Elk Petroleum – Uniquely Positioned for Low Cost Oil
Elk Petroleum has renewed its commitment to its Grieve enhanced oil recovery project in Wyoming after having nearly given up on the troublesome venture in the past. Enhanced oil recovery processes are superior to conventional recovery techniques, in many ways. Low operating costs offset potentially high pre-production capital requirements and sometimes lengthy gestation periods. Oil recovery rates are much higher than with conventional techniques. Unfortunately, historical management inexperience and poor market conditions will leave the Grieve property unable to cover the full cost of its historical capital. A modest return on incremental capital may be possible from a restructured joint venture. Lessons having been learned, Elk’s capacity to generate future competitive investment returns and validate the current market value of the company will depend on it successfully managing a growing number of post-Grieve development options. A PortfolioDirect report dated 1 June 2016 rated the company ‘3’ on the five point rating scale where a ‘5’ is the highest rating on the risk adjusted quality scale. A relatively high score for asset quality balanced a mid-range risk rating.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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