ELIXIR ENERGY LIMITED — Interim / Quarterly Report 2008

Oct 29, 2008

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ASX RELEASE

30 October 2008

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30 SEPTEMBER 2007

HIGHLIGHTS

Production receipts received in the quarter of $4.3 million

Cash on hand at the end of the period of $12.9 million (and at 29 October of approx $14.2 million)

COMMENT AND OUTLOOK

Elixir Petroleum Limited (“Elixir”) was active in the September 2008 quarter across our portfolio. We were pleased that no material damage was occasioned to our facilities located in the Gulf of Mexico with the passage of three hurricanes through the region in the quarter. A regional export pipeline system however, was damaged as a consequence of Hurricane Ike, meaning that production at High Island remains shut-in pending repairs to the pipeline.

A significant drop in oil and gas prices was experienced in the quarter as a result of the global financial crisis and fears of a period of recession grew. Between 1 July and late October, oil and gas prices have declined approximately 50% in value. At the same time the Australian dollar has declined in value against the US dollar (the currency in which we receive our production receipts) by approximately a third. The decline in the Australian dollar has had the effect of partially offsetting the decline in commodity prices. However, the impact of the shut-in at High Island and the decline in gas prices in the US will have a negative impact on cash flow in the December quarter.

Elixir remains well funded, with cash on hand in excess of $14 million at the date of this report. Elixir continues to examine opportunities which have the potential to be value accretive to the Company although it is fair to say that preservation of cash during the current difficult economic climate will be a priority.

An update on our various projects follows.

STRATEGY

Elixir is an internationally focused upstream oil and gas company with a diversified portfolio of offshore petroleum interests across the exploration, appraisal, development and production lifecycle.

Elixir’s business strategy is to acquire interests in exploration licences with high impact potential, to work up prospects internally and to farm these out to industry to drill, typically on a full carry basis. Complementing this exploration strategy is the addition of lower risk oil and gas development projects with appraisal upside located in the shallow waters of the Gulf of Mexico. These projects typically demonstrate a short cycle time to production and provide cashflow for the Elixir Group.

The Board of Elixir considers it important to remain flexible in the pursuit of new business opportunities which are judged to be complementary to its existing business activities and able to deliver superior growth in shareholder value.

8 The Courtyard Eastern Road Bracknell Berkshire RG12 2XB Tel: +44 1344 423 170 Fax: +44 1344 360 268 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

DEVELOPMENT AND PRODUCTION

Gulf of Mexico

Project Name: High Island Project (Block 268A) Location: High Island Area, Offshore Texas, USA Ownership: 30% Working Interest (22.5% Net Revenue Interest) Operator: Peregrine Oil and Gas, LP

Wells A-1 and A-2 at High Island discovered gas and condensate pay in two separate accumulations, with each well currently only producing from the lower of the two reservoir zones. In the three month period to 30 September 2008, the following production results at High Island were achieved:

High Island 268-A		Gas Production	Gas Production	Gas Production			Oil Production	Oil Production	Oil Production
	Total Sep Qtr (MMscf)	Total Jun Qtr (MMscf)	Avg Daily Sep Qtr (MMscf/d)*	Avg Daily Jun Qtr (MMscf/d)	Change (%)	Total Sep Qtr (Bbls)	Total Jun Qtr (Bbls)	Avg Daily Sep Qtr (Bbls/d)*	Avg Daily Jun Qtr (Bbls/d)	Change (%)
Project (100%)	281	442	4.7	4.9	(4%)	10,711	19,331	178	212	(16%)
Elixir (30% WI)	84	133	1.41	1.5	(4%)	3,215	5,799	54	64	(16%)

• Daily rate and average calculated up to 29 August 2008 when wells were shut-in for Hurricane Gustav

The field was shut in for just over 2 days primarily due to Hurricane Dolly up to 29 August 2008. Well A- 1 was shut-in for a further 2 days during this period for wireline work and a choke change out. The platform as a whole achieved an up time of 96% up to 29 August 2008.

