ELIXIR ENERGY LIMITED — Capital/Financing Update 2008

Sep 21, 2008

ASX ANNOUNCEMENT

ABN 51 108 230 995

22 September 2008 Company Announcements Platform Australian Securities Exchange Level 4 20 Bridge Street SYDNEY NSW 2000 By E-Lodgement

OPERATIONS AND PRODUCTION UPDATE

Elixir Petroleum Limited (“Elixir”), the international oil and gas exploration and production company (ASX:EXR, AIM:ELP), provides an update on activities in the Gulf of Mexico.

Hurricane Ike

Elixir’s operations at the High Island and Pompano projects located in the Gulf of Mexico were shut-in during the passage of Hurricane Ike. We are pleased to report that the platforms and associated offshore infrastructure were not damaged.

Whilst production at the Pompano project recommenced on the 19/09/08, some damage was sustained to the onshore section of the export pipeline into which Elixir’s High Island production is sold. An evaluation of the damage to the pipeline and the programme required to effect repairs is currently being investigated by the pipeline owner. The damage is not believed to be severe and production should restart within the next week.

Well #3 – Pompano Project

The operator at the Pompano Project has also advised that the Hercules 152 jack-up drilling rig, which is contracted to drill the third development well at Pompano, was not damaged by Hurricane Ike and has been mobilised to the field. The rig arrived on location on the 19/09/08 and was last reported to be making preparations to drive the 36” Caisson.

Well #3 will be drilled through this new Caisson which will be positioned adjacent to the existing #5 Caisson. The #5 Caisson forms part of the existing field infrastructure and is located approximately 900m to the southwest of the ‘A’ Production Platform to which it is already connected via subsea flowlines (see schematic below).

Well #3 is targeting undrilled and updip fault block compartments immediately adjacent to the recently successful Well #2. The well will be directionally drilled into a total of 4 primary and 2 secondary target sands. It is expected that the primary sands will contain proven undeveloped reserves in horizons encountered by Well #2.

ASX CODE: EXR www.elixirpetroleum.com

Elixir Petroleum Limited

Level 20, 77 St George’s Terrace PERTH WA 6000, AUSTRALIA T: +61 8 9440 2650 F: +61 8 9440 2699 E: info@elixirpetroleum.com

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Schematic: Layout of the Pompano Project
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It is estimated that Well #3 will take approximately 25 days to drill and evaluate. If a decision is made to complete the well, then these operations are expected to take a further 22 days.

Subject to integrity testing, the existing flowline infrastructure from the Well #3 location to the ‘A’ Production Platform should facilitate a short time frame to production from the well. The addition of a third production stream to the existing two producing wells will require some upgrade activity on the ‘A’ Production Platform. These upgrade activities may temporarily interrupt production from the field for short periods.

Commenting on the announcement, Elixir’s Managing Director, Andrew Ross said:

“Other than a short shut-in period during the passage of Hurricane Ike, we are pleased to advise that the storm has not adversely affected our projects in the Gulf of Mexico. We look forward to resumption of full production in the near future.

“We are eagerly anticipating the commencement of drilling operations in the coming days for Well #3 at the Pompano Project, where we hope to achieve a similar result to that of our successful Well #2 and a further lift in production rates from the field.”

The Participants in the Pompano Project and their respective working interests are:

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Elixir Petroleum Ltd Buccaneer Energy Ltd Baron Petroleum Inc. Streamline Exploration Inc.	25.0% 65.0% 7.5% 2.5%
	100%

• Interests held indirectly via their respective shareholdings in wholly-owned subsidiaries.

Yours faithfully,

Alex Neuling Company secretary Elixir Petroleum Ltd

For further information, please visit Elixir’s website at www.elixirpetroleum.com

Information contained in this report with respect to the Pompano Project, was compiled by Elixir, or from material provided by the project operator and reviewed by I L Lusted, BSc (Hons),SPE , who has had more than 15 years experience in the practice of petroleum engineering. Mr Lusted consents to the inclusion in this report of the information in the form and context in which it appears.

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