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Elk says it has secured a letter of support from one of its major shareholders, which will support its endeavours to organise funding for the company over the next 12 months, but auditor BDO says "there is a material uncertainty which may cast significant doubt over Elk's ability to continue as a going concern".
Management believes that there is significant value of assets in excess of carrying value, which would deliver cash above present cash needs, if required, for the next 12 months.
Metgasco terminated its merger agreement 10 days ago, following the collapse of oil prices that made it impossible for the company to raise the funds required under the implementation deal.
It also cancelled a $2.5 million loan offered to Elk to fund short term operations, triggering a 30 day requirement to replay $1.75 million by April 16.
Elk says its shareholder has agreed to help find the cash to repay the loan.
The company had less than $350,000 in the bank at the end of December, but was getting a trickle of funds from the state of Wyoming, about $US400,000 [$A510,000] all told, which covered Elk's potential liabilities when it was the operator of the Grieve Unit.
Elk is also trying to sell its Grieve pipeline for $US5.5 million [$A7.2 million] which would be paid out in three stages if that deal closes.
The junior is relying on the forbearance of its grieve CO2-EOR partner, Denbury, which has now completed its carry of Elk, having spent over $US75 million on the project to date, including a US$10 million free-carry and $US12 million loan, for about $A28 million on Elk's account.
Elk is now responsible for its remaining joint interest costs of the project through to free cash flow expected to be another $US10 million [$A12.7 million] over the next two years.
Denbury started sending the bills in February, for $US192,000 [$A245,000], but has agreed to suspend the requirement to repay the funds while the partners hash out their various obligations.
Elk admits its future is tenuous, as cashflow from the 12 million barrel Grieve field is not expected to begin until the field is repressurised until March 2017.
It posted a $1.9 million loss for 2014.
