JUNE QUARTER HIGHLIGHTS
The June 2017 Quarter was a very active and successful period for the Company dominated by three main highlights - first, the commencement of the final stage of field development construction at the Grieve CO2 EOR Project, second, the continued strong gas production and sales from the Madden Gas Field accompanied by the successful completion of the major scheduled maintenance of Train 3 of the Lost Cabin Gas Plant and third, the successful completion of securing additional funding through the convertible loan facility extension approved at the April extraordinary general meeting (EGM) and the US$ 6 million credit facility from CrossFirst Bank to complete the acquisition funding for the Madden Gas Field.
Commencement of final stage of Grieve CO2 EOR Project construction
The final stage of the field development construction for the Grieve CO2 EOR Project commenced during the week of 22 May with the arrival of the civil construction contractor. During the June Quarter, all the civil construction necessary to comp lete the Grieve Project was completed. Also during the June Quarter much of the procurement and fabrication of major components of the CO2 Recycling Facility and the Central Processing Facility were completed and readied for shipment to the Grieve Project construction site upon completion of the civil construction works.
The construction effort has now advanced to the mechanical installation phase with the arrival of these major components. Following the end of the June Quarter, tremendous progress has been made with the successful installation of both the High and Low Pressure Compression Units - the essential heart of the CO2 Recycling Facility - and the installation of the first of three Oil Processing Production Separators, partial installation of the major Heat Exchanger Facilities and the installation of the LACT Unit for the measurement and export of crude oil from the Grieve Oil Tank Farm Storage into the Grieve Crude Oil Pipeline. Major components of piping and pipe racks connecting the Central Processing Facility, the CO2 Recycling Facility and the Crude Oil Tank Farm together have also arrived at site. Additionally, the major components for the fabrication of the buildings to house the CO2 Recycling Facility have also arrived at the site.
Continued strong production from Madden Gas Field with average daily production 21.29 MMSCF/day (3,552 BOEPD) for total quarterly production 1.94 BCF (323,241 BOE)
The Madden Gas Field has also continued to perform ahead of expectations with continued strong production performance from both the Deep Madison Formation reservoir as well as from the shallower production horizons. Overall production declined towards the end of the June Quarter with the temporary curtailment of production from the Deep Madison Formation Reservoir to conduct scheduled major maintenance on the Train 3 Gas Processing Unit at the Lost Cabin Gas Plant - an exercise that takes place every 18-24 months. Restarting of Train 3 took place as expected without incident and production from the Deep Madison Formation resumed at rates approximately 10% higher than prior to Train 3 maintenance - a direct impact of the shutdown maintenance program.
Strengthened financial position with extension of convertible loan facility and securing CrossFirst Bank revolving credit facility
During the June Quarter, the Company continued to strengthen its financial position with the expansion of the convertible loan facility approved by shareholders at the April EGM and the successful completion of a new revolving bank loan credit facility with CrossFirst Bank of Oklahoma City supported by the Madden Gas Field and Lost Cabin Gas Plant. Subsequent to the end of the Quarter the proceeds of both the convertible loan and the CrossFirst Bank facility were used to complete the payment of the final US$ 5.5 million purchase price payment to Freeport McMoRan Corporation for the Madden Gas Field and the Lost Cabin Gas Plant.
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About Elk Petroleum Limited
Elk 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.
Chief Financial Officer