ELIXIR ENERGY LIMITED — Capital/Financing Update 2008

Jan 21, 2008

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ASX RELEASE

22 January, 2008

POMPANO PROJECT – UPDATE

Elixir Petroleum Limited (“Elixir” or “the Company”) is pleased to provide an update on drilling activities at the Pompano Project.

Since our last announcement, the following operations have taken place on Well SL 103229 #1 (“Well #1”):-

• The 16” casing string has been cemented into the hole at a depth of 808ft.

• The 13.5” hole was then directionally drilled to a depth of 3,132ft at a final inclination of 30 degrees.

• The 10 ¾” casing has been run and cemented in place at a depth of 3,129ft.

• Drilling has commenced in the final 9 7/8” hole section.

At the time of the Operator’s report at 06:00 hours on 21 January 2008 (US/CST), Well #1 had been drilled to a depth of 3,265 feet below the rotary table on the rig floor and is drilling ahead. Once Well #1 reaches its total planned depth of 7,973 feet logging activities will take place.

The Participants in Well #1 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.

Elixir’s 25% working interest in Well #1 will be reduced by 5.0% pursuant to a ‘back-in’ arrangement with AnaTexas once Elixir has recouped its total investment in the well, plus 20%.

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.

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.

Well #1 will be directionally drilled from the field’s existing “B” satellite platform to 7,941 feet measured depth. Well #1 is expected to take 30 days to drill and complete on a trouble free basis. Well #1 is designed to test seven potentially gas bearing sands located between 3,800 feet and 7,900 feet measured depth. Several of these sands have been productive down dip of the Well #1 location, or nearby within the Pompano field.

If successful, the Pompano Project will use the field’s extensive existing production and pipeline facilities. This 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 operators and reviewed by P D Allchurch, BSc, FAIMM, MPESA, who has had 40 years experience in the practice of geology including more than 5 years experience in petroleum geology. Mr Allchurch consents to the inclusion in this report of the information in the form and context in which it appears.

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