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1 Elk Petroleum Ltd. ABN Elk Petroleum Ltd ABN July 2013 GRIEVE UPDATE by DENBURY at the 7th ANNUAL CO 2 CONFERENCE Elk Petroleum Ltd (ASX Code: ELK) wishes to advise that Denbury Resources provided the attached presentation at the 7 th Annual Wyoming CO 2 Conference on Thursday 12 th July The presentation was an update of the work carried out at the Grieve field by Denbury as operator of a joint venture in which Elk holds a 35% working interest and Denbury the remaining interest. The presentation provided a recap on Denbury s CO 2 enhanced oil recovery (EOR) operations in the USA and their recent focus on new CO 2 EOR projects in the Rocky Mountain region and specifically the work that has been undertaken at Grieve over the past year. For further information please contact: Scott Hornafius, CEO OR Elk Petroleum Investor Relations Phone: Phone: ir@elkpet.com ABOUT ELK PETROLEUM Elk Petroleum Limited ABN (ASX: ELK) is an oil and gas producer and developer 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 established enhanced oil recovery (EOR) technologies to mature oil fields. This strategy significantly de-risks the process of finding and exploiting oil field reserves. Leveraging proven EOR technology and experience, Elk is currently developing two mature oil fields in Wyoming and is pursuing other opportunities that will benefit from the application of EOR technologies. For more information on Elk, see Elk s most recent Investor Presentation which was released to the ASX on 29 May 2013, and which is also available on Elk s website

2 Grieve Development Update July 2013 Kristen Barrett, Facilities Engineer

3 Outline Click to edit Master title style Denbury Wyoming Operations Overview Grieve Field Field Basics Field History Construction Update Grieve Challenges Summary 2

4 Wyoming Click to edit Operations Master title style DRI currently employs over 70 people in Wyoming Wyoming EOR Operations Grieve Hartzog Draw (future) CO2 Sources Shute Creek (XOM operated) Lost Cabin (COP operated) Riley Ridge (DRI operated - future) 3

5 Our Two CO 2 EOR Target Areas: Up to 10 Billion Barrels Recoverable with CO 2 EOR Click to edit Master title style Denbury Rocky Mountain Region 331 Million 3P CO 2 EOR Barrels (2) MT ND Estimated 1.3 to 3.2 Billion Barrels Recoverable in Rocky Mountain Region (1) ID Greencore Pipeline Lost Cabin SD WY Existing Denbury CO 2 Pipelines Denbury owned Fields With CO 2 EOR Potential Existing or Proposed CO 2 Source Owned or Contracted Other CO 2 Sources Denbury Gulf Coast Region 587 Million 3P CO 2 EOR Barrels (2) TX Green Pipeline Delta Pipeline Jackson Sonat MS Dome Pipeline LA MS Free State Pipeline (1) Source: DOE 2005 and 2006 reports. (2) 3P tertiary oil reserve estimates based on year-end 12/31/12 SEC proved reserves, based on a variety of recovery factors, includes CCA acquisition that closed on 3/27/13. Estimated 3.4 to 7.5 Billion Barrels Recoverable in Gulf Coast Region (1) 4

6 Field Click Location to edit Master title style 6

7 Basic Click to Info edit Grieve Master Field title style Zone of Interest Muddy Sandstone Highly permeable sandstone Average 220 md Some areas possibly as high as 2 Darcies Reservoir thickness greater than 80 in some areas Thick shales provide top, bottom, and lateral seals 7

8 Structure Click to edit Map Master title style 8

9 Structure Click to edit Map Master title style 9

10 History Click of edit Grieve Master Field title style 1954 Field discovered by Forest Oil Corporation Gas injection for pressure maintenance Gas cap blow-down Additional production wells drilled in gas cap 2011 Denbury partnered with Elk Petroleum Corp 2012 Existing equipment cleared off site and construction commenced on injection facilities st CO2 injection (Q1 2013) 10

11 Future Click to Work edit Master title style Increase reservoir pressure from 500 psi 3000 psi Optimize field development plan Construct production portion of test site and main recycle facility Complete flowline work and well work Bring electrical power to the site (existing power is not sufficient) 11

12 CO2 Click Flooding to edit Master Basics title style What are the components of a CO2 flood? 1. CO2 Capture 2. CO2 Transport 3. CO2 Enhanced Oil Recovery o Well work o Facilities 12

13 Facility Click to Processes edit Master title style Test Site Recycle Facility Free Water Knock-Out Oil & CO2 CO2 CO2 Compression Test Separator Oil/Gas/Water Separator Header Manifold Oil Treatment Water Storage CO2, Oil, & Water CO2 Reservoir Purchased CO2 13

