ELIXIR ENERGY LIMITED — Interim / Quarterly Report 2010

Oct 28, 2010

ASX RELEASE

31 October 2010

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30 SEPTEMBER 2010

HIGHLIGHTS

Good progress made across a number of study areas with respect to the Moselle Permit in France

• Several companies reviewing dataroom for Block 211/12b (Tiger Prospect), UK North Sea Additional new opportunities currently under consideration

Cash on hand at the end of the period of $4.12 million

Elixir is an internationally focused upstream oil and gas company with a diversified portfolio of petroleum interests across the exploration, appraisal, development and production lifecycle. Elixir holds interests in production leases located in the Gulf of Mexico and exploration licences in the UK North Sea and onshore in France.

A summary of the Group’s activities for the September 2010 quarter is set out below.

DEVELOPMENT AND PRODUCTION

Gulf of Mexico

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

The High Island field is located approximately 60 kilometres offshore the Texas coast in the Gulf of Mexico. The field has been in production since September 2007 from two wells and has produced to date in excess of 3.97 billion cubic feet (“Bcf”) of gas and over 161,000 barrels (“Bbls”) of condensate (100% project).

The following table summarises the production achieved from High Island during the quarter:

High Island 268A		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%)	24.8	32.3	0.27	0.35	-23%	8084	10,394	88	114	-22%
Elixir (30% WI)	7.4	9.7	0.08	0.11	-23%	2425	3,118	26	34.3	-22%

Production from High Island has continued to be curtailed over the reporting period. Although there has been some additional gas capacity on the processing platform, the common export line from the HI-268 production platform to the process facilities has limited the ability to flow the higher pressure Well A-2 without choking off production from Well A-1. Both High Island wells have a second shallower zone with gas reserves at original reservoir pressures. Producing from these shallower zones would negate the

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requirement to utilise the limited compressor capacity on the HI-442 platform, as the wells would have sufficient pressure to flow straight to export. They would also have a common flowing tubing head pressure which would allow them both to flow uninhibited through the common pipeline.

The Bureau of Ocean Energy Management Regulation and Enforcement (“BOEMRE”, formerly named the Minerals Management Service) requires that a prescribed minimum flow rate be reached before a producing horizon can be temporarily or permanently abandoned. During the reporting quarter, Well A-1 was continued to produce at rates above the prescribed BOEMRE rate of 50 bopd, and therefore further depletion of the current horizon by way of production is still needed before the zone could be shut-in ahead of producing from the shallower reservoir in that well. Contrary to prior discussions, the BOEMRE have indicated that they will not now approve the workover until these production criteria have been satisfied. It is estimated that oil production from Well A-1 will decline below the prescribed rate in Q1, 2011, after which the workover will be permitted to be undertaken.

Production uptimes for the quarter for Wells A1 and A2 were 94% and 96% respectively. There was very little incident driven down time during the reporting period however Well A-2 was at times severely choked back to limit back pressure on Well A-1.

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 field lies within the Brazos Area of the Gulf of Mexico and is located approximately 6 kilometres offshore the Texas coast and 110 kilometres south of Houston. The field has two production wells, with each producing from two separate reservoirs. The field has produced approximately 5.71 Bcf of gas and 6,000 Bbls of condensate (100% project) since the commencement of production in March 2008.

The following table summarises the production achieved from Pompano for the reporting period:

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 Jun Qtr (Bbls)	Avg Daily Sep Qtr (Bbls/d)	Avg Daily Jun Qtr (Bbls/d)	Change (%)
Project (100%)	447	516	4.9	5.7	-13%	515	482	5.6	5.3	+7%
Elixir (25% WI)	112	129	1.2	1.4	-13%	129	121	1.4	1.3	+7%

The field achieved an uptime of 91% with a 6 day shut down in late July due to a faulty instrument meter. There were no safety incidents reported over the reporting period.

