ELIXIR ENERGY LIMITED — Capital/Financing Update 2008

Jan 2, 2008

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ASX RELEASE

3 January, 2008

POMPANO PROJECT – OPERATIONS COMMENCED

Elixir Petroleum Limited (“Elixir” or “the Company”) is pleased to announce that it has been advised by the operator of the Pompano Project, AnaTexas Offshore Inc. (“AnaTexas”) that the Hercules 152 jack-up drilling rig has been contracted to drill the first well (“Well #1”) at the Pompano Project.

The Pompano Project is essentially a re-development of the Pompano gas field with new well locations based on modern 3D seismic data. 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. 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.

Well #1 will be directionally drilled from the field’s existing “B” satellite platform to 7,941 feet measured depth (“MD”). Well #1 is expected to take 30 days to drill and complete.

Well #1 is designed to test seven potentially gas bearing sands located between 3,800 feet and 7900 feet MD. Several of these sands have been productive down dip or nearby within the Pompano field. In the event of success, the well can be readily connected to the existing pipeline network and gas treatment facilities, and is expected to be brought on production soon after well completion.

AnaTexas advises that driving of 36” pipe on the “B” satellite platform is in progress and that the Hercules Drilling Rig is anticipated to mobilise to site around 7 January 2008.

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%.

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

Yours sincerely,

Alex Neuling Company Secretary Elixir Petroleum Ltd

Information contained in this report with respect to the High Island and Pompano Projects, 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.