Els, who is the hottest golfer on the planet with three wins in his last four starts, established a 36-hole record for this event, which is being staged for the second consecutive year at Lake Karrinyup Country Club. He set the previous mark of 132 at the 1998 event, which he lost in a playoff to Tiger Woods.
Australian Stephen Leaney and Frenchman Jean-Francois Remesy are tied for fourth at 9-under-par 135.
Allenby and Owen, who shot matching rounds of 8-under 64 in Friday's second round, were in the clubhouse at 11-under par when Els went to the first tee for his round. Els went through the first nine holes at even-par 36 and trailed by three, but thanks to spectacular play on the second nine, the South African vaulted into first place.
He two-putted for birdie at the 11th hole and knocked his tee ball at the par- 3 12th to inches for a tap-in birdie and a kick-start to his nine.
'I didn't feel quite right with my game on the front nine, but I just tried to stay patient,' said Els, who owned a one-shot lead after the first round. 'I didn't want to force it, I just tried to get my rhythm back and when I two- putted for birdie on the 11th and then almost holed my tee shot at the 12th, I was off and running.'
Els kept it going with a 30-footer for birdie at 13 to tie for the lead then drove into a greenside bunker at the short par-4 14th. He blasted out to two feet for another birdie and sole possession of the lead.
At the par-5 15th, Els holed a 30-foot putt for eagle, his second at 15 in as many days. He narrowly missed birdie at the 16th but ran home a 30-foot birdie at the last to post his second consecutive 7-under 29 on Lake Karrinyup's back nine.
'I have done a lot of things in golf, but I have never scored 29 on the same nine holes two days running. It is quite something,' said Els, who is ranked No. 2 in the world. 'I didn't go out there with that aim but it just happened. My game must just really suit those stretch of holes so I must thank the designer for designing them that way.'
Els opened the 2003 PGA Tour season with a record-setting performance at the Mercedes Championships and a playoff victory over Aaron Baddeley the next week at the Sony Open. He finished one stroke out of first at the Caltex Masters three weeks ago but successfully defended his title at the Heineken Classic the following week.
Allenby was flawless on Friday with eight birdies and no bogeys.
'I have been hitting the ball very well since the start of the year and have continued that this week,' said Allenby, who shared fourth at the Sony Open in Hawaii. 'I've had the last two weeks off and am feeling very fresh and strong. I have my swing right where I want it and I'm hitting a lot of good shots.'
Owen three-putted for bogey at the 16th, but collected seven birdies and an eagle to finish with his 8-under 64.
'All I'm going to do this year is try to do the right things on and off the golf course and if I work hard, practice correctly and train hard, I'll leave it in the lap of the gods as to what happens,' said Owen, whose best finishes on the European Tour were four third places.
Andre Stolz of South Africa is alone in sixth place at 8-under par.
Retief Goosen, who cruised to an eight-shot win in 2002, rebounded from an opening-round 72 with a 65 on Friday. He is tied for seventh at 7-under-par 137 with Terry Price, David Lynn, Michael Long, Justin Rose and 2002 WGC- NEC Invitational champion Craig Parry.
The 36-hole cut fell at 1-under-par 143 and Sergio Garcia, the sixth-ranked player in the world, will not be around for the weekend. He shot a 2-under 70 on Friday but missed the cut by one at even-par 144.
'I made a couple of stupid bogeys on the back nine and you can't do those sort of things,' said Garcia.