Elixir’s Lorelle-3H results gain a $205m funding partner

Lorelle-3H delivers strong early flow performance

Elixir Energy Limited (ASX:EXR) has put two important pieces of its Taroom Trough story together: an encouraging first-phase test at Lorelle-3H and a funding deal designed to carry much of the portfolio’s next four years of work. The appraisal well reached a peak rate of 10.4 million standard cubic feet of gas a day, alongside 10 barrels a day of light oil or condensate, while still producing substantial stimulation fluid.

The result came from roughly 1,000 metres of reservoir during a 30-day clean-up and flow-back period. From the most stable 12-hour period, Lorelle-3H averaged 2.35 mmscfd and 6 bbl/d of condensate, with the company saying the well was still producing about 763 bbl/d of stimulation fluid. That distinction matters: the headline peak was achieved before the well had fully cleared the injected fluid, so it is not yet a settled measure of sustainable production.

The company has now moved the well through a 60-day reservoir soak and began post-soak testing on 1 October. The earlier first-phase Lorelle-3H results had already established a 10.5 MMscfd peak equivalent rate and a 2.35 MMscfd stable rate; the next dataset is intended to show whether the reservoir can deliver more consistently after the soak. Elixir expects that testing to conclude by the end of October, with results due to be assessed and reported in the following quarter.

Gas quality strengthens the commercial case

Lorelle-3H produced gas containing about 1% carbon dioxide, around 10% ethane and 4% propane. Elixir says that composition sits within pipeline specifications and requires no processing other than standard dehydration and water removal. The company calculated a sales-gas conversion factor of 1.21 terajoules for each mmscf, while the associated condensate recorded an API gravity of 47.8 degrees.

“Stimulation and completion of multiple wells in ATP645 (PCA305) which is directly south of ATP2056 and hosts the Lorelle-3 appraisal well and due West of ATP2077A and ATP2044.”

Those are useful characteristics for a potential development, although they do not by themselves establish commercial reserves. Elixir’s broader Taroom Trough resource figures remain un-risked contingent resources classified as “Development Unclarified”, with no certainty that any portion will ultimately be economically recoverable. The company is progressing feasibility and concept-select work on the Warkon Pilot, including APA Group’s assessment of a pipeline and custody-transfer route to the Wallumbilla Gas Hub.

Beach deal changes Elixir’s capital equation

The more immediate corporate development is the strategic portfolio farmout to Beach Energy. Under the binding transaction, Beach will provide $25 million in cash and a $180 million gross carried programme covering exploration and appraisal drilling, testing, technical studies, seismic work and operating costs over four years. Elixir says the arrangement substantially reduces its forward capital requirements while leaving it with 1,193 square kilometres of diversified net acreage and exposure to the Taroom Trough, including its operated Diona-JV sub-block.

The transaction emerged from a strategic review launched as Elixir approached the end of its exploration phase and permit commitments. Earlier, the company had disclosed Beach farmout terms of $25 million in cash and a four-year $180 million carried work programme, with completion subject to conditions and approvals. The quarterly report does not provide the detailed forward work schedule; Elixir says it will release more information in the next reporting period.

That funding support arrives against a tight reported balance sheet. Elixir held $6.02 million in cash at 30 September, with a further $1.74 million of undrawn debt capacity, for total available funding of $7.77 million. On the quarter’s outgoings, the Appendix 5B calculated only 0.7 quarters of funding. Elixir said the period’s $10.835 million of capitalised exploration spending reflected the Lorelle-3 drilling and flow-test programme, which it does not expect to continue at the same level, while the Beach transaction is intended to fund much of the subsequent activity.

“Taroom Trough: ATP2044, EXR:100%”

Other pieces of the portfolio are moving more slowly. QGC has completed 3D seismic acquisition across parts of ATP2056 and ATP2077-A, with Elixir to receive processed data and a 54-square-kilometre reciprocal area, while ATP2057 is awaiting regulatory decisions on a later work-program extension and a potential commercial area application. At the Diona sub-block, further artificial-lift installation and testing of Diona-1 remain subject to agreement on a new work programme and budget.

The investment case is therefore becoming less about whether Elixir can keep funding exploration alone and more about what the carried programme can establish. The next Lorelle-3H flow numbers, formal completion of the Beach transaction and the eventual conversion of contingent resources into a commercially supportable development plan will determine whether the promising early well data can carry the weight now placed on it.