ELIXIR ENERGY LIMITED — Interim / Quarterly Report 2008

Mar 12, 2008

A B N 5 1 1 0 8 2 3 0 9 9 5

Interim Financial Report for the half-year ended 3 1 D e c e m b e r 2 0 0 7

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	Page
Corporate Directory	1
Directors’ report	2
Auditors’ independence declaration	7
Independent review report	8
Directors’ declaration	9
Consolidated income statement	10
Consolidated balance sheet	11
Consolidated statement of changes in equity	12
Consolidated cash flow statement	13
Notes to the financial statements	14

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Directors

Mr Jonathan Stewart –Chairman Mr Andrew Ross – Managing Director Mr Iain Knott –Executive Director, Exploration Mr Trevor Benson - Non-Executive Director Mr John Robertson – Non-Executive Director

Share Registry

Advanced Share Registry Services 110 Stirling Highway Nedlands WA 1156 Telephone: (08) 9389 8033 Facsimile: (08) 9389 7871

Company Secretary

Mr Alex Neuling

Registered and Principal Administration Office

Level 20, 77 St Georges Terrace Perth 6000 Western Australia Telephone: (+61) 8 9440 2626 Facsimile: (+61) 8 9440 2699

Computershare Investor Services plc The Pavillions Bridgwater Road Bristol BS99 7NH

Bankers

National Australia Bank Limited Ground Floor, 50 St Georges Terrace Perth WA 6000

UK OFFICE

Golden Cross House 8 Duncannon Street London WC2N 4JF United Kingdom Telephone: (+44) 207 484 5019 Facsimile: (+44) 207 484 4992

Auditors - Australia

Mack & Co Level 2, 35 Havelock Street West Perth WA 6005

Barclays Bank plc 5 The North Colonnade Canary Wharf London E14 4BB

Stock Exchange Listing

Australian Stock Exchange Home Exchange: Perth, Western Australia Code: EXR

AIM Market, London Stock Exchange Code: ELP

Auditors - UK

MGI Midgley Snelling Brettenham House Lancaster Place London WC2E 7EW

Website and Email

www.elixirpetroleum.com info@elixirpetroleum.com

1

Directors’ Report

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The Directors of Elixir Petroleum Limited present their report on the Consolidated Entity consisting of Elixir Petroleum Limited (“the Company” or “Elixir”) and the entities it controlled during the half-year ended 31 December 2007 (“Consolidated Entity” or “Group”).

Directors

The names of the Directors of Elixir Petroleum Limited in office during the half-year and until the date of this report are:

Mr Jonathan Stewart (Chairman, appointed 12 November 2007)

Mr John Robertson (Non-Executive Director)

Mr Andrew Ross (Managing Director, appointed 12 November 2007])

Mr Iain Knott (Executive Director)

Mr Trevor Benson (Non-Executive Director, appointed 12 November 2007)

Mr Russell Langusch (resigned 29 November 2007)

Mr Kent Hunter (resigned 12 November 2007)

Unless otherwise stated, all Directors were in office from the beginning of the half-year until the date of this report.

Review and Results of Operations

Operating Results

The Company recorded a net after tax loss of $6,057,000 for the half-year ended 31 December 2007 (2006: net loss of $2,259,632).

Summary Review of Operations

During the half-year ended 31 December 2007, the Company conducted oil and gas operations in the UK North Sea and offshore the Texas Coast in the Gulf of Mexico.

Gulf of Mexico

Project Name: High Island Project (Block 268A) Location: High Island Area, Offshore Texas, USA Ownership: 30% Working Interest (subject to ‘back-in’ of 5.4% after cost recovery) Operator: Peregrine Oil and Gas LP

The installation of the High Island HI-268A unmanned production platform and jacket commenced in late June and was completed on 7 July 2007. A 5km subsea production pipeline from the HI-268A platform to the High Island 442 regional processing facility was laid by the operator during July 2007.

