Ann: AGM Address to Shareholders - Managing Director, page-8

Some points to consider from the AGM

1) Each 1 US dollar rise in the price of oil increases the NPV10 of Aneth by US 20 million.

2) The refinancing of both Grieve and Aneth will have a cashflow benefit to ElK of US $ 20-25 million per annum made up of interest savings of around $7 million and a decrease in amortisation of US $13-18 million. It is a KPI for the new president of ELK USA to achieve over the next 12 months.

3) The first Aneth production enhancement performed by ELK to start ASAP is the CO2 compression increase which is expected to increase production net to ELK's interest of 500-1000 BOPD with a capital cost of US 11 million. ELK have already identified changes to the compression setup ( using Grieve as an analogue) which will also boost CO2 compression without a major expense.

4) There is a oil price differential/ discount of up to $ US 5 compared to WTI that ELK get paid for their crude because they are captive to the refinery that their crude gets sent to by rail. They are considering setting up a trucking operation to send crude elsewhere to decrease the differential. If they can sell Aneth oil to California then they will be able to access a CO2 tax credit due to the fact that the CO2 Aneth recieves is classes as industrial CO2 which then qualifies the Aneth crude for the rebate. This would decrease LOE by a couple of dollars a barrel.

5) The " D " word was brought up by some of the older ( long standing ) shareholders who believe that will help lift the SP , for example a yearly 0.5 cent which would cost about $ 6 million . Brad said while he cannot commit to a dividend date he has stated one of his top priorities is a consistent return to shareholders. Brad did say that ELk does actually pay dividends now because the preference shares are classed as equity, so they payments to those holders are "dividends" rather than interest . Interesting way to put it. Brad wants all shareholders to get a dividend and will work as hard as possible to make it a reality as soon as possible

I discussed the issue with the Chairman and CFO informally expressing my personal view that an unfranked dividend would be a "silly " idea with the subsequent tax implications. IMO any return to shareholders would be better spent in the form of a share buy back. At current prices $6 million would buy back almost 100 million shares. IMO, dilution rather than lack of a dividend is the killer because dividends can come and go, but equity dilution is permanent. Having said that, I won't knock back a "divvy" if offered one.

6) IMO expect a share consolidation , 1-10 or 1-20 . This was not publicly stated but Brad has a history with Drillsearch, and the if they want to attract US shareholders to buy the common equity and thus close the value gap as compared to ELK 's American peers, the price of ELK equity has to be in dollars and not cents as US investors are reluctant to by cent shares.

7) They have had requests to use their Grieve pipeline to transport 3rd party crude. Primarily from a heavy oil producer who wants to dilute its crude with the sweater Grieve stuff ASAP. They have declined te request at this stage because they want to make sure all is working smoothly with the pipeline and don't want to risk its performance until they are confident the pipeline will be able to handle the thicker mix.

8) The price of H2S ( hydrogen sulfide) has increased from $US 70 to $120 per tonne which if maintained will increase Madden EBIT by about US 12 million PA or almost US 1.6 million to ELK.

9) Elk have identified some electrical reconfiguration at Aneth which are cheap to perform and will save $ 1 million PA

Cheers

Dan