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post Posted: Jul 6 2008, 06:45 AM
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ELK is Expected to sequester 9.5mil tonnes of co2 at Greive.

CO2 currently trades at just under $5aus a ton in the US...however in Europe were they have signed the Kyoto protocol it trades around $45aus a ton...

"Last month, New Carbon Finance, a research firm, predicted that the U.S. carbon market could be valued at $1 trillion by 2020 if Congress passes a federal “cap-and-trade” system after the next presidential election"

If the US was to pass a cap and trade then based on EU prices we could be looking at upwards of $400mil in carbon credits for the Muddy project...any success with the upper sands would most likely see them undergo co2 flood at a later date as well....Why buy into a co2 company when you can have the same bussiness for free with ELK...COZ a co2 company listed on the Aus stock Exchange has a fully diluted market cap of $ it is serious bussiness...


Carbon prices in Europe highest in two years

09.06.2008 @ 09:27 CET

Carbon prices in the European Union have hit their highest level in two years on the back of spiralling oil prices.

The benchmark EU carbon contract for December delivery of EU allowances climbed to €27.54 on the European Climate Exchange – Europe's bourse for carbon credits - on Friday (6 June), according to Carbon Positive, a carbon offset management company.

Carbon prices are their highest in 25 months (Photo:
Comment article
The price is the highest carbon allowances have seen in 25 months, having risen some 40 percent in the last four months alone.

The rise is attributed by traders to the skyrocketing price for oil, which reached $139 a barrel before easing slightly Friday – jumping $10.75 in one day – the biggest single on-day price increase on record. The increase came atop a five percent rise the day before – totalling a $16-dollar hike in two days.

As oil prices escalate, power companies switch over to coal, which is cheaper but dirtier, requiring additional carbon allowances and pushing up the price of carbon.

The prices are a return to form for the European carbon market following the collapse of carbon prices after the over-allocation of credits in the first phase of the EU emissions trading scheme.

Carbon prices also dropped to €19 in February of this year on fears that a declining global economy would produce diminished demand for energy.

However, despite continued economic uncertainty, climbing oil prices have wiped out the effect of these worries on carbon prices.

Parallel to the price for EU allowances (EUAs), certified emissions reductions (CERs) have also risen steadily in the last month, climbing above €20 for the first time and closing at €20.30 on Friday.

CERs are carbon offset credits – issued under the Kyoto Protocol's Clean Development Mechanism (CDM) – whereby a reduction of carbon emissions through projects in developing countries – such as the planting of trees or the clean-up of refrigerator factories - can be used to offset emissions in industrialised countries. One CER is equivalent to a tonne of CO2.

European buyers are the major influence on the market for CERs, which can be used as offsets within the ETS. Rising oil prices are having an effect on the price of CERs as well, along with expectations that the number CDM projects in China will drop following the earthquake in Sichuan province.

The tightening of the issuance of CERs by the CDM auditors in the wake of the exposure of a number of projects of questionable environmental benefit is also pushing the price up.

Monday, March 17, 2008

Carbon Trading Exchanges – New Players in the U.S. and International Markets
Submitted by: Megan Good, Climate Change Research Team
This may be the year when carbon trading enters center stage. Growing interest in emissions trading is emerging not just in Europe, but also in the United States and globally. This still young market could see a shake-up as experienced exchange operators, such as Climate Exchange plc and Nord Pool, are challenged by a host of newcomers.

Today, NYMEX Holdings, in partnership with several investment banks and brokers, launched carbon derivatives trading on a new “Green Exchange” in New York. This is the first real challenge to U.S.-based Chicago Climate Exchange, owned by Climate Exchange plc, and is bound to spark new interest in potential growth for the U.S. carbon market. Last month, New Carbon Finance, a research firm, predicted that the U.S. carbon market could be valued at $1 trillion by 2020 if Congress passes a federal “cap-and-trade” system after the next presidential election.

Emissions trading markets allow polluting companies in countries regulated by the Kyoto Protocol to pay others to cut greenhouse gas (GHG) emissions on their behalf to meet emissions reduction targets. Companies in unregulated markets can also make voluntary commitments to reduce their emissions and trade on exchanges such as the Chicago Climate Exchange.

As pressure mounts for negotiators to agree on a post-2012 successor agreement to the Kyoto Protocol, exchange operators and banks are quickly seizing new opportunities. The value of global carbon markets grew by 80 percent from 2006 to 2007, reaching $60 billion in 2007, according to consulting group Point Carbon. This market is expected to continue to grow rapidly, and extend from Europe to the United States.

