ELIXIR ENERGY LIMITED — Interim / Quarterly Report 2007

Oct 30, 2007

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ASX RELEASE

31 October, 2007

QUARTERLY ACTIVITIES REPORT FOR PERIOD ENDED 30 SEPTEMBER, 2007

HIGHLIGHTS

• Merger approved by Gawler shareholders and Second Court Hearing

• Enlarged entity’s new shares start trading around 13 November

• Panther farmout negotiations at advanced stage

• Encouraging technical results on 24[th] Round Block 21/16b

• Production commences at Gawler’s High Island project

ACTIVITY OVERVIEW

OPERATIONS

Block 211/18b (EXR 56% interest)

The assignment of a 30% interest in Block 211/18b and the execution of the Joint Operating Agreement with farminee RWE Dea UK SNS Limited (“RWE”) were completed in early August.

Block 211/18b (Licence P1381) is a Traditional licence awarded in the 23[rd] Seaward Licensing Round in December 2005. The initial interest holders in P1381 were Elixir (80%) and its joint venture partner, Sosina Exploration Ltd (“Sosina”) (20%). Under the terms of the farmin, RWE will earn a 30% interest in Block 211/18b by contributing on a promoted basis to the cost of drilling an exploration well on the Leopard prospect within the block.

Efforts to secure another farminee in order to largely cover Elixir’s and Sosina’s cost exposures in the proposed Leopard well are ongoing with several companies assessing the opportunity.

The availability of suitable drilling rigs has improved significantly over recent months with a number of well slots becoming available during 2008. Provided that the Leopard farmout can be concluded over the coming months, we remain confident that the well can be drilled next year.

Block 21/16b (EXR 40% interest)

Good progress has been made on Promote Block 21/16b (Licence P1507) during the quarter towards finalising pre-requisite technical work prior to farmout. State-of-the-art fluid inclusion studies of a number of wells already drilled in the area have demonstrated the movement of hydrocarbons through a well previously classified as a dry hole and proved a hydrocarbon migration path across the block. An interesting Jurassic prospect has been identified on this trend within Block 21/16b and will now form the focus of farmout attention.

Block 211/8b (EXR 80% interest)

Block 211/8b (Licence P1379) is a Promote licence awarded in the 23[rd] Licensing Round in December 2005. Under the terms of the Promote licensing scheme, a drilling commitment or similar substantial work program is required by the Department of Business, Enterprise and Regulatory Reform (BERR, formerly known as the DTI) by the second anniversary of licence award.

Negotiations with a prospective farminee are at an advanced stage which, if successful, will lead to retention of the licence and drilling of the Panther well potentially sometime in 2008. Elixir and its partner, Sosina, would see their respective 80% and 20% licence interests diluted in return for a cost-carry through the Panther well.

CORPORATE

Progress on Gawler Resources Merger

The Scheme documents for the proposed merger of Elixir and ASX-listed Gawler Resources Limited (“Gawler”) were lodged with the Australian Stock Exchange (“ASX”) and the Australian Securities and Investments Commission (“ASIC”) on 31 July 2007. Following ASX and ASIC review, the First Court Hearing in the Federal Court in Perth, Western Australia, approved the dispatch of the Scheme booklet to Gawler security holders.

Subsequent to period-end, Gawler share and option holders voted overwhelmingly in favour of the merger at a meeting held on 19 October. The meeting results were then tabled at a Second Court Hearing on 25 October where the Court formally approved the Scheme of Arrangement which then became effective on 26 October.

The new Elixir shares and options will be allotted to Gawler shareholders on 12 November and normal trading of these new shares in the enlarged entity is expected to commence on the ASX on 13 November.

The board and management of Elixir are very pleased that the Gawler merger has finally been concluded. The creation of a balanced pan-Atlantic exploration and production company will provide an ideal platform for further growth.

During the quarter gas and oil production commenced at Gawler’s High Island A268 project in the Gulf of Mexico. Full details are available in Gawler’s September Activities Report (www.gawlerresources.com.au).

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Convertible Note Issue

The issue of 10.7 million Elixir unsecured convertible notes at a subscription price of $0.25 was completed in early August raising a total of approximately $2.7 million before expenses.

The convertible note issue was arranged and underwritten by Argonaut Capital Limited. The issue was made to Macquarie Bank Limited, AFM Perseus Fund Limited and two other clients of Argonaut under Section 708 of the Australian Corporations Act. The notes are not quoted on the ASX or AIM.