The two primary zones that continue to contribute to production are the B Sand in Well ATO #1 and the E Sand in Well ATO #2, with over 90% of the daily total coming from these two horizons and another 10% being contributed from the B Sand in Well ATO #2. At this point, no immediate additional work is planned for the Pompano field, however some platform maintenance activities are scheduled for Q4, 2010.

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APPRAISAL

UK North Sea

Project Name: Mulle Prospect (Block 211/22b and 211/27d) 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.

The operator of Block 211/22b has published 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 operator is currently finalising a phased appraisal work programme that is anticipated to reduce the upfront capex commitment for potential farm-in partners. The outcomes of these studies are due to be reviewed in Q4 with a view to re-marketing the project to industry in 1H, 2011. The current licence term for Blocks 211/22b and 27d does not expire until late 2011.

EXPLORATION

France

Project Name: Moselle Permit Location: Northeastern France Ownership: 100% Working Interest Operator: Elixir Petroleum (Moselle) Limited

The Moselle Permit is a 5,360 km[2] onshore exploration block located in north-eastern France. The Permit is prospective for a number of different play types, including conventional oil and gas and unconventional gas (i.e. tight gas sands and shale gas). Over 4,000 kilometres of 2D seismic exists over the block and several dozen oil and gas wells have been drilled in around the Permit area over the past 60 years. The Permit was awarded in January 2009 for an initial five year term. Elixir acquired operatorship and a 100% working interest in the Permit in April 2010.

Following the completion of the acquisition of the Permit, Elixir has embarked upon an extensive data gathering exercise and has initiated a number of technical studies designed to assess the prospectivity of the permit area, particularly for unconventional shale/tight sand gas. It expected that the outcomes of the studies will allow for the generation of an in-place hydrocarbon resource estimate for the Permit area in Q4.

A database containing information and digitised logs on over 100 regional wells has been assembled, which now contains in excess of 800 kilometres of digitised wireline data. Regionally, 25 of these wells have penetrated the Carboniferous interval, the primary target in the basin, with 7 of these wells located on block. The wells have been drilled over a period spanning nearly 60 years and none have had modern fracture stimulation techniques applied to the Carboniferous section. A number of wells recorded gas shows throughout the target interval, and at least two are known to have produced gas to surface.

Detailed petrophysical studies are underway to characterise both shale and tight gas sand deposits throughout the Carboniferous interval which is in excess of 6,000 metres thick. It is anticipated that these studies will be completed in Q4.

Processing of 534 line kilometres of 2D seismic data over the permit was completed in the quarter and the data delivered to the company. The balance of the remaining digital raw seismic data over the

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permit has also been purchased. This provides an additional 1,602 line kilometres of digital 2D data available for processing and interpretation over the permit. The interpretation of the reprocessed 2D seismic data set has now commenced and it is anticipated that results from the interpretation will be available in Q4.

Six key wells in, and adjacent to, the Permit area have been identified as wells of interest from the perspective of evaluating unconventional shale/tight gas sand potential in the Westphalian and Stephanian aged Carboniferous section. Core and cuttings have been located and sampled from these wells for geochemistry and petrophysical analysis. A total of 157 samples have been analysed and results received for total organic content, vitrinite reflectance and other rock evaluation techniques. The analytical programme is being conducted by a world leading consultant group in evaluating unconventional resources, Core Laboratories. Although work is still in progress, preliminary results have been encouraging.

An additional 500 samples have been selected from wells in and adjacent to the permit from a geochemical database owned by the French Government sponsored, IFP Energies Nouvelles, and this data will be used in conjunction with the data received from Core Laboratories. The data will be integrated with the petrophysical and seismic interpretation with a view to calculating the hydrocarbon volumetric potential within the permit during Q4.