Several factors are driving this trend. For one, the likely presidential nominees in each party are backers of cap-and-trade legislation. After Sen. John McCain emerged as the Republican candidate for president on the Feb. 5 “Super Tuesday” primary, the price of carbon dioxide traded on the Chicago Climate Exchange jumped from $2.70 for $4.50 per ton. Like his Democratic counterpart, Sens. Clinton and Obama, McCain has pledged to make passage of climate change legislation a hallmark of his presidency. In addition, this bolsters the chance that the United States will be an active participant in the “Bali Roadmap” for a new global climate agreement, and open the door to new carbon trading markets at home and abroad.

Europe vs. the United States
Even without an international post-2012 agreement, Europe is committed to moving ahead on its own. In January, the European Commission announced its proposal for emissions reduction targets to 2020 as well as an update to the European Union Emissions Trading Scheme (EU-ETS). Given that carbon prices for the first phase of trading (2005-2007) collapsed in 2006 due to an oversupply of emissions allowances to affected entities, Europe is now focused on tightening targets, reducing the free allocation of permits and expanding coverage to new industries, including airlines, in the next round (2008 2012), which coincides with the first binding limits under the Kyoto Protocol. The Commission’s proposal still needs approval from national governments and the European Parliament, and extensive debate is likely to continue.

Meanwhile, as the United States awaits adoption of its own federal climate legislation, the focus is on voluntary markets, including the Chicago Climate Exchange and a market in Renewable Energy Certificates (RECs) that is meant to spur alternative energy investment. Twenty-seven states plus the District of Columbia have Renewable Portfolio Standards in place that drive the REC market. Additionally, 10 states in the Northeast and Mid-Atlantic region have agreed to a cap-and-trade program to control power generation emissions starting in 2009 under the Regional Greenhouse Gas Initiative (RGGI). And finally, the Chicago Climate Exchange also announced plans in May 2007 to launch the California Climate Exchange, which will support that state’s mandatory reductions under the California Global Warming Solutions Act, or AB32. At the same time, several states, including participants from Canada and Mexico, have moved towards standardized corporate emissions reporting through The Climate Registry, a non-profit agency that aims to provide transparency in emissions accounting.

This range of trading options has created a wide variance in carbon prices. A ton of carbon dioxide traded voluntarily on the Chicago Climate Exchange now trades for just over $5, for example, while an equivalent contract on the European Climate Exchange, also managed by parent company Climate Exchange plc, fetches around $35. The main reason for the disparity is that the European trades count toward emissions reductions under the Kyoto Protocol, whereas the U.S. trades do not.

But this all could change after this fall’s national elections, and several U.S. banks are already preparing for the future. As one the world’s two largest GHG emitters (along with China), the United States is expected to quickly surpass Europe in carbon trades as its key industries become regulated. Banks are eager to step in as intermediaries, and many are buying up carbon credits to sell to industry and national governments later on. Morgan Stanley, for one, has announced plans to commit approximately $3 billion over the next five years to buying carbon credits and developing emissions reduction projects. Several other U.S. and international banks are also building carbon credit portfolios and offering brokerage services for clients, including Barclays plc, Citigroup, Credit Suisse, Deutsche Bank, Merrill Lynch and Morgan Stanley.

Here Come the Exchanges
The most recent trend, however, is for the world’s leading commodities and securities exchanges to carve out a piece of the carbon-trading pie for themselves. These players realize that along with standard carbon credit allowances will come numerous derivative products as carbon begins to trade like any other commodity. The first announcement came in October 2007 when NYSE Euronext said it will join with Caisse des Dépôts, the state-owned French financial institution, to launch BLUENEXT, an international carbon credit exchange. BLUENEXT launched in January 2008 with spot market offerings and aims to add futures contracts in the second quarter of 2008. BLUENEXT is likely to benefit from the global reach of NYSE Euronext, and will probably look to expand to both North America and Asia.

NYMEX Holdings, owner of the New York Mercantile Exchange, followed in December 2007 by teaming up with Morgan Stanley, Credit Suisse, JPMorgan Chase, Merrill Lynch and three other firms to set up The Green Exchange—launched today. Futures contracts are available for trading on the CME Globex electronic trading platform, while options contracts trade on the NYMEX trading floor. Initial contracts will focus on United Nations-approved and voluntary carbon credits, while future offerings could include bio-fuel and reforestation credits. Such liquidity will allow even more investors to take a position in climate change-based markets.

Climate Exchange plc, which owns the main European and U.S. exchanges, says it expected such competition, but also has to be wary of this new competition. NYMEX, for example, will offer energy traders seamless access to oil, gas and carbon trades, as well as its own clearing platform for exchange and over-the-counter (OTC) transactions. This is an important consideration, as the European Climate Exchange is just now offering Certified Emission Reduction (CER) futures through ICE Futures’ platform after a prolonged conflict with clearinghouse LCH Clearnet was settled in late February. Meanwhile, European Energy Exchange is set to launch CER futures trading on March 26.

