ELIXIR ENERGY LIMITED — Capital/Financing Update 2008

May 5, 2008

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ASX RELEASE

6 May, 2008

POMPANO PROJECT – WELL #2 ON PRODUCTION

Elixir Petroleum Limited (“Elixir”), the international oil and gas exploration and production company (ASX:EXR, AIM:ELP), is pleased to announce that Well SL 103230 #1 (“Well #2”) at the Pompano Gas Field, offshore the Texas Gulf Coast was placed on production on 1 May 2008, resulting in current field production of approximately 14.6 million standard cubic feet of gas per day (“MMscf/d”) and 35 barrels of condensate per day (“BCPD”).

Production rates at Well #2 have stabilised over the past few days at a combined rate of approximately 8 million standard cubic feet of gas per day (“MMscf/d”) from the B and E sands. The well is also producing approximately 30 barrels of condensate per day (“BCPD”) from the E Sand.

Well #1 at the Pompano Project continues to produce on expectation at approximately 6.6 MMscf/d and approximately 5 BCPD. This provides combined total production from the Pompano Project of approximately 14.6 MMscf/d and 35 BCPD.

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

“We are delighted with the production result that has been achieved from Well #2 at Pompano. The result is particularly pleasing given the historically high gas prices being realised for gas production at Pompano. We look forward to reporting on further planned activities at the Pompano Project in the near term.”

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

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

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

Elixir’s 25% working interest in Well #2 will be reduced by 5.5% pursuant to a ‘back-in’ arrangement with the Operator once Elixir has recouped 120% of its total investment in the Pompano Project.

Yours sincerely,

Alex Neuling Company Secretary Elixir Petroleum Ltd

Golden Cross House 8 Duncannon Street London WC2N 4JF Tel: +44 207 484 5019 Fax: +44 207 484 4992 Website: www.elixirpetroleum.com

Level 20 77 St George’s Terrace Perth WA 6000 Western Australia +61 8 9440 2650 +61 8 9440 2699 ABN 51 108 230 995

Pompano Project – Background

The Pompano gas field lies offshore in the Gulf of Mexico, in Brazos Block 446-L SE/4, which is approximately 90 miles southwest of Houston Texas. The field is approximately 7 miles offshore in 55 feet of water.

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Schematic: Pompano Field Layout

The Pompano gas field was discovered in 1966 and produced over 120 billion cubic feet of gas prior to being shut-in in 2003. The Pompano Project is essentially a re-development of the Pompano gas field with new well locations based on modern 3D seismic data.

Well #1 was directionally drilled in January 2008 from the field’s existing “B” satellite platform to 7,825 feet measured depth. Well #1 intersected three gas bearing sands located between 6,700 feet and 7,426 feet measured depth (“MD”) which were successfully flow tested. Production commenced from this well in early March 2008 from the B and 6700A sands.

Well #2 spudded in late February 2008 and was directionally drilled from the field’s existing “A” Production Platform. Well #2 encountered several gas bearing sands between 7,300 feet and 8,980 feet MD. The well has been completed using a dual string completion over the B and E sands so as to enable concurrent production of these two zones. Well #2 was placed on production on 1 May 2008.

The Pompano Project is using the field’s extensive existing production and pipeline facilities, which has achieved a significant capital cost saving and a reduction in time to production for the project.

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

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