Ann: Corporate Presentation - Roadmap to 100 mmbbls and Beyond, page-4

Some comments:

1. Elk projects a profit of $40 to $45 per barrel from Grieve based on (GUESS WHAT??) a WTI price of $60 per barrel. Again, I hate to keep bringing up the point, but I really, really doubt that Elk will sell the oil from Grieve at the equivalent of the WTI oil price per barrel. LOE is forecast at $19 to $20 per barrel with zero capex for the project..............

2. They forecast a EBITDA of US$50 million for the year. Again, the figure is meaningless as actual cash is the only really important figure. How much cash they have after paying everything is the only number that matters.

3. They still have Madden production in the presentation (Slide 12). Based on the terms of the Preferred Stocks they get zero earnings from Madden while the Preferred Series B is outstanding.

4. Production life of 26 years is shown in the "Investment Proposition" slide. The calculation in the 'fine print' is using average 2018 production forecast divided by total reserves. IMO this would be ok, but the entire presentation is shouting that Elk's production is going to ramp up over the next few years. IMO very misleading as the Elk production is going to supposedly almost double.............

5. Elk's production is 9319 BOED comprising 59% oil (Financial Snapshot) and the projection is for a profit of US$25 to $35 per barrel at a WTI price (There you go again!!) of $US60 per barrel (Slide 4). This profit margin accounts for royalties and production taxes, but I'm wondering what other costs and expenses have been included....

Other posts and reports indicate that the interest expense to Elk is over US$20 million a year. Using a production of say 2 million barrels per day of oil and allocating 60% of the interest expense to that to reflect the % of oil production for the company, Elk is paying around $US6 per barrel just in interest costs alone per barrel produced.

6. Elk has several slides pointing out that it sells at a discounted valuation to its various peers. IMO this is justified given the debt structure of the company, shareholder dilution to date, and the lack of any data on Grieve production to date.

Furthermore, the Aneth contingency payments are not addressed at all in the presentation. That is a potential US$35 million payment still hanging over the company.