On 29 August 2008 the field was shut-in due to difficulties with export pipeline pressures and production was not restored before the passage of Hurricane Gustav led to the precautionary evacuation of the platform in early September 2008. Hurricane Ike forced the evacuation of the platform again in midSeptember. The High Island facilities suffered only superficial damage as a result of the passage of the two hurricanes, but the High Island Offshore System (“HIOS”), a regional pipeline system into which production from High Island is ultimately transported to shore, was damaged preventing production being re-instated at High Island.

We understand that repairs to the HIOS are likely to be effected in November. Production will recommence at High Island as soon as practicable following the completion of the repairs. Despite the passage of two hurricanes and the precautionary evacuation of the platform on two occasions, there were no safety incidents reported during the quarter.

The observed decline in total production for the quarter presented in the table above is predominantly due to the wells being shut-in for the month of September, as explained above. Prior to the shut-in, Well A-1 was producing approximately 0.4 million standard cubic feet per day (“mmscf/d”) and 170 barrels of condensate per day (“bcpd”) over the reporting period up to the 29 August 2008. Attempts to manipulate sleeves in this well have been abandoned due to operational complications. However, the prolonged shut-in of the well will be useful in providing a further source of information to assist with ongoing

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reservoir management. Ultimately, it is expected Well A-1 will be recompleted on the logged shallower zone once the condensate rim in the deeper zone has been fully depleted.

Production of gas and condensate from Well A-2 remains relatively stable, although the well is exhibiting a slow, natural decline in production over time, which is in accordance with expectations. The well achieved an average of approximately 4.3 mmscf/d and 8 bcpd up to 29 August 2008.

In the normal course, a lag of two months is experienced from the month of production to receipt of sales proceeds. Accordingly, receipts in the quarter were for production in the months of May 2008 to July 2008 inclusive. Sales receipts for these months totalled US$1.51 million. The average price realised for the sale of gas produced in July and August was US$11.78/Mcf, and for oil was US$121.31/Bbl.

Project Name: Pompano Gas Project (Block 446-L SE/4) Location: Brazos Area, Offshore Texas, USA Ownership: 25% Working Interest (18.125% Net Revenue Interest) Operator: AnaTexas Offshore Inc.

The Pompano gas field lies in the Gulf of Mexico, in Brazos Block 446-L SE/4, which is approximately 90 miles southwest of Houston, Texas. The first well on Pompano, SL103229#1 (“Well #1”), was directionally drilled from a new caisson installed adjacent to the field’s existing “B” satellite platform. The second well, SL 103230#1 (“Well #2”) was drilled from a caisson adjacent to the existing main processing facility, the “A” platform. Well ATO#1 was placed on production on 10 March 2008 and Well ATO#2 on 1 May 2008.

A third well on Pompano, SL 103230#4 (“Well #3”) spudded on 22 September 2008 and reached planned total depth 21 days later on 13 October 2008. Unfortunately, the well only encountered potentially commercial sands in one horizon, the 6700’ Sand, with the deeper sand targets being wet. At the time of this report, Well #3 has been temporarily suspended pending a detailed review of data before a decision is made as to whether to complete the well over the 6700’ sands or to use the well bore as a sidetrack candidate in the future.

In the three month period to 30 September 2008, the following production results were achieved at Pompano:

Pompano Field – Brazos Block 446-L		Gas Production	Gas Production	Gas Production			Oil Production	Oil Production	Oil Production
	Total Sep Qtr (MMscf)	Total Jun Qtr (MMscf)	Avg Daily Sep Qtr (MMscf/d)	Avg Daily Jun Qtr (MMscf/d)	Change (%)	Total Sep Qtr (Bbls)	Total Mar Qtr (Bbls)	Avg Daily Jun Qtr (Bbls/d)	Avg Daily Mar Qtr (Bbls/d)	Change (%)
Project (100%)	988	903	10.9	9.9	9%	388	3,237	4.3	35.6	(88%)
Elixir (25% WI)	247	226	2.7	2.5	9%	97	809	1.1	8.9	(88%)

Gas production in the quarter was 9% higher due to the reporting of a full period of production from Well ATO#2. Condensate rates have declined from the last quarter, but the impact of this change to project cashflow is relatively minor.

There were approximately seven days downtime during the reporting period, six of which arising as a result of the precautionary shut-in during the passage of Hurricane Ike. Excluding the precautionary

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shut-in period, the platform achieved an average uptime of 98.6%. There were no safety incidents reported in the period.

