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Elk Petroleum Partner Denbury Resources Acquires CO2 Asset

Elk Petroleum (ASX: ELK) partner Denbury Resources (NYSE: DNR) has acquired ownership over part of the carbon dioxide assets that will supply CO2 to the Grieve enhanced oil recovery project.

Talks between Denbury and ExxonMobil had resulted in Denbury gaining ownership of a portion of ExxonMobil's LaBarge field's carbon dioxide assets.

This allows Denbury to supply the previously contracted CO2 for the Grieve EOR project under the new arrangement and has terminated the supply contract originally established by Elk.

It has also assured Elk the termination will not have any impact on the previously agreed supply of CO2 to Grieve or with Denbury's compliance with its obligations under the Participation and Development Agreement.

"The Denbury‐ExxonMobil property swap is further confirmation of Denbury's commitment to the expansion of the CO2 supply and reticulation system and infrastructure in the Rockies and hence, the implementation of more CO2 based enhanced oil recovery projects in Wyoming and Montana," Elk managing director Robert Cook said.

"It also validates Elk's involvement in the Grieve EOR Project and Elk's ambitions to seek out and to be part of other CO2 enhanced oil recovery opportunities in the area."

Denbury, a US$6.47 billion market capitalised company specialising in EOR, operates the Grieve EOR project and has made significant progress towards starting CO2 injection.

The Grieve Project is expected to produce up to 1,000 barrels of oil per day net within three years, and possibly up to 5,000 barrels of oil per day by five years.

Importantly, EOR delivers almost as much production as primary and secondary oil recovery. The U.S. Department of Energy estimates there is 3.2 billion barrels recoverable from the Rocky Mountain region using CO2 EOR.

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