The funds subscribed are being employed in Gawler’s enlarged field development program in the Gulf of Mexico at High Island and Pompano under a bridging loan arrangement that has operated during the merger process.

Following the successful finalisation of the merger, the notes are convertible into Elixir shares at a price of $0.25 per share at any time up until 31 October 2008, or are redeemable at face value plus interest on 30 November 2008.

2007 Annual General Meeting

The Company’s Annual General Meeting for the 2006-07 year is scheduled to be held at Level 31 Allendale Square, 77 St George’s Terrace, Perth, Western Australia, on 30 November 2007.

The 2007 Annual Report has been finalised and is being sent to shareholders who have requested copies either by post or email. An electronic version will be available for viewing and download from the company’s website (www.elixirpetroleum.com) shortly.

Russell Langusch Managing Director Elixir Petroleum Ltd

+44 207 484 5623 (UK office) +44 7840 523 771 (UK cell) +61 411 725 858 (Aust cell) rlangusch@elixirpetroleum.com

In accordance with ASX and AIM requirements, this announcement has been compiled, reviewed and approved by Elixir Petroleum’s Managing Director, Russell Langusch BE (Hons) M Eng Sc. He is a Petroleum Engineer of more than 30 years standing and a member of the Society of Petroleum Engineers (“SPE”) and the Australasian Institute of Mining and Metallurgy (“AusIMM”).

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Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

ELIXIR PETROLEUM LIMITED

ABN 51 108 230 995	Quarter ended (“current quarter”)
51 108 230 995	30 September 2007

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (a) Exploration JV Reimbursement Net Operating Cash Flows	Current quarter $A’000	Year to date (3 months) $A’000
	(174) - - (785) - 48 - - 25	(174) - - (785) - 48 - - 25
	(886)	(886)
Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c)other fixed assets (d)term deposit 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets 1.10 Loans to other entities - GRL 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	- - (3) - - - - (3,169) - -	- - (3) - - - - (3,169) - -
	(3,172)	(3,172)
	(4,058)	(4,058)

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(4,058)	(4,058)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (Convertible Note) Other – Underwriting fees relating to Con Notes Net financing cash flows	- - - - - 2,675 (134)	- - - - - 2,675 (134)
	2,541	2,541
Net (decrease) increase in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(1,517) 4,406 -	(1,517) 4,406 -
	2,889	2,889

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		214
		-
1.25	Explanation necessaryfor an understandingof the transactions
	1.23 Includes salaries and superannuation contributions for UK and Australian resident directors of approximately $197,000 and fees of $17,178 paid to Mining Corporate Pty Ltd for ongoing accounting and company secretarial services. Kent Hunter has a controlling interest in Mining Corporate.

Non-cash financing and investing activities

2.1 2.2	Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	-	-
	-	-

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development	$A’000
	200
	-
Total	200

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as	Current quarter	Previous quarter
shown in the consolidated statement of cash flows) to	$A’000	$A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank	304	417
5.2 Deposits at call	2,585	3,989
5.3 Bank overdraft	-	-
5.4 Other (provide details)	-	-
Total: cash at end of quarter(item 1.22)	2,889	4,406

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increase	Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital,buy-backs	72,224,791	72,224,791
7.5 +Convertible debt securities 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured,converted	10,700,000	-	25 cents	25 cents
	10,700,000	-	25 cents	25 cents
7.7 Options Granby Performance Hunter “Farm In” Director Incentive Director Incentive Director Incentive Director Incentive RFC Options Ambrian Options Director Incentive Argonaut Options Discovery Options	4,625,000 500,000 2,500,000 2,500,000 1,000,000 1,000,000 500,000 637,148 250,000 1,000,000 10,000,000	- - - - - - - - - - -	Exercise price 50 cents 100 cents 90 cents 130 cents 90 cents 130 cents 90 cents 60 cents (24p) 100 cents 50 cents 74 cents	Expiry date 31 December 2007 31 December 2007 5 October 2007 5 October 2007 31 December 2007 31 December 2007 16 May 2008 16 May 2010 31 December 2007 31 December 2007 Exercisable only after achievement of a commercial Discovery on the ‘Jaguar’ license block, and until 5pm (WST) on 31 December 2007

• See chapter 19 for defined terms.

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7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter
7.11 Debentures
7.12 Unsecured notes

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here:

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Date: 31 October 2007

(Director and Company secretary)

Print name: Kent Hunter

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

• See chapter 19 for defined terms.

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