Eastern Australia’s Gas Crunch Deepens as Elixir Boosts Taroom Footprint

Context: Rising Demand Meets Supply Constraints

As global LNG demand continues its upward trajectory, driven by the energy transition and geopolitical shifts, Eastern Australia is confronting a tightening gas market with supply shortfalls looming. Prices on the east coast have surged above A$14 per gigajoule, with LNG imports expected from 2026 at even higher costs, underscoring the urgency for new domestic sources.

Within this landscape, Elixir Energy has positioned itself as a key player by expanding its presence in the Taroom Trough, a region uniquely advantaged by proximity to existing infrastructure and significant unconventional gas potential.

Strategic Expansion Through Santos Farmin Deal

Elixir's recent farmin agreement with Santos marks a pivotal step, creating two 50/50 joint ventures that consolidate their interests across ATP 2056 and ATP 2057. Under the deal, Elixir will operate and fund the upcoming vertical appraisal well Lorelle-3 in ATP 2056 and carry Santos through a 200km 2D seismic program in ATP 2057, after which Santos will assume operatorship.

This collaboration not only spreads operational risk but also accelerates resource development timelines. The deal is highly accretive on a gas resource per share basis, with contingent resources acquired at less than one cent per thousand cubic feet, reflecting strong capital efficiency.

Material Growth in Contingent Resources

Independent certification by ERCE confirms a 46% increase in Elixir’s net contingent gas resources post-farmin, now totaling approximately 8.9 trillion cubic feet equivalent (BCFE). This growth encompasses tight sands, deep dry coals, and condensate resources across multiple ATPs, reinforcing the scale and diversity of the Grandis Project portfolio.

While these contingent resources remain classified as 'development unclarified', the enhanced resource base strengthens Elixir’s negotiating position with potential partners and off-takers, and supports the conversion of exploration permits into potential commercial areas.

Upcoming Drilling and Development Plans

The Lorelle-3 appraisal well, planned for 2025, aims to access the shallower BCG (Brigalow Coal Gas) play approximately 900 metres above previous wells, targeting both the BCG and the Dunk Sand formations. This well is designed to enable a horizontal lateral, potentially unlocking higher liquids content and improving project economics.

Additionally, Elixir is preparing to drill the conventional Diona-1 well in mid-2025, with farmout negotiations underway to fully carry Elixir’s costs. These activities, alongside ongoing multi-operator programs including Shell’s recent drilling and testing, highlight the Taroom Trough’s emergence as a hotspot for unconventional gas development.

Implications for Eastern Australia’s Gas Market

The Taroom Trough’s multi-Tcf potential, combined with its strategic location near the Wallumbilla Gas Hub and existing pipeline infrastructure, positions it as a critical supply source to alleviate the East Coast gas crisis. With LNG demand forecast to grow and domestic supply gaps widening, Elixir’s expanded resource base and active development program could play a vital role in securing Australia’s energy future.

However, the contingent resources remain subject to further appraisal and commercial viability assessments, meaning investors should watch closely how these projects progress from resource to production.