Elk has now commissioned an independent expert to review all existing and newly acquired data on the upper sands to calculate an original oil in place for each sand. These results are expected in the next two months.

Shortly after acquiring the field in June last year, Elk said it observed a positive wellhead pressure at well-17, accompanied by a small quantity of live crude oil after opening the surface valve, according to the company.

“This should not have been the case as the well had been temporarily abandoned - with reservoir isolated from the well by cement squeezed into the formation and mechanical and cement plugs in the well bore - and the field pressure had been bled down with the earlier gas production,” managing director Robert Cook said.

“Wells-2, 16 and 39 were also observed to have the same characteristics, namely leakage of live oil at surface and wellhead pressure.”

Cook said this “very promising” condition encouraged the company to workover well-17 in its phase one redevelopment plan.

Subsequent work on wells 17 and 16 concluded the observed oil was from the Grieve upper sand formations - not the underlying and current oil producing Muddy Formation, according to Cook.

“This demonstrates the benefits of applying modern technology to an old oil field and the importance of a methodical approach to oil field redevelopment,” he said.

Reservoir saturation tool logs were also run across four wells – 39, 12, 2 and 21 – which has produced promising results, according to Cook.

In the 1950s, the upper sands were not considered worthy for development. Instead, the Muddy Formation was developed in isolation as an 85 million barrel oil field.

This latest development means the company will defer its planned deepening of an up-dip Muddy formation well to test Cloverly, as part of the phase one redevelopment.

Elk has produced 9,750 barrels of oil equivalent from the Grieve and Sand Draw South fields since July last year. The fields are currently producing at 75 barrels of oil per day, with production expected to increase next quarter.

Sales during the December quarter totalled A$256,456 from 4,379 barrels of oil and 841 million cubic feet of gas.