to Elk

- US$6m credit facility now in place with Oklahoma based CrossFirst Bank

- 80% of next 12 months forecast Madden PDP gas sales hedged with Henry Hub gas price swaps

Madden Final Payment US$5.5m completed

Credit facility and gas price hedging in place

Elk has entered into a US$6m credit facility with Oklahoma based CrossFirst Bank to finance the final milestone payment. The facility has an annual interest rate of US Prime Rate plus 2%, with a 3-year straight line amortization requirement. Elk has implemented gas price hedging for 80% of next twelve months (August 2017-July 2018) forecast Madden PDP production at an average price of US$2.93/MMbtu, and 40% of August 2018-July 2019 forecast PDP production at an average price of US$2.82/MMbtu. Elk is pleased to commence a relationship with CrossFirst Bank and expects that this facility will underpin a more comprehensive lending relationship in the future.

Long-life Reserves

NSAI has independently audited Madden Deep Gas Field reserves at 1 January 2017 of 71.3 BCF (11.9 MMBOE) Proven (1P) gas reserves and 91.3 BCF (15.2 MMBOE) Proved & Probable (2P) gas reserves as detailed in the table below (see the link below).

Long-Term Profitable Production

Elk's share of Madden production at 30 June 2017 was 25.4 MMCFD/day (4,240 BOEPD). The next five years Madden forecast average gross production (to June 2022) is 206 MMCF/day (34,400 BOEPD), and based on Proved Developed Producing reserves is forecast to generate positive net operating cash flow of approximately US$6 million per annum to the Company based on consensus gas price forecasts. The table below (see the link below) sets out the historical operating results for Madden for calendar years 2015 and 2016, and 2017 year to date (January - May 2017) (see the link below).

To view tables and figures, please visit:
http://abnnewswire.net/lnk/2I6LMY1N


About Elk Petroleum Limited

Elk Petroleum Limited ASX ELKElk Petroleum Limited (ASX:ELK) (OTCMKTS:EKPTF) is an oil and gas company specialising in Enhanced Oil Recovery (EOR), with assets located in one of the richest onshore oil regions of the USA, the Rocky Mountains. Elk's strategy is focused on applying proven EOR technologies to mature oil fields, which significantly de-risks the Company’s strategy of finding and exploiting oil field reserves.

 


Contact

Brad Lingo
Managing Director/CEO
T: +61-2-9093-5400
E: ir@elkpet.com

Alex Hunter
Chief Financial Officer
T: +61-2-9093-5400
E: ir@elkpet.com



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