ELIXIR ENERGY LIMITED — Interim / Quarterly Report 2009

Mar 15, 2010

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 9

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	Page
Corporate Directory	1
Directors’ report	2
Auditor’s independence declaration	6
Independent review report	7
Directors’ declaration	9
Consolidated statement of comprehensive income	10
Consolidated statement of financial position	11
Consolidated statement of changes in equity	12
Consolidated statement of cash flows	13
Notes to the financial statements	14

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Directors

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

Share Registry

Computershare Investor Services Pty Ltd Level 2 45 St Georges Terrace Perth WA 6000

Company Secretary

Ms Julie Foster (Appointed 23/10/2009) Mr David Lim (Resigned 23/10/2009)

Bankers

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

Registered and Principal Administration

Office

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

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

Stock Exchange Listing

UK Office

8 The Courtyard Eastern Road, Bracknell Berkshire RG12 8XB United Kingdom Telephone: (+44) 207 484 5019 Facsimile: (+44) 207 484 4992

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

Website

www.elixirpetroleum.com

Email

Auditors

info@elixirpetroleum.com

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

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 2009 (“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 (Executive Chairman) Mr Andrew Ross (Managing Director) Mr Iain Knott (Executive Director - Exploration) Mr John Robertson (Non-Executive Director)

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 EBITDAX of ($449,000) and a net after tax loss of $4,091,000 for the half-year ended 31 December 2009 (half-year to 31 December 2008: EBITDAX of $3,132,000 and a net after tax loss of $21,489,000).

Corporate and Financial

At 31 December 2009, Elixir held cash on hand of approximately $6.7 million (half-year to 30 June 2009: $8.1 million). The Elixir Group remains debt free.

The Company held its fifth annual general meeting since its listing on the ASX in 2004 on Tuesday, 24 November 2009 at Level 31, 77 St. Georges Terrace, Perth Western Australia. Both resolutions put to the meeting were passed without amendment.

Summary Review of Operations

During the half-year ended 31 December 2009, the Company conducted oil and gas operations offshore the Texas Coast in the Gulf of Mexico and in the UK North Sea.

DEVELOPMENT & PRODUCTION INTERESTS

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

The High Island field is located approximately 65 kilometres southeast of Houston, Texas in the Gulf of Mexico and was brought into production in September 2007. Wells A-1 and A-2 at High Island discovered gas and condensate pay in two separate accumulations, with each well currently producing from only the lower of the two reservoir zones to a regional processing facility, the Maritech HI-442 platform.

Gas and oil production rates at High Island were constrained during the reporting period due to restricted availability of compression on the processing platform. Well A-1 produced approximately 190 barrels of oil per day (“Bbls/d”) during the reporting period and could have achieved a higher result if greater gas processing capacity had been available. In early November 2009, Well A-2 was shut-in as a result of compressor capacity restrictions on the Maritech platform.

It is likely that the operator will temporarily suspend production from the two currently producing reservoir zones during H1, 2010 and workover the two High Island wells to allow the wells to produce from the shallower reservoir horizons. In doing so, the wells will not then require access to compression on the processing platform and gas production rates from the field should significantly increase.

In the six month period to 31 December 2009, the following production results were achieved at High Island:

2

Directors’ Report

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High Island Field – 268-A			Gas Produ	ction				Oil Produ	ction
	Total Dec Half (MMscf)	Total June Half (MMscf)	Avg Daily Dec Half (MMscf/d)	Avg Daily June Half (MMscf/d)	Change (%)	Total Dec Half (Bbls)	Total June Half (Bbls)	Avg Daily Dec Half (Bbls/d)	Avg Daily June Half (Bbls/d)	Change (%)
Project (100%)	238	641	1.3	3.5	(63%)	35,031	3,409	190	19	1,027%
Elixir (30% WI)	72	192	0.4	1.1	(63%)	10,509	1,023	57	6	1,027%

At the date of this report, Well A-1 is producing approximately 170 Bbls/d of condensate and 0.3 MMscf/d of gas. Well A-2 remains shut-in. The High Island field has produced approximately 3.9 Bcf of gas and 130,350 Bbls of condensate (100% project) in the period from the commencement of production in September 2007 to the date of this report.

Production receipts from High Island for the half year to 31 December 2009 totalled approximately US$688,000. The average price realised for the sale of gas produced in these months was US$2.95/Mcf, and for oil was US$70.86/Bbl.

Gas processing capacity uptimes for Wells A1 and A2 averaged approximately 35% and 65% respectively during the reporting period. The downtime was due to a lack of compressor availability described above, together with a fire which occurred on third party facilities associated with the regional gas export pipeline system. The fire resulted in the High Island field being shut-in for 10 days until production was restored via a bypass around the damaged downstream installation. There were no reported safety incidents in the period.

