Hi binbin Went to the AGM today.... the mood certainly was less...

Hi binbin

Went to the AGM today.... the mood certainly was less jovial and less upbeat than last year... the Aneth honeymoon was, the "we are going to conquer the EOR in the Rockies" talk was gone and Brad was much more circumspect in what he had to say. They still talked about record this and record that, but the shareholders pretty well saw through those comments. A couple of statements from the floor rather than questions were along the lines of "bugger record production and reserves if they are not making money, you need to focus on that, and no more equity raises'

Both Brad and Neal admitted the company has heard " loud and clear" what the market is saying regarding equity raises. They reinforced that their current focus is tidying up the balance sheet ASAP, BRAD and Alex were actually leaving early afternoon to fly to the US to spend about a week working to progress the refinance. At the end of the meeting Brad basically wheeled his suitcase out of there and straight to the airport. They have a number of term sheets in progress with the aim to get the best deal possible in a competitive process.

CBmud, ( pretty sure it was him, Hi CBmud) asked his technical questions regarding Grieve... still non commercial ATM but ramped up to 100 BOPD with 7000 barrels in the pipe. Sales should start in early December. They are confident to ramp up will continue , as are the reserve certifiers at a rate where once the commercial threshold is reached full production of ~3200 BOPD will be achieved 13 months later. When the threshold will be reached they didn't say, but the good news it that both Grieve 7 and 9 are producing oil and CO2 only, and the field is producing 3400 MCF CO2 per day... in other words, the field is slowly starting to see a CO2 response.

Brad tried to talk down the importance of Grieve in the scheme of things.... he said it was material, but it's total reserves to Elk are produced by Aneth in 2 years. Having said that, he admitted that Grieve had an impact on the refinance, but would not stop it.

Still crapping on about dividends, that they are a divvy payer through the preference shares to the tune of $10 million per year.. but common divvies will not be paid out until the preferred are taken out, redeemed etc... however, the preferred will not be part of the refinance.

The refinance is the major item on the immediate horizon, so in that respect,I tried to draw Brad out on the desired, expected hoped for cashflow benefit ELK would get through the refinance without giving any detail on the how it would be achieved ....thought that was a pretty fair question, basically, " what do you expect to achieve, obviously can't tell us how, or who " he waffled through an answer which didn't say anything... I told him" thanks, but I know as much now as I did before I asked the question"

For me the main takeout of this year is they know and admit their credibility has taken a hit, especially over Grieve. The bridging finance used to get a hold of Aneth is toxic and they are in the process of refinancing which at this stage should be completed late 2018, early 2019. Further expansion is on hold until the balance sheet is stabilised and debt is significantly reduced, which will be achieved without equity ... expansion of Aneth production will occur concurrently...taking out the preferred equity is then next on the agenda but no timeline was given. They still want to get more of their hands on the assets they own , including Grieve.

Cheers

Dan