Singleton Unit

The Singleton CO2 EOR Project is currently on care and maintenance. The Company will continue to evaluate the viability of the redevelopment of the Singleton Oil Field through CO2 enhanced oil recovery.

The main focus is on executing an EOR Project in the J1 and J2 sands of the Muddy Formation – the same formation and sands that are being redeveloped at the company’s Grieve Oil Field CO2 EOR Project in Wyoming. The acquisition during the year of the Singleton South properties from Devon Energy to the south of the Singleton Oil Field present significant synergies for the development of the overall Singleton Oil Field and the EOR Project.

The primary focus of Devon’s Opis 1P and 1H wells, the Mississippi Limestone had very high water cut oil in this primary objective. In order to manage the produced water, Devon was required to truck a significant volume of water to a remote disposal location. At current oil prices the cost of water disposal to a remote location via a trucking operation at an estimated cost of US$2.50 barrel of water made continuing production uneconomic.

The produced water from the Opis from the Mississippi Limestone can provide a water production source necessary for repressuring the Singleton Unit Oil Field as the initial phase of the EOR Project. The cost of this solution is estimated to be approximately USD 0.15 per barrel of water. The presence of a much larger unexploited oil pool in the southern quadrant of the Singleton Unit and across the Singleton South Project area is expected to provide additional initial oil production in the greater Singleton Oil Field redevelopment project area while the EOR flooding project is progressing.

During the year Elk has continued with water injection in the Singleton Unit at a modest rate of 4800 barrels per month at the W-10 injection well. Subsequent to the year we are currently re-entering the W-4 injection well to check its integrity for injection restart. The company will be making a reservoir pressure measurement in the Opis-1 well after perforating the J3 sand at the end of August to ascertain if the J3 sand in the area to the south of the Singleton Unit is in pressure communication with the J1 and J2 sands in the Singleton Unit. This data will help us better devise an integrated field re-development plan that would optimise the use of EOR techniques available to us.

Throughout the year we have continued with negotiations with interested parties who have pipeline right of way rights to investigate the construction of a CO2 pipeline from corn ethanol plants in eastern Nebraska to our oil fields in the DJ basin for EOR purposes.

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