Nagarjuna,Would love it if ELK managed to achieve $500m as I...

Nagarjuna,

Would love it if ELK managed to achieve $500m as I would be able to retire but your explanation IMO fails to take into consideration the following:

1) 5000BPD in 2017 is most likely the peak of production and if you look at historical EOR fields, you will find that production drops off pretty quickly once a peak has been reached. IMO to value ELK based on peak production is unrealistic;

2) $120m EBITA appears overly excessive. From the Strachan Research report released last year, they stated:

"Peak production rates ranging between 4000 and 12000 BOPD will deliver ELK an EBITDA between US$29m and US$67m pa for those PEAK YEARS"

Based on their assessment, even at 12000 BOPD, EBITDA would only be US$67m so i'm not sure how you arrived at $120m EBITA based on 5000 BOPD.

Using you 4X Multiple of EBITDA, and Strachan's EBITDA numbers, 5000 BOPD would more likely result in a valuation for ELK of $145m (EBITDA of $36.25m x 4) which IMO is more realistic and achievable. This would equate to a share price of around $0.95 which would still be more than 4x the current share price of $0.18.