UK North Sea

Project Name: Tiger Prospect (Block 211/12b) Location: Northern UK North Sea Ownership: 100% Working Interest Operator: Elixir Petroleum (Europe) Limited

Block 211/12b is located in the northern sector of the UK North Sea, approximately 160 kilometres north east of the Shetland Islands, in a water depth of approximately 186 metres. The Block contains the Tiger prospect, which lies 5 kilometres to the east of the Magnus field. The Magnus field was brought into production in 1983 by BP with an in-place volume of approximately 1.54 billion barrels of oil.

The target reservoir in the Tiger prospect is the Magnus Sandstone Member, over 500 feet of which was encountered in Well 211/12b-15. This well was drilled down-dip of the Tiger Prospect in 1992. The equivalent sands in the nearby Magnus Field have excellent porosity and permeability characteristics. Evidence from the 211/12b-15 well also indicates the presence of a nearby hydrocarbon column. Reservoir presence and hydrocarbon charge for the Tiger prospect are considered to be low risks.

The technical work programme has been completed and the farm-in opportunity is now being marketed to industry participants, with several companies now in the dataroom. The Block has a licence term of 4 years with a drill-or-drop decision required by February 2013.

Gulf of Mexico

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.

No significant additional activity was undertaken on this prospect in the September 2010 quarter.

FINANCIAL SUMMARY AND OTHER MATTERS

At the end of the reporting period, Elixir held cash on hand of approximately $4.12 million. Receipts from production received in the September 2010 quarter were approximately US$464,484. The Elixir Group is debt free.

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Please find attached the Company’s Appendix 5B for the 3 month period to 30 September 2010.

Yours sincerely, ELIXIR PETROLEUM LIMITED

==> picture [145 x 37] intentionally omitted <==

Andrew Ross

Managing Director

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

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 Elixir’s Operations Manager, Ian 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 Mulle and Tiger Projects and the Moselle Permit was compiled by Elixir and reviewed by 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, 01/06/10.

Name of entity

	ELIXIR PETROLEUM LIMITED	ELIXIR PETROLEUM LIMITED	ELIXIR PETROLEUM LIMITED	ELIXIR PETROLEUM LIMITED
	ABN 51 108 230 995 Consolidated statement of cash flows
			30 September 2010
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & 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 – Recovery from JV Net Operating Cash Flows			Current quarter $A’000	Year to date (3 months) $A’000
			489 (187) - (754) (365) - 25 - - -	489 (187) - (754) (365) - 25 - - -
			(792)	(792)
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 (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)			- - - - - - - - -	- - - - - - - - -
			-	-
			(792)	(792)

• 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)	1.13 Total operating and investing cash flows (brought forward)	(792)	(792)	(792)
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 (provide details if material) Net financing cash flows		- - - - - -		- - - - - -
		-		-
Net increase (decrease) 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		(792) 5,148 (234)		(792) 5,148 (234)
		4,122		4,122
Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities
1.2 1.2	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
				179
				-
	Explanation necessary for an understanding of the transactions
	Payments include: Directors’ fees, salaries and rent. All payments are on normal commercial terms.

• 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

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration			$A’000
			150
			-
			400
			550
Total			1,100
Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. 5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter(item 1.22)
	Current quarter $A’000		Previous quarter $A’000
	2,822 1,300 - -		5,148
			-
			-
			-
	4,122		5,148

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 ofquarter	Interest at end of quarter
	-	-	-	-
	-	-	-	-

• 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 (b) Decreases through returns of capital, buy-backs	188,988,472	188,988,472	Various	FullyPaid
	- -	- -	- -	- -
7.5 ~~+~~Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	-	-	-	-
	- -	- -	- -	- -
7.7 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	1,750,000 3,250,000 2,750000 7,750,000		Exercise price $0.25 $0.30 $0.35	Expiry date 31 Mar 2011 31 Mar 2012 31 Mar 2013
7.11 Debentures (totals only)
7.12 Unsecured notes(totals only)

• See chapter 19 for defined terms.

Appendix 5B Page 4

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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: 29 October 2010 ( ~~Director/~~ Company secretary) Print name: Julie Foster

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.

Appendix 5B Page 5

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