Hopefully this is the start of the re rate with what looks like institutional accumulation.
IMO , even at these prices ELK is a bargain as the recent+US $10 gain in the oil price has added over US$ 200 million to the Aneth field NAV 10. ( if WTI stays around $60 ). When the deal was announced the field NAV10 was $288 million at WTI $ 50 with the then forward strip. Each US$ rise in WTI increases the Aneth value by US 20 million.
Unfortunately with the hedging that was associated the the Aneth deal of around 4000 BOPD , ELK will not benefit as much from the oil price gain, however, the large increase in NAV will significantly enhance its ability to refinance ( with the associated US 25 million per annum cashflow benefit)
Having said that, when Grieve comes on line in the next 2 or so months, Elk should be receiving spot oil ( minus some differential ) for half its oil production.
Cheers
Dan
ELK Price at posting:
8.8¢ Sentiment: Buy Disclosure: Held