14 Grieve Construction Activity

15 Before Click to Construction edit Master title style 15

16 Click Before to Construction edit Master title style 16

17 Before Click to Construction edit Master title style 17

18 Click Before to Construction edit Master title style 18

19 During Click to Construction edit Master title style Environmentally Friendly Minimize disturbance: Re-use land that has already been disturbed Filed an Environmental Assessment (EA) to Federal Government NEPA National Environmental Policy Act FONSI Finding of No Significant Impact o Use existing ROWs o Follow existing roadways with new pipelines o Build facilities on existing sites 19

20 During Click to Construction edit Master title style 20

21 During Click to Construction edit Master title style 21

22 During Click to Construction edit Master title style 22

23 During Click to Construction edit Master title style 23

24 During Click to Construction edit Master title style Pipeline right-of-ways are inspected on a regular basis 24

25 During Click to Construction edit Master title style Field Production and Injection Pipeline Details Materials: Zap-lok pipe 25

26 During Click to Construction edit Master title style 26

27 During Click to Construction edit Master title style 27

28 During Construction - Pipeline Internal Coating Click to edit Master title style Field Production and Injection Pipeline Details Pressure: Can operate at up to 3200 psi Pressure tested before put into operation to 1.25 times the maximum allowable working pressure Internal corrosion resistance: All pipe is internally coated 28

29 During Construction Click to edit Master title style Pipeline External Coating (FBE) Field Production and Injection Pipeline Details External corrosion resistance: All pipe is externally coated with Fusion Bonded Epoxy (FBE) Coating 29

30 During Click to Construction edit Master title style 30

31 During Click to Construction edit Master title style 31

32 During Click to Construction edit Master title style 32

33 During Click to Construction edit Master title style 33

34 During Click to Construction edit Master title style 34

35 Post Click Construction to edit Master title Test style Site 35

36 Post Click Construction to edit Master title Test style Site 36

37 Post Click Construction to edit Master title Test style Site 37

38 Post Click Construction to edit Master title Test style Site Air Quality Alarms Normal conditions = six air changes per hour If air quality alarm is activated, ventilation system stays on until alarm is cleared Audible Alarm Visual Alarms Red = High Methane Blue = Low O2 Orange = High H2S White = operational alarm (not air quality) 38

39 Click Post Construction to edit Master title Test style Site 39

40 Post Click Construction to edit Master title Test style Site 40

41 Post Click Construction to edit Master title Test style Site 41

42 Grieve Click to Facility edit Master Optimization title style Studies Questions for future development: Corrosion inhibition chemicals vs. internally coated pipe/equipment Dehydrated compression vs. standard compression 42

43 Water Content Increasing Water Click to Content edit Master of CO2 title vs. style Methane Pressure Increasing 43

44 Grieve Click to Facility edit Master Optimization title style Studies Questions for future development: Corrosion inhibition chemicals vs. internally coated pipe/equipment Dehydrated compression vs. standard compression Plant automation vs. staffing Pre-fabricated tanks vs. on-site build-out Skidded equipment vs. concrete foundations Downhole pressure vs. surface compression Minimizing steel usage within facilities Contractor recommendations 44

45 Grieve Challenges

46 Grieve Click to Challenges edit Master title style Winter weather 46

47 Wind Speed, mph Grieve Click to Challenges edit Master title Winter style Weather 90 Grieve Wind Speed History Hurricane Category Tropical Storm Avg Wind Speed Max Sustained Winds Max Gust Gulf Coast Average Wind Speeds 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 47

48 Temperature, ⁰F Grieve Click to Challenges edit Master title Winter style Weather 100 Grieve Temperature History Gulf Coast Average Temperatures Avg Temp Min Temp 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

49 Grieve Click to Challenges edit Master title Winter style Weather Fog: 25 days/year Rain: 55 days/year Thunder: 22 days/year Snow: 48 days/year Average snow depth: 2.6 inches 49

50 Grieve Click to Challenges edit Master title style Winter weather Sage Grouse Grieve Field is in Natrona Core Area New construction prohibited from 3/15-7/1 Raptors - birds of prey 50

51 Summary Click to edit Master title style Acquired Grieve in 2011 High permeability sandstone Completed: Injection portion of test site Moving forward: increase reservoir pressure and install production facilities Challenges: winter weather, sage grouse restrictions 51

52 Kristen Barrett Facilities Engineer North Region