ELIXIR ENERGY LIMITED — Capital/Financing Update 2008

May 21, 2008

ASX ANNOUNCEMENT

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ABN 51 108 230 995
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22 May 2008 Manager of Company Announcements Australian Stock Exchange Limited By E-Lodgement

RESOURCE ESTIMATE FOR OIL ACCUMULATION IN BLOCK 211/22b ANNOUNCED BY OPERATOR

Elixir Petroleum (“Elixir” or the “Company”), the international oil and gas exploration and production company (ASX:EXR, AIM:ELP), advises of the publication of an oil resource estimate for the Mulle Field located in Block 211/22b in the UK North Sea by the block operator, DNO UK Limited.

Highlights

• DNO has today provided a contingent P50 recoverable resource estimate for the Mulle accumulation of 17 MMBoe and a P10 estimate of 36 MMBoe

• An appraisal programme is being prepared by the joint venture with a view to inviting a new entrant(s) to farm in to the licence though the funding of an appraisal well to be drilled during 2009

• In the event of successful appraisal, the joint venture is aiming to fast track the development of the field to first production by 2010

Contingent Resource Estimate

The technical evaluation programme undertaken by DNO as operator has recently been completed. Based on a new petrophysical interpretation of the 211/22-2 well located in the southern portion of the block, remapped 3D seismic data and information from the adjacent Causeway appraisal programme, DNO has today released a contingent resource estimate for the Mulle accumulation.

The estimated contingent resource range is as follows:

Mulle Field (Project 100%)	P90 (MMBoe)	P50 (MMBoe)	P10 (MMBoe)
Oil in Place	16	57	111
Contingent Recoverable Resource	4	17	36
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

On a most likely outcome basis, this equates to almost 7 million barrels of contingent recoverable oil resource net to Elixir, given its 40% interest in Block 211/22b.

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

“We are delighted with the results of the further technical work undertaken by the 211/22b joint venture. The booking of contingent resources today for the Mulle oil accumulation by the operator is a significant first step in moving this discovery closer to commercialisation. The joint venture will now be examining appraisal and development scenarios for the accumulation, a process in which Elixir will be actively involved.

“This is an exciting result for Elixir’s North Sea business and builds on our recent development drilling successes in the Gulf of Mexico. We look forward to reporting further progress on Mulle in the coming months.”

Background

In early 2006, the Block 211/22b joint venture undertook the drilling of the Jaguar exploration well. Although the primary target of the well was not commercial, the logging programme identified residual oil shows in a 17 metre column within the Brent Group of formations, being a secondary target for this well. The presence of residual oil demonstrated a working hydrocarbon system within the licence and encouraged further evaluation of the Block.

With the data derived from the Jaguar well, the joint venture undertook an extensive technical evaluation programme to examine other favourable targets within the licence area. This work included the purchase of additional 3D seismic data, the re-interpretation and re-mapping of the 3D data set over the licence and the re-examination of an earlier exploration well, 211/22-2, drilled in the southern portion of the licence by Sun Oil in 1977. The 211/22-2 well encountered a gross 20 metre column in the Middle Jurassic Brent formation, however Sun Oil elected not to test the formation, or to recover fluid samples, deeming the well uneconomic at the time.

The joint venture has also been monitoring the continuing success over the past 18 months of the active Causeway appraisal drilling programme being undertaken in an adjacent block in the same Middle Jurassic Brent trend.

As part of the re-evaluation of Block 211/22b, a modern petrophysical evaluation of all core and log data from the 211/22-2 well was completed which found the well to contain a movable oil column in the Ness Formation. A comparison of recent analogue discoveries in adjacent blocks has corroborated this interpretation.

It is believed the Mulle accumulation is analogous to the Causeway Field which is located on trend and up-dip of the 211/22-2 well. The operator of the Causeway field has drilled several appraisal wells which have successfully confirmed reservoir presence and excellent reservoir deliverability with disclosed rates on test of up to 14,500 barrels of oil per day.

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The Mulle field is in 151m/500ft of water and the reservoir lies at 3,509m/11,580ft true vertical depth subsea.

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Mulle Accumulation
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Figure 1: Location Map for Block 211/22b and Mulle Accumulation

Forward Programme

An appraisal programme is in the process of being designed to resolve the remaining structural and reservoir performance uncertainties associated with the Mulle accumulation prior to possible development sanction.

Based on the newly acquired data, the joint venture is seeking new entrant companies to participate in planned appraisal activity in 2009. The initial appraisal activity will involve the drilling of a well up-dip from the original discovery well to confirm the oil column and the productive capacity of the Mulle reservoir. On a successful test, the appraisal well is likely to be suspended as a producer as part of the development of the field.

New entrants will be expected to carry the cost of the appraisal programme in return for licence equity in Block 211/22b. Following successful appraisal, the joint venture’s objective will be to produce first oil from the potential development in 2010. The Mulle development would likely

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consist of a sub-sea tie back of up to three wells to one of several existing potential offtake points, and could be developed in tandem with the Causeway Field.

Block 211/22b (Licence P1067) was awarded in the UKCS 21[st] Licensing Round and was renewed in September 2007 for a further 4 year term. The participants in the licence and their respective working interests are:

Elixir Petroleum Ltd * 40.0% DNO (UK) Ltd (Operator) 50.0% Rocksource UK Ltd 10.0% 100%

• Interest held indirectly via its shareholding in a wholly-owned subsidiary

Yours sincerely,

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 Mulle Discovery, was compiled from material provided by the project operator, DNO (UK) Limited, and has been reviewed by the Company’s Exploration Director, Mr. I Knott, BSc, MSc, FGS, AAPG, who has had more than 25 years experience in the practice of geology, including more than 5 years experience in petroleum geology. Mr Knott consents to the inclusion in this announcement of the information in the form and context in which it appears.

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