Interview with Neil Young, MD & CEO of Elixir Energy Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/elixir-energy-asxexr-drilling-down-unconventional-gas-prize-in-bullish-australian-market-6251

Recording date: 18th February 2025

Elixir Energy (ASX:EXR) is advancing a significant gas project in Queensland, Australia, following a strategic pivot from its Mongolian operations. The company recently strengthened its position through a deal with Santos, Australia's second-largest oil and gas company, securing a 50% stake in two permits adjacent to its existing acreage.

The company plans to drill a key well in Q3 2025 to a depth of over 3,000 meters on the Santos acreage. This well, costing less than $10 million with approximately half potentially funded through R&D tax credits, aims to prove commercial viability by testing productivity and liquids content in an up-dip location expected to be more liquids-rich.

Elixir's acreage sits within the Taroom Trough, described as a large, homogeneous unconventional gas play. The company estimates its acreage contains over 30 TCF of gas-in-place in deep coals, though current recovery factors are less than 1%. Shell's presence in adjacent blocks provides validation of the play's potential, with the major having invested approximately $500 million in the region through its own activities and its acquisition of BG Group.

The project benefits from strong market fundamentals, with current gas prices around $14/GJ at the Wallumbilla Hub. The market is expected to tighten further, with LNG imports into Southern Australia potentially driving prices above $20/GJ. Queensland's supportive regulatory environment and the growing recognition of gas's role in energy security and transition add to the project's appeal.

Beyond the Santos acreage well, Elixir plans to drill the Diona-1 conventional well in mid-2025 and is seeking a farm-in partner for its 100% owned acreage. The company's management team, led by CEO Neil Young, brings significant industry experience and relationships, particularly with Santos.

Young emphasizes the project's advantages: "This is an unconventional play located immediately proximate to infrastructure, it doesn't need a single FID with a big signing ceremony and billions in spending. Here you can incrementally spend tens of millions, feed markets that are small to start, then build up your infrastructure."

The company sees significant potential for value creation through its ongoing drilling program, potential farm-out deals, and the continued de-risking of the play through both its own activities and those of nearby operators. With a strong acreage position, supportive market conditions, and clear development pathway, Elixir appears well-positioned to capitalize on Queensland's growing gas opportunity.

View Elixir Energy's company profile: https://www.cruxinvestor.com/companies/elixir-energy

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