On the other hand, Climate Exchange has unique experience with voluntary credits, a lead in the U.S. SO2 and NOx markets with the Chicago Climate Futures Exchange (CCFE), and the ability to link regional markets. The firm also plans to start the Climate Spot Exchange (CSX) to capture expected growth in spot trades. Meanwhile, these environmental exchanges may not be able to avoid continuing consolidation among financial exchanges. CME Group, the parent of the Chicago Mercantile Exchange, announced an $11 billion buyout proposal for NYMEX in the last week of January. The companies are expected to vote on a potential merger today.

Developing Markets Also Have a Role to Play
None of this will stop developing countries from also trying to participate in this burgeoning market. India’s largest commodity exchange, Multi Commodity Exchange of India, announced in January that it will offer European Climate Exchange (ECX)-based futures contracts. This will allow local emissions reduction project developers, who generate credits under the Clean Development Mechanism (CDM) of the Kyoto Protocol, to hedge against price risk. For example, if an Indian firm reduces emissions through a landfill methane gas capture project and enters into a futures contract to deliver the resulting carbon credits, the firm can ensure that there is no loss in credit revenues by purchasing European allowance futures contracts.

In fact, with China and India currently dominating the market for CDM project development, it is possible that Asia will emerge as a major carbon trading center. The Hong Kong Stock Exchange has announced plans to partner with an international exchange in emissions trading. New Zealand already has a regulated scheme that mirrors the EU-ETS, and Australia expects to start trading in 2011. Most recently, the Tokyo Stock Exchange and the Tokyo Commodity Exchange have agreed to jointly study the possibility of creating a domestic trading market.

However, it remains to be seen how demand for credits in Asia will grow if many companies there are not faced with emissions caps. Moreover, the European Commission is keen to cut back on developing world credits used for Kyoto compliance so that more utilities and industrial firms shift their technologies at home. Accordingly, many issues still need to be resolved before the future of global emissions trading becomes clear.

What is certain is that these markets, and their growth potential, are ultimately dependant on government regulation. If there is enough continuing support from exchange operators and brokers to spur such market-based solutions to climate change, it may just be the financial sector that acts as the catalyst for a new “green” revolution in our increasingly carbon-constrained world.

US Carbon Prices
EPA projects emissions allowances to cost $25 in
The price of a carbon emission allowance in 2030
would be $25.00 under a cap-and-trade scheme,
cushioned by a $12.00 safety valve, according to
new analysis released by the US Environmental
Protection Agency (EPA).
The EPA on 16 January released analysis of the
Low Carbon Economy Act – a bill proposed last
summer by Democratic Senator Jeff Bingaman and
Republican Senator Arlen Specter – that calls for a
reduction of greenhouse gases to 2006 levels by
2020 and to 1990 levels by 2030.
The bill has drawn early support from large
utilities and labour unions because the inclusion of
a safety valve guarantees some degree of
economic certainty. Critics of a safety valve
content it reduces the certainty of the
environmental impact of the programme.
The “trigger” price for the safety valve starts at
$12.00 when the programme begins in 2012, rising
each year by 5 per cent above inflation.
Companies would contribute a Technology
Accelerator Payment (TAP), which would collect
funds, for research and development of clean
According to the EPA study, if allowance prices are
bound by the TAP level, the price of an allowance
in 2050 – the year by which emissions must decline
60 per cent below current levels – would be
Without the TAP, allowance prices would range
from $57-$61 per tonne of CO2 equivalent (CO2e)
in 2030, and from $149-$162 per tonne of CO2e in
2050, the agency stated.
Cost of US carbon allowances under cap-andtrade
pegged at $77 in 201219
According to Victor Niemeyer, climate change risk
manager at the Electric Power Research Institute,
US utilities could pay US$77 per short ton of
carbon dioxide (CO2) emitted in 2012 if their
greenhouse gas emissions are capped by proposed
Lieberman and Warner legislation.ò

post Posted: Jun 25 2008, 10:55 AM
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SDS production down about 20% to 165bopd.....Greive 12bopd..... good thing that oil prices are so high.....looking at around $1.3 -$1.4 mill in revenue per quarter at that rate.....
Hopefully Ash Creek upper sands will be successful as it would be nice to lift the production back up a bit, as without any reworking SDS production will continue to decline....All good, just takes time......


post Posted: Jun 17 2008, 09:26 PM
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In reply to: chimera on Tuesday 17/06/08 06:00pm

well effectively that is roughly what John did intend as he placed them all alongside each other for comparison purposes ...and yes each company is in a unique set of circumstances...and some have other projecte on the go but ELK will also have other projects as well......note.. that i did mention possible shareprice "once production had kicked in"

PPP.. does indeed have a lot of cash, it also had as of the last quarterly $35mill of liabilities, has nothing of any interest in the way of other projects.....considering how expensive offshore wells are and that only about 10% are successful it may burn most of that cash trying to find another project....