The High Island A-2 well was successfully drilled and completed in late July 2007. Following the completion of flow testing and pressure build-up operations, the well was placed on production on 15 September 2007. The well was completed over a shallower and deeper horizon, with the well currently only producing from the lower of these reservoir sands. Following the drilling and completion of Well A-2, the rig re-entered Well A-1 which had been drilled and suspended in early 2007. Well A-1 was completed for production over the deeper of two reservoir horizons and placed on production on 7 September 2007.

In the period from first production to 31 December 2007, Wells A-1 and A-2 produced a cumulative total of approximately 1,56 Bcf of gas and 20,840 Bbls of condensate. Average daily production for the relevant period was 14.5 MMscf of gas per day and 194 Bbls of condensate per day. The production uptime result for the month of December was 99%.

2

Directors’ Report

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Summary Review of Operations (continued)

Production of gas and condensate from Well A-2 remains relatively stable, with the well exhibiting a slow, natural decline in production over time, which is in accordance with expectations. Well A-1 was also producing relatively stable volumes of gas and condensate to the end of the period. However, following the end of the period, we have observed a significant increase in condensate and water production from Well A- 1. This is believed to be due to the presence of a thin oil rim which overlays the water leg in the reservoir. Following three months of production from Well A-1, it is believed that the gas / water contact in the reservoir has now risen such that the oil rim and underlying water leg is being accessed and produced by the well bore. Although the increase in condensate and water production has reduced the ability of Well A-1 to produce gas from this, the lowest perforated interval in the well, the gas production is merely deferred, and not lost.

Production will continue from the lowest zone in Well A-1 to attempt to recover as much condensate as possible. In the near future the sliding sleeve over the lowest perforations in Well A-1 will be closed and a sliding sleeve approximately 50 feet shallower up the wellbore (but still in the same reservoir zone), will be opened, which it is expected will re-establish higher gas flow rates from Well A-1.

Elixir holds a 30% working interest in the High Island Project. Federal and other royalties on production equate to 25% giving a net revenue interest to Elixir of 22.5%. Elixir’s 22.5% net revenue interest will be reduced to 19.6% pursuant to a ‘back-in’ arrangement once Elixir has recouped 120% of its initial investment in the project.

Project Name: Pompano Gas Project (Block 446-L SE/4) Location: Brazos Area, Offshore Texas, USA Ownership: 25% Working Interest (subject to “back-in” of 5.5%) Operator: AnaTexas Offshore Inc.

The acquisition of a 25% working interest in the Pompano gas field development and exploration project (“Pompano Project”) located in Brazos Block 446-L SE/4 was completed on 4 August 2007. The Pompano Project is located approximately 90 miles south-west of Houston and 7 miles offshore the Texas Gulf Coast in 60 feet of water. The field has existing production infrastructure and pipeline access to intrastate gas markets. The Pompano gas field was discovered in 1966 and 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.

At the end of the period under review, development planning activities were well underway, with preparations for the drilling of the first of two new wells in the field almost complete. On 31 December 2007 in-field facilities installation activities kicked off. The first well on Pompano, SL103229#1 (“Well #1”) was spudded in midJanuary 2008. The well encountered three reservoir intervals, was completed using a dual string completion over two of these intervals and was placed on production on 8 March 2008.

Following the success of Well #1, the Pompano joint venture participants elected to drill Well SL103230#1 (“Well #2”) at Pompano immediately following the completion of Well #1. At the date of this report drilling activities on Well #2 are proceeding on schedule and the well is expected to reach total depth by late March 2008.

Elixir holds a 25% working interest in the High Island Project. Federal and other royalties on production equate to 27.5% giving a net revenue interest to Elixir of 18.125%. Elixir has also agreed to a ‘back-in’ whereby Elixir will re-convey 5.5% of its 25% working interest in the Pompano Project to the vendor and the project introducer once Elixir has recovered from hydrocarbon sales 120% of the cost of Elixir’s investment in the Project.

