Elk Petroleum Limited announced the commencement of the McElmo Creek Unit Well Deepening Program and delivering an immediate success with the deepening of five oil production wells in the Desert Creek II waterflood project area within the McElmo Creek Unit (MCU) of the Greater Aneth Oil Field. The five oil wells ­ MCU I-19, MCU K-15, MCU P-12, MCU O-11 and MCU J-14 ­ are the first of an initial 8-production well deepening program. These wells were successfully deepened 150 feet (45 meters) from the Desert Creek I (DC I) reservoir unit to the deeper Desert Creek II (DC II) oil reservoir unit. Each well deepening was completed for a per well capital cost of less than $450,000 (Elk share approximately $305,000). From this first operation, Elk has identified further cost reductions to be employed on well deepenings, that will provide for a gross capital cost per well of $375,000 per well (Elk share approximately $255,000). Initial production results have been encouraging. At current oil prices and well flow rates the full cost of each production well deepening is expected to payback within 165-days and the well is expected to have an estimated incremental ultimate recovery of approximately 140,000 barrels of oil ­ an incremental capital development cost of approximately $4.82/barrel. The McElmo Creek Well Deepening Project is a multi-well programme involving the deepening and recompletion of 43 poor performing or inactive production wells from the DC I formation to the deeper DC II oil reservoir unit. The DC II reservoir unit within the McElmo Creek Unit is currently undergoing active waterflood oil production (secondary recovery) within the programme area and each of the deepened wells is targeting unswept or under-swept oil pay within the DC II oil reservoir. Each well will be deepened approximately 150 feet (45 meters). One half of the wells have been deepened using a combination of highly mobile cost effective Coiled Tubing drilling unit (CTU), and truck mounted workover rig, not a traditional drilling rig. The other half will have used a truck mounted workover rig for the entire process. At the start of the deepening campaign, the Company estimated 7 days to undertake a well deepening operation, with learned efficiencies and rapid intra field moves, the company is already seeing this time reduced to 5 days. The eight-oil production well deepening campaign commenced on 17 June 2018 and the entire eight-oil production well deepening campaign is now expected to be completed by July 13, 2018­ a total of 26-days ­ an approximate 50% drilling and well construction time savings. Of the 43 wells to be deepened ­ 28 of these wells will be new DC II oil production wells and 15 of the deepened wells will be new DC II water injection wells for reservoir pressure maintenance to optimise oil production. The entire programme is scheduled to take approximately 15-months and is expected to be completed by September 2019. The CY2018 McElmo Creek Unit Desert Creek Well Deepening campaign will include deepening 11 poorly performing DC I production wells to deliver 8 new DC II production wells and 4 new DC II water injection wells. This will be followed in CY2019 by deepening another 32 poorly performing DC I production wells to deliver 21 new DC II production wells and 11 new water injection wells.