Q1

ELK PETROLEUM

SEPTEMBER 2015

• CO injection averaging in excess of 50 mmscf/day

HIGHLIGHTS

GRIEVE CO2 EOR PROJECT DEVELOPMENT

• Approximately 70% of capital expenditures incurred

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• Field repressuring in line with models to reach estimated target pressure in Q1 CY 2017

ELK APPOINTS BRAD LINGO AS MANAGING DIRECTOR AND CHIEF EXECUTIVE

• Becomes a top 10 shareholder with substantial on market purchases post-appointment

• Subject to shareholder approval, Mr. Lingo to invest further $250,000 via equity placement

NEGOTIATIONS CONTINUE FOR A POTENTIAL TRANSACTION INVOLVING THE PURCHASE OF ALL OR PART OF DENBURY'S INTEREST IN GRIEVE PROJECT

• Miro Advisors appointed to assist with acquisition and financing

• Detailed due diligence and discussions on-going

• Agreement reached to extend negotiation period to 1 December 2015

SIGNIFICANT INCREASE IN COMPANY SHARE PRICE SETTING NEW 52-WEEK HIGH OF A$0.125/SHARE

Water truck at substation site

The September 2015 quarter has seen a repositioning of Elk Petroleum (ASX: ELK) ('Elk' or the 'Company'), marked by key events including the appointment of a new Managing Director and Chief Executive, and the assessment of an opportunity to re-arrange ownership and financing of

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the Grieve CO

Enhanced Oil Recovery (EOR) Project.

Under new leadership and opening of opportunities, Elk has renewed its strategy to unlock shareholder value from its portfolio of projects, commencing with the estimated Grieve Project target pressure remaining on target for early CY2017.

GRIEVE CO2 EOR PROJECT DEVELOPMENT

At the end of the reporting period, development of

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Construction of the major facilities (such as associated CO

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the Grieve CO

EOR Project is progressing well with

supply line, power supply and site works and production

approximately 70% of the initial capital expenditures incurred. To date, joint venture capital expenditures in the

manifold) at the Grieve Oil Field has been completed. Completion of construction of the central oil production

Project is over US$70 million. It is currently estimated that

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and CO

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recovery, oil processing and CO

recompression

the remaining joint venture project capital expenditures to first oil will be approximately US$45 million, of which Elk's

facilities currently remains outstanding.

current share is approximately US$15 million.

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The CO

injection into the Grieve oil reservoir is ongoing.

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At the end of the quarter, approximately 20 BCF of CO

has

In addition to these joint venture expenditures, Denbury

been injected into the Grieve Field and as of the date of this

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would construct the central oil production and CO

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report CO

is continuing to be injected into the reservoir at a

recompression facility. Under the current joint venture arrangements, this facility is to be owned by Denbury as operator of the Project and the cost of this facility is to be borne by Denbury.

rate of 1.5 BCF per month.

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Grieve CO

recompression facility Typical joint of field piping

3400

3200

3000

2800

First Oil March 2017 BHP = 3180

BHP is at Free Flowing Condition

2600

Reservoir Pressure (psig)

2400

2200

2000

MMP = 2256 Psig

March 2016

1800

1600

1400

1200

1000

800

600

400

200

0

First Oil March 2017 Well #20

Well #22

Well #11

Well #5

Well #10

Well #18

Well #12 Well #6A Well #30

Last Survey Date October 7, 2015

Grieve Pressure Surveys vs Simulated Pressure Response

Based on the latest schedules provided by Denbury as operator of the Project, Denbury estimates achieving target pressure

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at the Grieve CO

EOR Project in Q1 CY2017.

POTENTIAL ACQUISITION OF GRIEVE PROJECT

During the reporting period, a unique opportunity emerged for the Company to increase its ownership interest in the

and Denbury agreed to withdraw the lawsuit without prejudice dismissing Elk's claims and Denbury's counterclaims.

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Grieve CO

EOR Project by acquiring all or part of the Joint

Venture interest held in by the operator, Denbury Onshore LLC (Denbury), a subsidiary of NYSE-listed Denbury Resources Inc. As previously reported, in the prior quarter the Company instituted a civil lawsuit in the Wyoming Federal Court asserting several breaches of the agreements between the Company and Denbury over the development

Under the agreement, Elk and Denbury agreed to attempt good faith negotiations for the sale of all of Denbury's 65% interest in Grieve. The negotiation period will last until 1 November 2015 or until viable and productive negotiations cease. Elk considers that good progress is being made as part of these negotiations. As such, Denbury and Elk have

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of the Grieve CO

EOR Project.

agreed to extend the negotiation period until 1 December 2015 to allow the parties to continue to negotiate for a

During the Quarter, in an attempt to resolve these disputes Elk and Denbury entered into an agreement pursuant to which Elk

potential transaction involving all or a part of Denbury's interest in the Grieve Unit.

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Grieve CO

EOR Project, Wyoming