3

Directors’ Report

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Summary Review of Operations (continued)

UK North Sea

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

Block 211/18b (Licence P1381) is a Traditional licence awarded in the 23rd 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%). The assignment of a conditional 30% revenue interest in Block 211/18b and the execution of the Joint Operating Agreement with farminee RWE Dea UK SNS Limited (“RWE”) was completed in early August 2007. 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 over recent months with several well slots becoming available during 2008. Provided that the Leopard farmout can be concluded over the coming months, we remain confident that the Leopard exploration well can be drilled during the second half of 2008.

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

Technical work has now been completed on the post drill results of the Jaguar well drilled in this Block. The well failed to encounter hydrocarbons in its primary target, however it encountered significant residual hydrocarbon shows in the Brent Formation. Further technical work has indicated the potential for oil entrapment up-dip of the Jaguar location in the southern end of the Block. This up-dip accumulation potential has been named Mulle by the joint venture.

The Mulle prospect will require an appraisal well to be drilled to test the commerciality of the accumulation. The joint venture plans to open a technical data room for selected participants to review the structure and will thereafter assess the options available to the joint venture with respect to the Mulle accumulation.

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

Good progress has been made on Promote Licence Block 21/16b during the period with all pre-requisite technical work having been finalised to allow farm out activities to commence. State-of-the-art fluid inclusion studies of a number of wells already drilled in the area have demonstrated the movement of hydrocarbons through the area and proved a hydrocarbon migration pathway across the Block. The studies have also revealed that a historic well drilled on the block that was formerly thought to be a dry hole, in fact contains hydrocarbon shows and provides additional support for the Bobcat prospect.

A data room will be opened and farm out activities formally commenced in late March 2008.

4

Directors’ Report

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Summary Review of Operations (continued)

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

Block 13/25 (Licence P1404) is a promote licence that was awarded in the 23[rd] Seaward Licensing Round in December 2005. During the period under review the joint venture agreed to a proposal to merge Block 13/25 with the adjacent Block 13/24d (Licence P1459) which is owned and operated by Petro-Canada.

An application made by the licence holders to merge the two promote licences to form a new traditional licence was approved by the Department of Business, Enterprise & Regulatory Reform (“BERR”, formerly the DTI) in late November 2007. This has enabled the holders of both licences to avoid relinquishment of the promote licences, while assuming a contingent obligation to drill one well on the merged licence. It is felt that combining the promote licences may also increase the prospect that a discovery (if made) on the licence would be sufficiently large to enable commercial development and exploitation.

As a part of the block merger process, an application was made to BERR to relinquish approximately 30% of the northern part of Block 13/25 in early January 2008.

Following the approval of the merger of the two promote licences by BERR, Elixir’s interest in the merged block is now 12.5%, and Petro-Canada has assumed operatorship of the block. High resolution 2D data has been acquired over Blocks 13/25 and 13/24 by Petro-Canada. The 2D seismic data has now been processed and will be interpreted by the end of Q2, 2008.

23[rd] Round Licence Relinquishments

During the period under review, three 23[rd] Round Promote Licences held by Elixir and its partners in the Southern and Northern sectors of the North Sea were relinquished immediately prior to the expiry of the two year term of the respective licences.

Corporate

On 9 July 2007 unsecured Convertible Notes raising A$2.7 million were issued by the Company to a group of sophisticated investors. The note holders elected to convert these notes on 9 November 2007, some 11 months prior to expiry. As a consequence, 10.7 million new fully paid ordinary shares in the Company were issued to the Noteholders and admitted to trading on the ASX.

On 2 February 2008 a further issue of unsecured Convertible Notes was undertaken by the Company to raise A$3 million. These notes bear simple interest calculated at 10% per annum paid quarterly in arrears and are convertible into ordinary shares at A$0.35 per share on or before 31 December 2008, or are otherwise repayable by the Company on 31 January 2009.

In the period under review, 22.38 million unlisted options held by management and other third parties expired without being exercised. As at 31 December 2007, Elixir had 3.75 million unlisted options on issue.

