Elk Petroleum (ELK)

Business description

Elk Petroleum is an enhanced oil recovery (EOR) company. This technology achieves low-cost tertiary recovery of residual oil. Elk’s first project at Grieve in the US is targeted for first production in CY17. There is a significant opportunity to apply EOR in Australasia, Indonesia and Malaysia.

Stock data

Market cap.A$59.8m
Last closeA$0.07
High / Low (52 weeks)A$0.1 / A$0.1
Stock market listingAU
Forecast net debt (A$m)58.2
Forecast gearing ratio (%)248
TeamResources - Oil & Gas
SectorOil & Gas

Price performance

%1m3m12m
Actual(1.4)(5.4)1.8
Relative *(3.7)(8.8)(9.4)

* % Relative to local index

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Y/E Jun Revenue (A$m) EBITDA (A$m) PBT (A$m) EPS (fd) (c) P/E (x) P/CF (x)
2015A 0.0 (3.1) (3.6) (1.9) N/A N/A
2016A 0.0 (5.0) (5.7) (2.2) N/A N/A
2017E 15.6 2.1 (3.7) (0.5) N/A N/A
2018E 53.2 28.8 6.9 0.4 17.5 15.8

Last updated on 20/04/2017

Latest research

Investment summary

Elk Petroleum (ELK) has acquired a c 14% interest in the ConocoPhillips-operated Madden Gas Field, as well as the 310mmscfd capacity Lost Cabin Gas Plant in Wyoming. This elevates ELK to producer status, with cash flow being generated from Madden methane sales. The Madden field is also a significant CO2 producer, fulfilling ELK’s strategy of CO2 integration, securing supply for future CO2 enhanced oil recovery (EOR) projects. We incorporate Madden in our valuation along with recent changes to the company’s capital structure – our base case 2P NAV stands at A$0.11 with significant upside in the event of oil/gas price recovery and/or incremental reserve/resource recovery above audited 2P estimates.

Last updated on 20/04/2017

Industry outlook

At current low oil prices, many fields suitable for EOR are uneconomic for conventional oil. EOR is a tertiary recovery method to target the substantial residual oil remaining in mature or life expired fields. The low oil price environment may assist ELK cost-effectively, securing additional oil acreage.

Last updated on 04/04/2017

Key management

Brad Lingo , CEO
Alexander Hunter, CFO

Company address

Level 1, Suite 101
10 Bridge Street
Sydney
NSW, 2000
Australia
+61 2 9093 5400
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