Status of existing oil contract hedges, page-5

Extract from Note 23 of Elk's Half Year Accounts:

Resolute Aneth, LLC Acquisition

Elk announced on 15 September 2017 that it entered into a purchase and sale agreement to acquire a 100% held subsidiary (Resolute Aneth, LLC), from Resolute Energy Corporation, which holds ~63% working interest in the Greater Aneth Field for US$160 million plus future contingent consideration of up to US$35 million depending on oil price performance.

As part of the purchase and sale agreement to acquire Resolute Aneth, LLC, it was agreed that Elk would pay contingent consideration in the form of additional cash payments, subject to the West Texas Intermediate (WTI) crude oil closing spot price over the three years following the date of acquisition. Details of each of the three contingent payments are provided below.

• First Contingent Payment - During the 12 months following the acquisition date, US$40,000 for each week day that the WTI price is greater than US$52.50 up to a maximum amount of US$10 million.

• Second Contingent Payment – During the 12 months commencing on the first anniversary of the acquisition date, US$50,000 for each week day that the WTI price is greater than US$55.00 up to a maximum amount of US$10 million.

• Third Contingent Payment – During the 12 months commencing on the second anniversary of the acquisition date, US$60,000 for each week day that the WTI price is greater than US$60.00 up to a maximum amount of US$15 million.


Extract from Note 13 of Elk's Half Year Accounts:

During the period, the Company implemented an oil price hedging program to underwrite oil price going forward for the Aneth Project. Under this program the Elk Petroleum Aneth entered into Oil price swaps at US$47.45/bbl for 27% of its share of forecast oil production from the Aneth Project during the calendar year 2018 and at US$50.05/bbl for 53% of its share of forecast oil production from the Aneth Project during calendar years 2018 to 2020.


Regards

SP

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