ELIXIR ENERGY LIMITED — Capital/Financing Update 2008

Feb 25, 2008

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ASX RELEASE

26 February, 2008

POMPANO PROJECT – SECOND WELL COMMENCED

Elixir Petroleum Limited (“Elixir” or “the Company”) is pleased to announce that the Hercules 152 jack-up drilling rig, which successfully drilled Well SL 103229 #1 (“Well #1”), has been moved to the ‘A’ Production Platform and has spudded Well SL 103230 #1 (“Well #2”) at the Pompano Gas Project offshore Texas.

Well #2 is being directionally drilled to approximately 9,360 feet measured depth (“MD”) and is targeting several sands containing a combination of proved, probable and possible reserves. On a trouble free basis, the well is expected to take about 28 days to reach total depth.

The drilling rig is currently positioned on the north side of the existing ‘A’ Production Platform (see schematic below) and has driven the first casing string, a 30” Caisson, to a depth of 354 feet. At the time of the Operator’s report at 06:00 hours on 25 February 2008 (US/CST) the 20” hole section had reached 800 feet MD and the drilling rig was preparing to run the 16” casing. The casing will be cemented in place and thereafter a 13 ½” hole will be vertically drilled to a planned depth of 3,550 feet MD.

Facilities Refurbishment

With the successful completion of Well #1 and its encouraging test results, refurbishment operations are now underway at both the ‘B’ Caisson location and at the ‘A’ Production Platform using two jack-up workboats. The key activity is the testing of the buried pipelines between the ‘B’ Caisson and the ‘A’ Production Platform, the outcome of which will dictate the timing of first gas from Well #1.

Commenting on the announcement, Elixir’s managing director, Andrew Ross, said:

“We are pleased with the progress being made at the Pompano project. The results achieved from Well #1 have been encouraging, with flow rates during the testing programme exceeding our expectations. We are looking forward to further success with the second well in the programme and to first gas at Pompano, which will add to the company’s existing revenue stream from its High Island 268-A production.”

The Participants in Well #2 and their respective working interests are:

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.

Golden Cross House Level 20 8 Duncannon Street 77 St George’s Terrace London WC2N 4JF Perth WA 6000 Tel: +44 207 484 5019 Western Australia Fax: +44 207 484 4992 +61 8 9440 2650 Website: www.elixirpetroleum.com +61 8 9440 2699 ABN 51 108 230 995

Elixir’s 25% working interest in Well #2 will be reduced by 5.5% pursuant to a ‘back-in’ arrangement with the operator, AnaTexas Offshore Inc, once Elixir has recouped 120% of its total investment in the well.

Yours sincerely,

Alex Neuling Company Secretary Elixir Petroleum Ltd

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 has 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.

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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 which have been successfully flow tested.

The Pompano Project will use the field’s extensive existing production and pipeline facilities, which will achieve 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 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 report of the information in the form and context in which it appears.

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