That interview was really nothing about ELK, just pretty well general E&P questions.
The jury is still out on Grieve but even though ELK put on a lot more debt with the Aneth purchase, IMO we are still better of than we would be if we had less debt and no Aneth.
If Grieve is a truely a flop and it was the only asset ELK had apart from Madden, then we would be truly up the creek without a paddle because the US$58 million debt used to fund the final stage to complete the development would not be repaid period.
At least with Aneth on the books, and the fact that the POO has risen to$65+, the NPV of Aneth has risen substantially to approx US 360+ million. This is significant because which will give some headroom for the banks in the refinance exercise.
Elk needed to hold Aneth for 12 months before the banks would entertain an reserve based facility according to Brad. They apparently should be able to get ~60% of the NPV of Aneth for the refinance on significantly better terms than now. They should even have capacity left over to fund further development at Aneth without recourse to equity. A corporate bond may also be in the mix which they may use to refinance the convertible notes.
Until the T&C of the refinance and the product mix associated with it are disclosed is difficult to say any more than that.
Cheers
Dan
ELK Price at posting:
7.3¢ Sentiment: Buy Disclosure: Held
