Operator of Aneth CO2 EOR project

Elk Petroleum is to acquire a 63% operated interest in the Aneth Rocky Mountain CO2 EOR project, transforming the company into one of the largest producers on the ASX. Management forecasts 2018 net production of 11,000boe/d. At US$160m, the deal is priced at a material discount to management’s estimates of 1P (NPV10) at US$288m, with the consideration to be funded through a combination of new equity and debt. An equity placement to raise A$27.5m was priced at A$0.062 (a 22% discount to last close and 10% below the six-month trading average), with the balance funded through a US$98m debt facility from Riverstone Credit Partners and institutional lenders and up to US$55m in preferred equity provided by the AB Energy Opportunity Fund.