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 approximately 150 kilometres southwest of Houston, Texas. Well #1 at Pompano was directionally drilled from a new caisson installed adjacent to the field’s existing “B” satellite platform and was placed on production in March 2008. Well #2 at Pompano was drilled from a caisson adjacent to the existing main processing facility, the “A” platform, and was placed on production in May 2008. Well #3 at Pompano spudded in late September 2008 and encountered potentially commercial sands in one horizon, with the deeper sand targets being wet. Well #3 was temporarily suspended pending use as a sidetrack candidate for future drilling targets.

A workover of Well #1 was undertaken in late September 2009 in which sand was cleaned out from each completion, a chemical stabilisation treatment was injected into the shallow 6700 sand and a water shut-off treatment was carried out to isolate the B sand reservoir from the deeper water bearing B2 sands. As reported on 6 October 2009, initial indications were positive for both horizons.

Due to concerns about the volumes of water that may have cross-flowed into the B sand from the deeper B2 sand prior to the isolation operation, production from the B sand has been initially limited by the Operator and both water and sand production rates have been closely monitored. Sand production has been minimal and the water production has trended down during the reporting period from more than 100 Bbls/d to less than 10 Bbbls/d at the date of this report. As the water rate has dropped, the gas production rate has correspondingly increased. With water production now stabilised at a sufficiently low rate, the operator will now consider opening up the well further in order to achieve higher gas production rates.

The sand stabilisation treatment on the shallower 6700 sand in Well #1 does not appear to have worked with continuing indications of sand production. Consequently this upper horizon in Well #1 was shut-in on 1 November 2009.

In the six month period to 31 December 2009, the following production results were achieved at Pompano:

Pompano Field Brazos Block 446-L			Gas Produc	tion				Oil Produ	ction
	Total Dec Half (MMscf)	Total June Half (MMscf)	Avg Daily Dec Half (MMscf/d)	Avg Daily June Half (MMscf/d)	Change (%)	Total Dec Half (Bbls)	Total June Half (Bbls)	Avg Daily Dec Half (Bbls/d)	Avg Daily June Half (Bbls/d)	Change (%)
Project (100%)	783	757	4.2	4.2	3.4%	172	80	0.9	0.4	215%
Elixir (25% WI)	196	189	1.1	1.1	3.4%	43	20	0.2	0.1	215%

3

Directors’ Report

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At the date of this report, average gas production rates have improved with Well #1 producing approximately 4.0 MMscf/d and Well #2 producing approximately 2.0 MMscf/d. The field has produced approximately 4.6 Bcf of gas and 4,950 Bbls of condensate (100% project) in the period from the commencement of production in March 2008 to the date of this report.

Production receipts from Pompano for the half year to 31 December 2009 totalled approximately US$287,300. The average price realised for the sale of gas produced in these months was US$3.43/Mcf.

There were approximately 27 days downtime during the reporting period, of which 16 were as a result of the workover operations described above. Excluding these activities, the platform achieved an average uptime of approximately 94% for the period. There were no reported safety incidents in the period.

APPRAISAL INTEREST

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 southwestern extension of the Osprey Ridge and is adjacent to the proposed Causeway oil field development. Elixir’s wholly-owned UK subsidiary, Elixir Petroleum (Europe) Limited (“E(EU)”), holds a 40% working interest in the Block.

Due to a number of changed conditions which occurred during the period under review, including marked reductions in drilling and development costs combined with the recently announced fiscal incentive from the UK Treasury for small field developments, the joint venture is reconsidering its options for the further appraisal of the field. The partners are in the process of developing a revised, phased work programme that reduces upfront costs for potential farm-in partners and identifies further exploration upside potential, with a view to re-marketing the project to industry in 1H, 2010.

The current licence term for Blocks 211/22b and 27d do not expire until late 2011.

EXPLORATION INTERESTS

UK North Sea

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

Block 211/12b is located in the northern sector of the UK North Sea, approximately 140 kilometres north east of the Shetland Islands, in a water depth of approximately 125 metres. Block 211/12b contains a newly mapped prospect named ‘Tiger’. The Block lies 5 kilometres to the east of the Magnus Field which was brought into production in 1983 by BP with an in-place volume of approximately 1.5 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, which 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 risk.

Elixir completed various technical studies in relation to the Tiger prospect during the reporting period. A data room is being prepared and it is anticipated that the marketing of the prospect to industry will commence in 1H, 2010.