Well ATO#1 achieved an average of approximately 3.5 mmscf/d and 3 bcpd in the quarter, with the majority of the production being delivered from the deeper B Sand. Production from ATO #1 has been restricted due to sand forming bridges in the short production string which produces from the 6700 ft Sand. Water production is also affecting gas rates in the long production string which produces from the B Sand. The water is believed to be originating from the deeper B2 Sand and is channelling up to the B Sand through a channel formed in the annulus cement.

In early October, Well ATO#1 was shut-in as the operator made preparations to undertake a workover of the well to rectify some of the issues described above and thereby attempt to increase production rates from the well. As part of the preparations a wireline entry will be carried out on both strings to gather further planning information.

Well ATO#2 achieved an average of approximately 7 mmscf/d and 7 bcpd for the quarter, with the majority of the production being delivered from the deeper E Sand. The well continues to produce in accordance with expectations.

In the normal course, a lag of two months is experienced from the month of production to receipt of sales proceeds. Accordingly, receipts in the quarter were for production in the months of May 2008 to July 2008 inclusive. Sales receipts for these months totalled US$2.45 million. The average price realised for the sale of gas produced in these months was US$8.46/Mcf, and for oil was US$118.06/Bbl.

Project Name: Red Fish Prospect (Block 479-L N/2 and NE/4) Location: Brazos Area, Offshore Texas, USA Ownership: 25% Working Interest (18.125% Net Revenue Interest) Operator: AnaTexas Offshore Inc.

During the quarter, the Red Fish lease was awarded to the Pompano joint venture participants. Work continues to evaluate the opportunities within the block and Elixir is currently considering participation in two further extensions of the Red Fish area.

APPRAISAL

UK North Sea

Project Name: Mulle Prospect (Block 211/22b) Location: Northern UK North Sea Ownership: 40% Working Interest Operator: DNO (UK) Limited

The Mulle accumulation lies in Block 211/22b on the south-western extension of the Osprey ridge and is adjacent to the proposed Causeway oil field development which has achieved flow rates from an appraisal well of up to 14,500 barrels of oil per day on test. The operator of Block 211/22b, DNO (UK) Limited, published in late May 2008 a most likely contingent resource estimate for Mulle of 18 million barrels of oil. This equates to a most likely net contingent recoverable oil resource to Elixir of almost 7 million barrels.

The joint venture has developed a two well appraisal and testing programme for the Mulle accumulation and is seeking a further partner or partners to enter the Block to assist with the funding of the

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programme. To that end, an online dataroom in respect of the Mulle accumulation was opened in midSeptember 2008 and the initial level of interest shown by industry has been very encouraging. A number of companies have been admitted to the dataroom and it is thought likely that the anticipated closure of the dataroom at the end of October will be delayed by two weeks because of the level of interest.

EXPLORATION

UK North Sea

Project Name: Leopard Prospect (Block 211/18b) Location: Northern UK North Sea Ownership: 56% Working Interest Operator: Elixir Petroleum (UK) Limited (“Elixir (UK)”)

Block 211/18b (Licence P1381) is a traditional licence awarded in the 23[rd] Seaward Licensing Round in December 2005. The interest holders in P1381 are Elixir (UK) (56%), RWE Dea UK SNS Limited (30%) and Sosina Exploration Ltd (14%). Under the terms of a farm-in agreement finalised with RWE in August 2007, RWE will be contributing on a promoted basis to the cost of drilling an exploration well on the Leopard prospect which lies within the block.

Efforts to secure another farminee in order to largely cover Elixir (UK)’s cost exposure in the proposed Leopard well are ongoing with several companies currently assessing the opportunity.

Testing of 3D seismic data with a new processing technique is expected to commence in November. The technique could replace the need for a shallow seismic acquisition over the well location, representing a considerable time and cost saving to the project. The availability of suitable drilling rigs is still tight, however the licence partners are committed to drilling a well in 2009 subject to finalisation of farm out and rig availability.