A merger by way of Schemes of Arrangement between Elixir and Gawler Resources Ltd was approved by the Federal Court on 25 October 2007. Scheme consideration comprising 69.31 million new fully paid ordinary shares and 8.108 million unlisted options in Elixir were issued to Gawler security holders on 14 November 2007. At the end of the period, a number of the consideration options had been exercised by option holders, leaving 2.61m consideration options on issue.

As a result of the merger new directors were appointed o the Board and Mr. Jonathan Stewart was elected Chairman and Mr. Andrew Ross appointed Managing Director of the Company. The implementation of the merger at a management level has progressed relatively smoothly with the integration of the two businesses now complete.

The Company held its third annual general meeting since its 2004 ASX listing at Level 31, 77 St. Georges Terrace, Perth Western Australia on Friday, 30 November 2007. All six resolutions put to the meeting were passed without amendment.

5

Directors’ Report

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Auditor’s Independence Declaration

The Auditor’s independence declaration is included on page 7 of the half-year financial report.

Rounding of Amounts to the Nearest Thousand Dollars

The company satisfies the requirements of Class Order 98/0100 issued by the Australian Investments and Securities Commission relating to "rounding off" of amounts in the Directors' Report and the Financial Report to the nearest thousand dollars. Amounts have been rounded off in the Directors' Report and Financial Report in accordance with that Class Order.

Signed in accordance with a resolution of the Directors made pursuant to s.306 (3) of the Corporations Act 2001 .

On behalf of the Directors

JONATHAN STEWART

Chairman

Perth, Western Australia

13 March 2008

6

Auditors’ Independence Declaration

UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF ELIXIR PETROLEUM LIMITED

I declare that to the best of my knowledge and belief, during the half year ended 31 December 2007 there have been:

• a. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• b. no contraventions of any applicable code of professional conduct in relation to the review.

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Independent Review Report

TO THE MEMBERS OF ELIXIR PETROLEUM LIMITED

Report on the Half Year Financial Report

We have reviewed the financial report of Elixir Petroleum Limited and Controlled Entities (the consolidated entity) which comprises the balance sheet as at 31 December 2007, and the income statement, statement of changes in equity and cash flow statement for the half year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration.

Director’s Responsibility for the Half year Financial Report

The directors of the consolidated entity are responsible for the preparation and fair presentation of the half year financial report in accordance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the half year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half year financial report based on our review. Our review has been conducted in accordance with Auditing Standards on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporation Regulations 2001 . As the auditor of Elixir Petroleum Limited and Controlled Entities, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , provided to the directors of Elixir Petroleum Limited and Controlled Entities would be in the same terms if provided to the directors as at the date of this auditor’s review report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half year financial report of Elixir Petroleum Limited and Controlled Entities is not in accordance with the Corporations Act 2001 including:

• A. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and of its performance for the half year ended on that date; and

• B. complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

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8

Directors’ Declaration

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The Directors declare that:

• (a) The financial statements of the consolidated entity and notes thereto are in accordance with the Corporations Act 2001, and

• i. give a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and of its performance for the half-year ended on that date; and

• ii. comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and

• (b) in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as when they become due and payable.

This declaration is signed in accordance with a resolution of the Directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the Directors

Jonathan Stewart

Chairman

Perth, Western Australia 13 March 2008

9

Consolidated income statement For the half-year ended 31 December 2007

Note Revenue from continuing operations Other income Total income Operating and production costs Depreciation and amortisation expense (1) Exploration & evaluation expenses Administrative expenses Finance costs Other costs – Fair Value adjustment on warrants Foreign exchange gain / (loss) Loss from continuing operations before income tax expense Income tax expense Net loss attributable to members of Company (3) Earnings / (loss) per share Basic loss per share (cents per share) Diluted loss per share (cents per share)

Consolidated 2007 2006 $'000 $'000 2,999 251 - - 2,999 251 (38) - (5,808) (10) (1,292) (1,297) (1,503) (1,252) (282) (2) 10 (28) (143) 79 (6,057) (2,259) - - (6,057) (2,259) (6.5) (3.2) (6.5) (3.2)

The above income statement should be read in conjunction with the accompanying notes.

