"Any cash Elk pay out to the counter party to settle the hedge is paid from the increase Elk gets for selling the hedged oil on the market at the spot price, so the net effect is the same whether oil is at $62 or $120."
No, not really.
It all depends on the type and grade of oil being sold as well as any discounts for transport.
If the hedge is established on an oil grade or type that goes up in price , but the oil being produced suffers from grade, type or transport discount the company will lose more.
"Any cash Elk pay out to the counter party to settle the hedge...
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