The Block has been awarded for a licence term of four years with a drill or drop decision required by February 2012.

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)

4

Directors’ Report

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Operator: AnaTexas Offshore Inc.

The Red Fish lease was awarded to the Pompano joint venture participants in April 2008. Work continues to evaluate exploration opportunities within the lease area.

France

Project Name: Moselle Permit Location: Northeastern France Ownership: 100% Working Interest Operator: East Paris Petroleum Development Limited

Following the end of the reporting period, Elixir announced the acquisition of 100% of the Moselle Permit located in Northeastern France. The Permit is over 1.34 million acres in area, has multiple well penetrations, is covered by over 4,000km of 2D seismic data and is thought to be prospective for both conventional and unconventional oil and gas.

The completion of the acquisition of the Moselle Permit is anticipated to occur in April 2010.

Relinquishments

Block 211/18b is a traditional licence located in the Northern sector of the UK North Sea and contains the Leopard prospect. Efforts to secure another farminee to contribute toward the cost of drilling of an exploration well at Leopard were not successful and consequently the licence was relinquished by the joint venture at the conclusion of its term in late December 2009.

In December 2009, Elixir elected not to renew the mineral licences held in relation to the Amadeus and Ngalia Projects, both located in the Northern Territory. With the relinquishment of these two licences, Elixir no longer holds any interests in mineral exploration licences in Australia.

Auditor’s Independence Declaration

The Auditor’s independence declaration is included on page 6 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

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ANDREW ROSS Managing Director

Perth, Western Australia 16 March 2010

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 the Moselle Permit, 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.

5

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Auditor’s 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 2009 there has been:

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

• ii. no contraventions of any applicable code of professional conduct in relation to the audit.

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MACK & CO

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S S FERMANIS PARTNER WEST PERTH

DATE:16TH MARCH 2010

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6

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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 accompanying half-year financial report of Elixir Petroleum Limited and controlled entities (the consolidated entity) which comprises the statement of financial position as at 31 December 2009 and the statement of comprehensive income, the statement of changes in equity, and the statement of cash flows for the half-year ended on that date, other selected explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at 31 December 2009.

Director’s Responsibility for the Half-Year Financial Report

The directors of Elixir Petroleum Limited 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 controls 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. We conducted our review 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 2009 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting, the Corporation Regulations 2001 and other mandatory financial reporting requirements in Australia. 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.

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7

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Independence Declaration.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the halfyear 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 2009 and of its performance for the half-year ended on that date; and

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

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MACK & CO

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S S FERMANIS PARTNER WEST PERTH

DATE:16TH MARCH 2010

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8

Directors’ Declaration

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The Directors declare that:

• (a) The consolidated financial statements and notes set out on pages 10 to 16 are in accordance with the Corporations Act 2001 , including:

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

• ii. giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2009 and of its performance for the half-year ended on that date; and

• (b) there are reasonable grounds to believe that Elixir Petroleum Limited will be able to pay its debts as and when they become due and payable.

This declaration is signed in accordance with a resolution of the Directors made pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the Directors

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ANDREW ROSS

Managing Director

Perth, Western Australia 16 March 2010

9

Consolidated statement of comprehensive income For the half-year ended 31 December 2009

Note Revenue from oil & gas sales Other income Operating and production costs General & administrative Costs Foreign exchange loss EBITDAX1 Depreciation, depletion and amortisation expense Exploration & evaluation expense Impairment expense EBIT2 Finance income Finance costs Loss before income tax (2) Income tax expense / benefit Net loss attributable to members of Company Other comprehensive income Foreign currency translation differences Other comprehensive income for the half year, net of tax Total comprehensive income for the half year (Loss) per share Basic and diluted loss per share (cents per share)

Consolidated 2009 2008 $'000 $'000 1,117 4,197 56 1,568 1,173 5,765 (323) (726) (1,150) (1,907) (140) - (440) 3,132 (3,317) (7,580) (437) (4,191) - (12,918) (4,194) (21,557) 103 219 - (151) (4,091) (21,489) - - (4,091) (21,489) (750) 115 (750) 115 (4,841) (21,374) (2.2) (11.4)

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

1 EBITDAX: Earnings before Interest, Tax, Depreciation, depletion and amortisation, Exploration & evaluation expense (including Impairment expense).