10

Consolidated balance sheet as at 31 December 2007

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Note Current assets Cash and cash equivalents Trade and other receivables Other current assets Financial assets Total current assets Non-current assets Trade & other receivables Other financial assets Plant and equipment Deferred exploration and evaluation expenditure (5) Total non-current assets Total assets Current liabilities Trade and other payables Total current liabilities Total liabilities Net assets Equity Contributed equity (7) Reserves Accumulated losses Total equity

Consolidated 31-Dec-07 30-Jun-07 $'000 $'000 2,489 4,406 3,124 1,348 - 49 40 221 5,653 6,024 23 - - 4,408 5 14 30,845 1,803 30,873 6,225 36,526 12,249 1,517 314 1,517 314 1,517 314 35,009 11,935 52,729 22,500 2,323 3,421 (20,043) (13,986) 35,009 11,935

The above balance sheet should be read in conjunction with the accompanying notes.

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Consolidated statement of changes in equity For the half-year ended 31 December 2007

Note Share capital At the beginning of period Share issues Costs of issue At the end of the period Option premium reserve At the beginning of period Options granted Options exercised At the end of the period Accumulated losses At the beginning of period Loss for the half-year At the end of the period Financial asset reserve At the beginning of period Revaluation of financial assets Transfer to cost of investment upon acquisition of Gawler Resources Ltd (3) At the end of the period Foreign currency translation reserve At the beginning of period Recognised during the period At the end of the period Total equity At the beginning of the period At the end of the period

Consolidated 2007 2006 $'000 $'000 22,500 22,120 30,264 200 (35) (20) 52,729 22,300 1,690 1,690 2,951 - (2,084) - 2,557 1,690 (13,986) (10,901) (6,057) (2,260) (20,043) (13,161) 1,786 (232) - 41 (1,786) - - (191) (55) 529 (181) (228) (236) 301 11,935 13,206 35,007 10,940

The above balance sheet should be read in conjunction with the accompanying notes.

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Consolidated cash flow statement For the half-year ended 31 December 2007

Note Cash flows from operating activities Receipts from sales Payments to suppliers and employees Interest received Finance costs Net cash outflow from operating activities Cash flows from investing activities Cash acquired with subsidiary (3) Payments for plant and equipment Proceeds from sale of equity investments Loans to other entities Payments for exploration & evaluation Net cash outflow from investing activities Cash flows from financing activities Proceeds from issues of shares Proceeds from option entitlement issue Proceeds from borrowings Share issue costs Net cash inflow from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of exchange rate changes on cash Cash and cash equivalents at the end of the period	2007 $'000 235 (2,295) 106 (283) (2,237) 3,304 - 210 (3,220) (2,514) (2,220) 7 - 2,590 (35) 2,562 (1,895) 4,406 (22) 2,489	2006 $'000 - (1,151) 241 (2)
		(912)
		- (2) - - (1,039)
		(1,041)
		200 - - (20)
		180
		9,130 11,072 (169)
		9,130

The above cash flow statement should be read in conjunction with the accompanying notes.

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Notes to the financial statements for the half-year ended 31 December 2007

1. Basis of preparation of half-year report

This general purpose financial report for the interim half-year reporting period ended 31 December 2007 has been prepared in accordance with Australian Accounting Standard 134 Interim Financial Reporting and the Corporations Act 2001 .

This interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this interim financial report is to be read in conjunction with the annual report for the year ended 30 June 2007 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

Critical accounting estimates and judgements

In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the Group. All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgements, estimates and assumptions. Significant judgments, estimates and assumptions made by management in the preparation of these financial statements are outlined below:

Significant accounting judgements

Exploration, evaluation and development expenditure

The Group's accounting policy for exploration, evaluation and development is set out in its annual report for the year ended 30 June 2007. Application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves have been found. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under our policy, the Group concludes that the expenditure is unlikely to be recovered by future exploitation or sale, then the relevant capitalised amount will be written off to the Income Statement. As at 31 December 2007 the carrying amount of Exploration, Evaluation and Development expenditure is $30,845,000 (30 June 2007: $1,803,000).