Project Name: Bobcat Prospect (Block 21/16b) Location: Central UK North Sea Ownership: 40% Working Interest Operator: Elixir (UK)

Block 21/16b contains four clustered Jurassic Fulmar Sand prospects named Bobcat. During the June quarter, a marketing campaign for the block commenced and a data room opened. There has been a consistent level of interest in the online dataroom during the September quarter. Several companies have visited the dataroom, but no firm offers to farmin have yet been received.

The dataroom will remain open until the end of 2008. A formal well commitment must be declared by late Q1, 2009 or the licence will be relinquished.

Project Name: Fat Cat Prospect (Block 13/25) Location: Central UK North Sea Ownership: 12.5% Working Interest Operator: Petro-Canada

Block 13/25a (Licence P1404) is a promote licence that was awarded in the 23[rd] Seaward Licensing Round in December 2005. The initial approval of the merger of Block 13/25a with the adjacent Block 13/24d was achieved in late 2007, with Petro-Canada assuming operatorship of the merged block. The relinquishment of part of the northern section of 13/25 was also approved at the same time.

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A Deed of Variation was lodged with the UK regulator and the two blocks are now merged, with PetroCanada as operator. While the two licences are separate (P1404 & P1459), they are both operating under the same work programme and obligation to commit to a contingent well in 2009.

A meeting of the joint venture was held on 17 September 2008 during which recently completed 2D seismic mapping was presented, forward plans discussed and the 2009 budget was introduced. The seismic data is of high quality although the on-block in-place volume has decreased as a result of the mapping activities. Elixir (UK) is currently considering its options with respect to its interest in the block.

West Africa - Sierra Leone

Project Name: Block SL-4 Location: Offshore Sierra Leone Ownership: 15% Working Interest Operator: Elixir (UK)

An interest in Block SL-4 was assigned to Elixir (UK) on 20 February 2008. At that time, Elixir (UK) was also approved as operator of the licence. Block SL-4 comprises an area of 4,429 km[2] lying in water depths from 100m to over 3,500m offshore Sierra Leone, West Africa. The acquisition of a 1,222 km[2] 3D seismic survey over the Block was completed in early June.

At the conclusion of the current quarter approximately 85% of the processing sequence of the 3D data set was completed and it is anticipated that the full sequence will be completed by end of October 2008.

Elixir announced on 26 September 2008 that its subsidiary, Elixir (UK), had placed its joint venture partner, Prontinal Limited, into default for failing to meet its obligations with respect to the payment for the 3D data acquisition and various other joint venture costs. Elixir also advised the market that Elixir (UK) had received a letter of demand from the seismic contractor in relation to the outstanding amount. Elixir (UK) has sought from the seismic contractor, but not received, clarification in relation to the alleged debt and letter of demand. Elixir (UK) is in discussions with its partner and the seismic contractor in an effort to resolve the dispute.

MINERAL ASSETS

During the quarter Elixir continued to market the seven mineral asset licences it holds in the Northern Territory and South Australia which were acquired as a result of the merger with Gawler Resources Limited. Discussions have been held with a number of parties with respect to a possible sale or farm-out of the licence interests, but to date no offers have been forthcoming. Failing receipt of offers for the licences, it is expected the licences will not be renewed at the conclusion of their current terms.

FINANCIAL SUMMARY

At the end of the September 2008 quarter, Elixir held cash on hand of approximately $12.9 million.

The full year financial report for the Company was issued on 30 September 2008. The accounts reported an Earnings Before Interest, Tax, Depreciation, Amortisation and Exploration Write-offs (EBITDAX) result of $5.9m for the period and a consolidated loss of $6.4m.

Please find attached the Company’s Appendix 5B for the 3 month period to 30 September 2008.

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REPORTING SCHEDULE

A notice of meeting together with the 2008 Annual Report for the Company was posted to shareholders on 24 October 2008. The 2008 Annual General Meeting of the Company is due to be held on Monday, 24 November 2008 in Perth.

Yours sincerely, ELIXIR PETROLEUM LIMITED

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Andrew Ross Managing Director

For further information, please visit the Company's website at www.elixirpetroleum.com, or contact:

Elixir Petroleum Limited Blue Oar Securities Plc Alex Neuling Jerry Keen / Olly Cairns Tel: (+61) 8 9440 2650 Tel: (+44) 207 448 4400 / (+61) 8 6430 1631

Conduit PR

Jonathan Charles Tel: (+44) 207 429 6666

Information contained in this report with respect to the High Island and Pompano Projects and the Red Fish Prospect, was compiled by Elixir or from material provided by the project operators and reviewed by I L Lusted, BSc (Hons),SPE , 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.

