ABN 38 112 566 499

3 June 2016

LAUNCH OF A$30.76M ENTITLEMENT OFFER

• Elk launches partially underwritten 1 for 1 non-renounceable pro-rata Entitlement Offer to raise up to A$30.76 million

• Offer price of A$0.075 per new share

• Main use of proceeds to fund direct Grieve Project capex contribution and corporate working capital

• Successful completion of Entitlement Offer in combination with debt financing proposed to fully fund completion of Grieve Project

Overview and Purpose

Elk Petroleum Ltd (ASX: ELK) (Elk or the Company) is pleased to announce a partially underwritten non-renounceable pro-rata entitlement offer (Entitlement Offer) to eligible shareholders of one new share for every one share held on the record date at an offer price of A$0.075 per new share.

Elk has reached agreement on definitive contracts with Denbury Resources Inc. (Denbury) in relationto the restructuring of the Grieve CO2 EnhancedOil Recovery Project (Grieve Project). The restructuring remains conditional upon execution of those definitive transaction documents, and the completion of Elk's financing initiatives to fund the US$55m in capital costs under the fixed price contract proposed to be agreed with Denbury, the operator of the Grieve Project.

On 1 June 2016, Elk announced that it has executed a mandate letter with the credit arm of a premier global asset management firm to provide a senior loan facility of US$55m for direct Grieve Project development funding plus additional facility amounts to cover hedging and other associated Grieve Project restructuring transaction costs (subject to, among other things, final approval from that financier). Once all necessary financier approvals are received, and detailed documents executed, this funding will be directly applied to fund the capital requirements for the Grieve Project (and associated costs).

The Entitlement Offer announced today represents the final financing initiative for Elk in relation to the Grieve Project. Upon successful completion of the Entitlement Offer, and execution of binding loan documents, Elk will be fully funded through to first oil, with adequate working capital and having covered all costs associated with the Denbury transaction and financing activities.

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Elk Managing Director, Brad Lingo, commented "The launch of the Entitlement Offer today represents the final major plank in Elk's strategy to deliver the necessary platform for Elk's transformation into an oil production company. The successful completion of this offer and the debt financing will see Elk fully funded and well placed to create shareholder value from the Grieve Project and the other pipeline of projects and initiatives within the Company."

Entitlement Offer

The Entitlement Offer is available to eligible shareholders with registered addresses in the offering jurisdictions on the basis of one New Share for every Share held at the Record Date (terms as defined in the Offer Booklet). Eligible shareholders will be invited to participate in the Entitlement Offer, which is scheduled to be open from 9 June 2016 to 5.00 pm (Sydney time) on 21 June 2016. Eligible shareholders may elect to take up all, none or some of their entitlements, and may apply to take up New Shares in excess of their entitlements via a Shortfall Facility.

Taylor Collison has been appointed to underwrite part of the Entitlement Offer as described in the Offer Booklet for the Entitlement Offer. Elk's largest shareholder, Republic Investment Management Pte. Ltd., has agreed to support the Entitlement Offer by sub-underwriting part of Taylor Collison's underwriting obligation.

Additional Information

Elk has released additional information to the ASX today in the form of an Offer Booklet containing an Entitlement Offer Presentation, among other documents. The Offer Booklet will be mailed to eligible shareholders. Refer to the Offer Booklet for key dates regarding the Entitlement Offer.

Miro Advisors is acting as financial advisor to Elk, and Norton Rose Fulbright is acting as legal advisor.

For further information, please contact:

Investor:

Brad Lingo

Managing Director/CEO P: +61 2 9093 5400

E: [email protected]

Media:

Rebecca Lawson

Media and Capital Partners P: +61 433 216 269

E: [email protected]

ABOUT ELK PETROLEUM

Elk Petroleum Limited (ASX: 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 USA, the Rocky Mountains. Listed on the ASX in 2005, 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. Leveraging proven EOR technology and Company expertise and experience, Elk is currently developingthe Grieve oil field in Wyoming (Elk - 35% WI) and is planning for a CO2-basedEOR project at the Singleton oil field in Nebraska (Elk - 100% WI & operator).