Significant accounting estimates

Amortisation

Upon commencement of production, Elixir amortises the accumulated costs for the relevant area of interest over the life of the area according to the estimated rate of depletion of the economically recoverable quantities of reserves. Estimates of recoverable reserve quantities include judgemental assumptions regarding commodity prices, exchange rates, discount rates, and production and transportation costs for future cash flows. It also requires interpretation of complex and difficult geological and geophysical models in order to make an assessment of the size, shape, depth and quality of reservoirs, and their anticipated recoveries. The economic, geological and technical factors used to estimate reserves may change from period to period. Amortisation charged for the period to 31 December 2007 was $5,808,000 (June 2007: nil).

2. Loss for the half-year

Loss for the half-year includes the following items which are unusual because of their nature, size or incidence:

	2007	2006
	$'000	$'000
Expenses
Exploration and evaluation costs written off	1,292	1,297
Amortisation of producing projects	5,808	-

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Notes to the financial statements for the half-year ended 31 December 2007

3. Business Combination

On 25 October 2007, Federal Court approval of the merger between Elixir and Gawler Resources Ltd (“Gawler”) was obtained and the merger became effective on 26 October 2007 pending the issue of the scheme consideration. Scheme consideration, being shares and options in Elixir, was issued to Gawler security holders on 13 November 2007. In accordance with the requirements of AASB 3 – Business Combinations, the merger has been accounted for as an acquisition by Elixir.

Details of the purchase consideration and the fair value of assets and liabilities acquired are set out below:

(i) Purchase consideration

Number Fair Value per security Consideration $ Shares issued 69,312,992 0.365 Options issued 8,107,611 0.364 Plus Gawler shares and options already held, at cost: Shares 12,487,500 0.200 Options 12,487,500 0.010 Other costs of combination Advisor shares 1,000,000 0.2 Advisory fees Total costs of combination	Fair value $’000 25,299 2,951 2,498 125 200 100
	31,173

(ii) Assets and liabilities acquired

Cash Exploration and evaluation expenditure Other assets Trade creditors Loan payables Deferred tax liability Net assets	Acquiree's carrying amount $’000 3,304 20,467 101 (893) (4,408) (3,098) 15,473	Fair value $’000 3,304 33,069 101 (893) (4,408) -
		31,173

Gawler contributed revenues of $2,895,000 and a net loss of $3,153,000 to the Group for the period from 26 October 2007 to 31 December 2007. Had the business been consolidated for the whole of the period from 1 July 2007 until 31 December 2007, consolidated revenues would not have been materially different, but losses for the period would have been $1,096,000 higher.

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Notes to the financial statements for the half-year ended 31 December 2007

4. Segment Note

Primary reporting – Geographical Segments

Elixir operates in three main geographical segments, Australia, Europe and the USA.

Australia

Australia is the location of the central management and control of the Company and its principal administrative base.

Europe

The Group’s North Sea exploration activities and license interests are located in the United Kingdom. The Group’s European operations are conducted through a locally registered subsidiary, Elixir Petroleum (UK) Limited.

USA

The Group’s interest in the High Island and Pompano projects are held by a wholly-owned US subsidiary, Cottesloe Oil & Gas, LLC.

2007 Sales Other revenue Expenses Loss before tax Tax Loss after tax	USA Europe Australia $'000 $'000 $'000 2,883 - - 7 82 26 (6,026) (2,085) (945)	Eliminations Total $'000 $'000 - 2,883 - 116 - (9,056)
	(3,135) (2,003) (918) - - -	- (6,057) - -
	(3,135) (2,003) (918)	- (6,057)

2006 Sales Other revenue Expenses Loss before tax Tax Loss after tax	- - - - - - 151 100 - 251 - (2,112) (399) - (2,511)
	- (1,961) (299) - (2,260) - - - - -
	- (1,961) (299) - (2,260)

