The Sand Draw South oil field has current oil production of 47 barrels of oil equivalent per day (boepd), which would increase the company’s current daily production to about 67boepd.

Elk will complete the purchase of the Sand Draw South oil field from Wold Oil Properties early next week with a payment of $US775,000, to be funded out of existing cash reserves.

The Sand Draw South oil field includes a 100% oil interest in roughly 240 acres with two currently producing oil wells and considerable processing and storage facilities. Current oil production from this area is 35bopd (86.5% net revenue interest).

It also includes a 25% interest in 1920 acres surrounding the oil production, including one producing gas well and processing facilities. Elk’s share of current gas production is about 75,000 cubic feet (25% NRI interest and equivalent to about 12bopd).

“Initial assessment undertaken by Elk Petroleum’s production team indicates a redevelopment of the field can be undertaken by the installation of higher volume pumps in current producing wells, the re-entry of two other wells and the installation of high capacity pumps,” the company said.

There was also potential to develop gas production opportunities in the 100%-owned 240 acres, according to Elk.

“Redevelopment of the oil reservoir will increase daily oil production from the South Sand Draw oil field to 140 net bopd and this will be undertaken within 12 months,” the company said.

Meanwhile, elsewhere in Wyoming, Elk has a workover rig on-site at the Grieve oil field and has begun the first stage of the redevelopment program for that field.

Elk Petroleum was currently producing oil from Grieve at about 20bopd and this rate would be significantly increased over the next three months, the company said.

The first two stages of the redevelopment of Grieve are aimed at optimising and expanding the field’s existing production rate to as much as 400bopd within the next 11 months of listing.

“The strategic redevelopment of the Grieve and South Sand Draw oil fields in Wyoming, both within the next 12 months, will increase daily production accredited to the company to over 500bopd,” Elk said.

“This will provide the company with a strong platform for growth and positive cash flow.”