NEWS BULLETIN

December 19, 2018 --- Vol. 24, No.34December 2018

Elixir/Emerald House deal with Entek next step, says Paul Craig

Paul Craig is pleased with the recent deal the Australian oil company Elixir Petroleum (ASX:EXR) made with another Australian firm, Entek Energy (ASX:ETE), for the South Nanushuk prospect that Craig sold to Elixir. (Elixir's wholly owned subsidiary Emerald House is the company's operating entity in Alaska.)

Elixir closed on 100 percent working interest in the 35,423-acre parcel on three federal leases in mid- November. The leases lie south of Armstrong's Nanushuk discovery at Pikka and Horseshoe and south of ConocoPhillips' Willow oil field.

Immediately after the closing with Craig, a coalbed methane prospect in Mongolia, which Elixir had given up on due to bureaucratic obstacles with the local government, got the greenlight. The small independent immediately started negotiations with fellow independent Entek, which had cash but was looking for an investment opportunity.

"It was a logical next step," Craig told Petroleum News Dec. 19. "I am very happy with the deal. If you had been sitting at the table you would understand. Elixir thought its Mongolian project, which they had worked very hard at, seemed permanently mired down, so they made the deal with me. Suddenly they had two very promising projects, but not enough cash to fund the next step for both; Entek had the cash to move the Alaska project forward."

The deal between the two "small, scrappy independents" is a throwback to Richfield (predecessor to Atlantic Richfield/ARCO/ConocoPhillips), which was the force that initially pushed development of the giant Prudhoe Bay oil field, Craig said.

Entek and Elixir have entered into a binding agreement granting Entek an exclusive option to purchase the acreage through the acquisition of Emerald House. The proposed transaction, exercisable on or before Jan. 31, allows Entek to acquire Emerald for up to 200 million shares.

Any additional leases acquired by Emerald will be included in the potential Entek acquisition.

In the Dec. 12 BLM lease sale Emerald was high bidder on 10 more leases in the National Petroleum Reserve-Alaska on 114,167 acres for $1.1 million, and adjacent to Craig's former leases.

According to Craig, per the example set by Armstrong, which has brought in several larger partners to fund oil developments on the North Slope, including those at Oooguruk, Nikaitchuq, Pikka and Horseshoe, "it can take billions of dollars to fund a really big North Slope development," and that is likely what Entek will have to do as a logical next step.

- Kay Cashman

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