5. Deferred Exploration and Evaluation Expenditure

Movements for the half-year ended 31 December were as follows:

At the start of the period Acquired with subsidiary (at fair value, see note (3)) Amortisation Net other changes At the end of the period	Consolidated 2007 2006 $'000 $'000 1,803 1,942 33,069 - (5,808) - 1,781 (622) 30,845 1,320	Consolidated 2007 2006 $'000 $'000 1,803 1,942 33,069 - (5,808) - 1,781 (622) 30,845 1,320
		1,320

The ultimate recoupment of exploration and development expenditure carried forward is dependent on successful development and exploitation, or alternatively sale of the respective area of interest.

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Notes to the financial statements for the half-year ended 31 December 2007

6. Dividends

No dividend has been paid or is proposed in respect of the half-year ended 31 December 2007 (2006: None).

7. Contingencies

Contingent assets

As a condition of the merger with Gawler, various mineral exploration licences held by a subsidiary of Gawler are proposed to be preserved for Gawler’s shareholders as at the record date of 5 November 2007, by means of an in-specie distribution and priority entitlement offer of shares in Transition Resources Ltd (“Transition”). As Elixir currently has no beneficial ownership of Transition, this entity and the associated mineral assets have been excluded from the consolidated assets and liabilities presented in this Condensed Financial Report. In the event that Transition is not granted conditional approval for admission to the official list of the ASX within 6 months of the effective date of the merger (26 October 2007), Gawler shareholders shall have no further right, entitlement or interest in the equity of Transition, other than as shareholders of Elixir. The carrying value of the mineral assets held by Transition was approximately $257,500 as per Gawler’s 30 June 2007 annual financial report.

Contingent liabilities

The Consolidated Entity has no contingent liabilities as at balance date.

8. Reconciliation of movements in consolidated equity

Movements in consolidated equity during the six months were as follows:

Date Opening balance Conversion of convertible notes 14 Nov 07 Issued as consideration to acquire Gawler (at fair value) 21 Nov 07 Issued to advisors Options exercised Plus, option fair value adjustment Less: transaction costs Closing balance 31 Dec 07	Number of shares Issue Price 72,224,791 10,700,000 $ 0.250 69,312,992 $ 0.365 1,000,000 $ 0.200 5,725,325 $ 0.001 - 158,963,108	$'000 22,500 2,675 25,299 200 6 2,084 (35)
		52,729

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Notes to the financial statements for the half-year ended 31 December 2007

9. Events occurring after the balance sheet date

Convertible Note Issue

On 1 February 2008 the Company issued 8,571,429 convertible notes to raise $3,000,000 before associated costs. The notes have a conversion price of $0.35 per share, accrue interest at 10% on face value and are convertible at any time on or before 31 December 2008 or are redeemable at face value plus interest on 31 January 2009. Funds raised from the note issue are to be applied primarily towards drilling and development activities at Elixir’s Pompano and High Island gas projects and for general working capital purposes.

Expiry of Scheme Options

On 5 February 2008 the options issued to Gawler shareholders as scheme consideration (see Note 3) expired. 7,880,139 options (97%) had been exercised prior to expiry and the remaining 227,472 options lapsed.

Pompano Project

The first well at the Pompano project (SL 103229 #1) spudded in mid-January 2008 and encountered three identified gasbearing zones. Following the successful completion of flowline testing and other refurbishment activities, gas production from two of these zones commenced on 9 March 2008. A second well (SL 103230 #1) spudded in late February and, as per the most recent weekly drilling update released by the Company on 11 March 2008 had been drilled directionally to a depth of 8,180 feet Measured Depth.

Other

The Company also continues to evaluate other opportunities globally to identify projects which are consistent with its strategic objectives and which have the potential to augment its existing operations.

Other than as disclosed above, no event has occurred since 31 December 2007 that would materially affect the operations of the Consolidated Entity, the results of the Consolidated Entity or the state of affairs of the Consolidated Entity not otherwise disclosed in the Consolidated Entity’s half-year financial report.

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