The final payment completes a total acquisition price of US$17.5 million to acquire the interest in the Madden Gas Field, the Madden Deep Unit Gas Field and the Lost Cabin Gas Plant.
Current net production to ELK stands at 25.4 million cubic feet per day or 4,240 barrels of oil equivalent per day.
Forecast average production for the next five years based on consensus gas price forecasts is set to generate net operating cash flow of US$6 million per annum to ELK.
ELK financed its final US$5.5 million payment through a US$6 million credit facility with CrossFirst Bank at an annual interest rate of U.S. prime rate plus 2%.
Earlier this year, ELK closed the acquisition of a 14% interest in the Madden Gas Field, Madden Deep Unit Gas Field and Lost Cabin Gas Plant in Wyoming, U.S.
The acquisition of the interest in the producing assets is effective as of 1 January 2017 meaning that ELK is now a producer.
Through the acquisition, ELK has secured quality, long-life reserves that materially increase not only the quantity but the quality of the company’s reserves base.
ELK has no further payment obligations to Freeport-McMoRan in relation to its Madden interest.
Gas price hedging in place
ELK has implemented gas price hedging for 80% of the next twelve months forecast Madden production at an average price of US$2.93 per million British thermal units.
It has also hedged 40% of August 2018- July 2019 forecast production at an average price of US$2.82 per million British thermal units.
ELK is an oil and gas company specialising in enhanced oil recovery (EOR), with assets located in one of the richest onshore oil regions of the U.S, the Rocky Mountains.
ELK’s strategy is focused on applying proven EOR technologies to mature oil fields, which significantly de-risks the company’s strategy of finding and exploiting oil field reserves.