Information contained in this report with respect to the UK North Sea Projects and Block SL-4 offshore Sierra Leone, was compiled by Elixir or from material provided by the project operators and reviewed by the Elixir’s Exploration Director, Iain Knott, BSc,MSc, FGS, AAPG, who has had more than 25 years experience in the practice of geology, including more than 5 years experience in petroleum geology. Mr Knott consents to the inclusion in this report of the information in the form and context in which it appears.

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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 Quarter ended (“current quarter”) 51 108 230 995 30 September 2008 Consolidated statement of cash flows	Name of entity ELIXIR PETROLEUM LIMITED ABN Quarter ended (“current quarter”) 51 108 230 995 30 September 2008 Consolidated statement of cash flows	Name of entity ELIXIR PETROLEUM LIMITED ABN Quarter ended (“current quarter”) 51 108 230 995 30 September 2008 Consolidated statement of cash flows	Name of entity ELIXIR PETROLEUM LIMITED ABN Quarter ended (“current quarter”) 51 108 230 995 30 September 2008 Consolidated statement of cash flows
	ELIXIR PETROLEUM LIMITED
	ABN 51 108 230 995 Consolidated statement of cash flows
			30 September 2008
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 – Exploration JV Reimbursement Net Operating Cash Flows			Current quarter $A’000	Year to date ( 3 months ) $A’000
			4,299 (434) (1,862) (652) (1,071) - 632 (75) - -	4,299 (434) (1,862) (652) (1,071) - 632 (75) - -
			837	837
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other – Cash acquired on acquisition of Gawler Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)			- - - - - - - - -	- - - - - - - - -
			-	-
			837	837

• See chapter 19 for defined terms.

Appendix 5B Page 1

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Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	837	837
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 Notes Less underwriting fee Issue Costs Net financing cash flows	1,607 - - - - - - - (104)	1,607 - - - - - - - (104)
	1,503	1,503
Net 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	2,340 10,604	2,340 10,604
	12,944	12,944

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
		(193)
		Nil
1.25	Explanation necessaryfor an understandingof the transactions
	Payments include: Directors’ fees, salaries and serviced office rental. All payments are on normal commercial terms.

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
	N/A
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest
	N/A

• See chapter 19 for defined terms.

Appendix 5B Page 2

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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
	500
	1,000
Total	1,500

Reconciliation of cash

Reconciliation of cash	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	6,621	4,765
5.2	Deposits at call	6,323	5,839
5.3	Bank overdraft
		-	-
5.4	Other (provide details)
		-	-
	Total: cash at end of quarter(item 1.22)	12,944	10,604

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter
	None
	None

• See chapter 19 for defined terms.

Appendix 5B Page 3

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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 (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital,buy-backs,redemptions	-	-	-	-
	- -	- -	- -	- -
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues Placement (b) Decreases through returns of capital,buy-backs	188,988,472	188,988,472	Various	FullyPaid
	5,920,000 -	- -	$0.27
7.5 +Convertible debt securities Convertible Notes 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured,converted	8,571,429		$0.35	31/12/2008
	- -	- -
7.7 Options Ambrian Options Employee Options Tranche 1 Employee Options Tranche 2 Employee Options Tranche 3 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	637,148 2,000,000 3,250,000 2,750,000 8,637,148	- - - -	Exercise price $0.60 $0.25 $0.30 $0.35	Expiry date 16 May 2010 31 Mar 2011 31 Mar 2012 31 Mar 2013
			Exercise price	Expiry date
	-	-	-	-
	-	-	-	-
7.11 Debentures(totals only)	-	-	-	-
7.12 Unsecured notes(totals only)	-	-	-	-

• 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 / ~~does not*~~ (delete one) give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 30 October 2008

( ~~Director/~~ Company secretary)

Print name: ALEX NEULING

• See chapter 19 for defined terms.

Appendix 5B Page 5

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