2 EBIT: Earnings before Interest and Tax.

10

Consolidated statement of financial position For the half year ended 31 December 2009

Note Assets Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Oil & Gas Properties (4) Other plant and equipment Deferred exploration, evaluation and development expenditure (5) Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Borrowings Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Contributed equity (8) Reserves Accumulated losses Total parent entity interest in equity	Consolidated 31-Dec- 09 30-Jun- 09 $’000 $’000 6,733 8,081 853 667 7,586 8,748 2,947 6,581 57 87 922 1,295 3,926 7,963 11,512 16,711 (357) (557) - - (164) (270) (521) (827) (1,337) (1,484) (1,337) (1,484) (1,858) (2,311) 9,654 14,400 60,644 60,644 2,065 2,720 (53,055) (48,964) 9,654 14,400	Consolidated 31-Dec- 09 30-Jun- 09 $’000 $’000 6,733 8,081 853 667 7,586 8,748 2,947 6,581 57 87 922 1,295 3,926 7,963 11,512 16,711 (357) (557) - - (164) (270) (521) (827) (1,337) (1,484) (1,337) (1,484) (1,858) (2,311) 9,654 14,400 60,644 60,644 2,065 2,720 (53,055) (48,964) 9,654 14,400
		8,748
		6,581 87 1,295
		7,963
		16,711
		(557) - (270)
		(827)
		(1,484)
		(1,484)
		(2,311)
		14,400
		60,644 2,720 (48,964)
		14,400

The above statement of financial position 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 2009

Attributable to equity holders of the Company

Consolidated Balance at 1 July 2008 (Loss) for the half-year Foreign currency translation reserve recognized during the period Total comprehensive income for the half-year Transactions with owners, in their capacity as owners Contributions of equity, net of transaction costs Options vested during the half year Balance at 31 December 2008 Balance at 1 July 2009 (Loss) for the half-year Shares issued Foreign currency translation reserve recognized during the period Total comprehensive income for the half-year Transactions with owners, in their capacity as owners Contributions of equity, net of transaction costs Options vested during the half year Balance at 31 December 2009	Contributed Equity Option Premium Reserve Share-based Payment Reserve Foreign Currency Translation Reserve Accumulated Losses Total $’000 $’000 $’000 $’000 $’000 $’000 58,609 1,773 200 (510) (20,400) 39,672 - - - - (21,489) (21,489) - - - 115 - 115
	- - - 115 (21,489) (21,374)
	2,035 - - - - 2,035 - - 326 - - 326
	2,035 - 326 - - 2,361
	60,644 1,773 526 (395) (41,889) 20,659
	60,644 1,773 731 216 (48,964) 14,400 - - - - (4,091) (4,091) - - - - - - - - - (750) - (750)
	- - - (750) (4,091) (4,841)
	- - - - - - - - 95 - - 95
	- - 95 - - 95
	60,644 1,773 826 (534) (53,055) 9,654

The above statement of changes in equity should be read in conjunction with the accompanying notes.

12

Consolidated statement of cash flows For the half-year ended 31 December 2009

Note Cash flows from operating activities Receipts from sales Payments to suppliers and employees	Consolidated 2009 2008 $’000 $’000 901 6,201 (866) (2,795) 35 3,406 - - (1,248) (4,529) - - - - 121 216 (1,127) (4,313) - 1,607 - - - (150) - (104) - 1,353 (1,092) 446 8,081 10,604 (256) 1,481 6,733 12,531
	2009
	$’000
	901 (866)
Net cash outflow from operating activities	35
Cash flows from investing activities Cash acquired with subsidiary Payments for exploration, evaluation and development Loans to other entities Proceeds from sale of equity investments Interest received	- (1,248) - - 121
Net cash inflow(outflow) from investing activities	(1,127)
Cash flows from financing activities Proceeds from issues of shares Proceeds from issue of convertible notes Interest paid 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 foreign currency denominated cash balances	(1,092) 8,081 (256)
Cash and cash equivalents at the end of the period	6,733

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

13

Notes to the financial statements for the half-year ended 31 December 2009

1. Significant accounting policies

Basis of preparation

(a) Statement of compliance

This general purpose financial report for the half-year reporting period ended 31 December 2009 has been prepared in accordance with Australian Accounting Standard 134 Interim Financial Reporting and the Corporations Act 2001 .

The half-year financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2009 and any public announcements made by Elixir Petroleum Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

Except as described below, the accounting policies adopted and methods of computation adopted are consistent with those of the previous financial year and corresponding interim reporting period.

(b) Change in accounting policy

(i) Determination and presentation of operating segments

The Group has applied AASB 8 Operating Segments from 1 July 2009. AASB 8 requires a “management approach” under which segment information is presented on the same basis as that used for internal reporting purposes.

Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision makers have been identified as the Board of Directors.

(ii) Presentation of financial statements

The Group applies revised AASB 101 Presentation of Financial Statements, which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in this half year financial statement as of and for the six month period ended on 31 December 2009.

Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

(iii) Foreign currency translation Functional and presentation currency

Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Aurora’s functional and presentation currency.

The functional currency of US subsidiaries has changed. As from 1 July 2009 the functional currency was changed to USD, primarily because the trend in the source currency of the majority of US subsidiaries costs, from AUD to USD, was not considered temporary. Cash receipts from the US operations are received in USD, and the majority of US subsidiaries payments, including operating expenses and income tax, are also payable in USD.

The change was implemented by translating the assets and liabilities of the US subsidiaries at spot rates at the date of the change and application of accounting for subsidiaries with a different functional currency being applied prospectively.

Translation and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions.

Foreign currency monetary assets and liabilities at the reporting date are translated at the exchange rate existing at reporting date.

Exchange differences are recognised in profit or loss in the period in which they arise.

14

Notes to the financial statements for the half-year ended 31 December 2009

Group companies

The results and financial position of all the Group companies that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position’,

• income and liabilities for each statement of comprehensive income are translated at average exchange rates’, and

• exchange differences arising on translation of intercompany payables and/or receivables of foreign operations, in a currency that is not the same as the parent’s functional currency, are recognised in the foreign currency translation reserve, as a separate component of equity. These differences are only recognised in the profit or loss upon disposal of the foreign operations.

2. Loss for the half-year

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

		Consolidated
	2009		2008
	$’000		$’000
Amortisation of oil & gas properties		3,308	7,565
Depreciation of plant and equipment		9	15
Employee benefits expense		95	229
Borrowing costs		-	151
Exploration and evaluation expense		437	4,191
Impairment of oil & gas properties		-	12,918

3. Segment Note

Management has determined, based on the reports reviewed by the Board of Directors that are used to make strategic decisions, that the Group has one reportable segment being oil & gas exploration and production.

The Board of Directors review internal management reports on a monthly basis is consistent with the information provided in the statement of comprehensive income, statement of financial position and cash flow statement. As a result no reconciliation is required, because the information as presented is used by the Board to make strategic decisions.

4. Oil & Gas Properties

Producing projects At cost Accumulated amortisation Provision for impairment Foreign currency movement Net carrying amount Development projects At cost Provision for impairment Written off Foreign currency movement Net carrying amount Total	Consolidated 31-Dec-09 30-Jun-09 $'000 $'000 41,192 40,958 (21,594) (18,379) (16,122) (16,119) (638) - 2,838 6,460 121 3,471 - (2,266) - (1,084) (12) - 109 121 2,947 6,581	Consolidated 31-Dec-09 30-Jun-09 $'000 $'000 41,192 40,958 (21,594) (18,379) (16,122) (16,119) (638) - 2,838 6,460 121 3,471 - (2,266) - (1,084) (12) - 109 121 2,947 6,581
		6,460
		3,471 (2,266) (1,084) -
		121
		6,581

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Notes to the financial statements for the half-year ended 31 December 2009

5. Deferred exploration, evaluation and development

Opening balance Capitalised expenditure Written off Foreign currency movement	Consolidated 31-Dec-09 30-Jun-09 $'000 $'000 1,295 1,286 152 439 (355) (376) (170) (54) 922 1,295

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

6. Dividends

No dividend has been paid or is proposed in respect of the half-year ended 31 December 2009 (2008: None).

7. Contingencies

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

8. Reconciliation of movements in consolidated equity

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

Description Date Opening balance 01 Jul 08 Share issue 01 Jul 08 Share issue 08 Jul 08 Less: transaction costs Closing balance 31 Dec 08 Opening balance 01 Jul 09 Closing balance 31 Dec 09	Number of shares Issue Price 181,117,922 1,950,550 $ 0.270 5,920,000 $ 0.270 188,988,472 188,988,472 188,988,472	$'000 58,609 527 1,598 (90)
		60,644
		60,644
		60,644

9. Events occurring after the balance sheet date

Following the end of the reporting period:

• Elixir Petroleum France was incorporated in the United Kingdom;

• Elixir announced the acquisition of 100% of the Moselle Permit located in Northeastern France. The Permit is over 1.34 million acres in area, has multiple well penetrations, is covered by over 4,000km of 2D seismic data and is thought to be prospective for both conventional and unconventional oil and gas. The completion of the acquisition of the Moselle Permit is anticipated to occur in April 2010.

Other than as disclosed elsewhere in this half-year financial report, no event has arisen since 31 December 2009 that would be likely to materially affect the operations of the Consolidated Entity, the results of the Consolidated Entity or the state of affairs of the Consolidated Entity.

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