NZO... Kupe project was expected to have around 10mil barrels net to NZO...well if one of the frontier sands were to come in successful and co2 flooding was included in the recovery project, then you have an equivalent for KUPE.....remember that at least 4 wells flow oil to the surface from one or more of these sands.....these sands are also productive in nearby fields...

IPM...suffering from geopolitical risk and lack of potential growth.......

as for 2p being significantly different from 3p...I disagree when it is in reference to a proven field with 50 years production history from 30 wells.....using co2 injection that has been successfully proven for decades....and is only 3p due to the fact that the rules for reporting reserves are out of date.....a recent quarterly newsletter from Ryder scott stated that fact....

the main risk is obtaining the co2....if they are unable to obtain it then there is always the option to produce a large amount of the oil through a solvent flood...they are also looking into a flood of Ash creek which could be good for a significant recovery of oil...and yes these techniques are expensive but so is drilling wildcats in the middle of the ocean with roughly only 1 in 10 proving successful......difference is the majority of old fields will be successful when secondry and tertiary techniques are applied......Shallow gas projects???

"Completely misleading" if you were to learn a bit about the industry ELK are involved in you may see why i am extremely confident that this will be a very rewarding company to be involved with...and where the shareprice may be headed if they are successful..

Said 'Thanks' for this post: macrae  
post Posted: Jun 17 2008, 05:00 PM
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In reply to: chimera on Tuesday 17/06/08 04:54pm

Forgot to add:

there is a big difference between 2P and 3P reserves. If ELK had 2P reserves the SP would be a lot different. Having said that this may be an opportunity in disguise. The future value of ELK depends on successful agreement on CO2. If this can be secured the SP will be massively re-rated as it effectively upgrades the 3P figures into 1P (subject to execution risk and time value of money). I do hold some as I believe this outcome is possible. IMO

post Posted: Jun 17 2008, 04:54 PM
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In reply to: davo22 on Sunday 15/06/08 07:35pm

Your figures are completely misleading and I'm sure, not what John intended.

For example PPP will have close to AUD100m in cash as at end of June. This leaves mere AUD60m as the true net market cap. The resulting figure per 2P reserves is a lot different.

NZO has KUPE and AUD100m worth of PRC shares and notes in their market cap. Hence AUD80m per barrel is not only pointless but utterly wrong.

IPM has no 2P reserves attributed to Turkey gas yet we all know this is where a lot value currently lies within IPM.

I could go on but you get the idea.

Have to agree with though that all of those mentioned appear more or less undervalued, some of them a fair bit!

post Posted: Jun 17 2008, 04:35 PM
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In reply to: davo22 on Sunday 15/06/08 07:35pm


Thanks for the analysis and giving us something to look forward to ($4 a share would do me). Looks like sideways trading for awhile until they come up with the partner. Nice to see the insiders consistently buying. I take it that they have some more info on what the Grieve's report authors really thought of the chances of significant oil recovery. It also indicates that they may be getting closer to identifying the JV partner. I am holding and waiting, still nothing out there with this sort of potential. FG


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post Posted: Jun 15 2008, 07:35 PM
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Numbers from O+G Weekly... their favourite small oil stocks....I have just taken the 2p reserves and market cap to arrive at an attributed market cap per barrel of 2p reserves...

carnarvon = $36
New Zealand = $80
Pan Pacific = $49
Cue = $45
Cooper energy = $111
Incremental = $9.40
Salinas = $17
stuart = $31
average $47 per barrel of oil....

Most of these companys have good production but it can give an idea of where the shareprice may head to when production at greive is up and running...many of them have other projects on the go but Elk looks likely to have a pipeline of projects comparable to them.....

based on the above and assuming a 50/50 jv + sds, a market cap around $500mill ($8 a share)is the average price that would likely be attributed when production kicked in....


post Posted: May 22 2008, 03:41 PM
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In reply to: davo22 on Thursday 22/05/08 03:34pm

Good timimg Davo, I have been buying steadily around 44c - 47c for the past couple of weeks, nice to see someone else has realised the value of ELK, with oil moving up everyday, the reserves ELK is sitting on just keep getting more and more valuable.

post Posted: May 22 2008, 03:34 PM
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I think the run was purely due to the fact that oil was up so much overnight.....I sourced some money over the last few days and picked up 100k on market at the open for 47c....oil is going ballistic..... lmaosmiley.gif

post Posted: May 22 2008, 02:22 PM
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Anyone heard any whispers. Looks as if more news may be due by todays action.

"Adversity does not build character; adversity reveals character."
Sandy Dahl

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