ELIXIR ENERGY LIMITED — Interim / Quarterly Report 2009

Jan 28, 2010

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ASX RELEASE

29 January 2010

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31 DECEMBER 2009

HIGHLIGHTS

• Successful completion of workover of Well #1 at Pompano and encouraging gas production rates achieved

• Continued condensate production at High Island despite gas production curtailment during the quarter

• Marketing activities to commence on Block 211/12b (Tiger Prospect) UK North Sea

• Several significant new opportunities currently under consideration

• Cash on hand at the end of the period of $6.7 million

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

A summary of the Group’s activities for the December 2009 quarter is set out below.

DEVELOPMENT AND PRODUCTION

Gulf of Mexico

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

The High Island field is located approximately 60 km offshore the Texas coast in the Gulf of Mexico. The field has been in production since September 2007 and has produced to date in excess of 3.9 billion cubic feet (“Bcf”) of gas and over 122,500 barrels (“Bbls”) of condensate (100% project).

Production uptime for the High Island 268 platform was curtailed towards the end of the quarter due to production constraints at the High Island 442 processing facility. As the existing producing zones deplete it has become necessary to utilise compression facilities on the High Island 442 platform to boost the gas pressure to export pipeline levels. However, the owner of the High Island 442 facility is afforded preferential usage of available compressor capacity for its well streams. During the quarter compressor capacity was limited by the facility owner’s usage and as a result, gas processing capacity uptimes for Wells A1 and A2 reduced to 77% and 39% respectively.

The operator and the platform owner are investigating ways of increasing compressor availability. Compression capacity is expected to become available over the coming weeks and High Island 268 production can be stepped up to match this capacity.

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

8 The Courtyard	Level 20
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Tel: +44 1344 423 170	+61 8 9440 2650
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Website:www.elixirpetroleum.com	ABN 51 108 230 995

High Island 268A		Gas Production	Gas Production	Gas Production			Oil Production	Oil Production	Oil Production
	Total Dec Qtr (MMscf)	Total Sept Qtr (MMscf)	Avg Daily Dec Qtr (MMscf/d)	Avg Daily Sept Qtr (MMscf/d)	Change (%)	Total Dec Qtr (Bbls)	Total Sept Qtr (Bbls)	Avg Daily Dec Qtr (Bbls/d)	Avg Daily Jun Qtr (Bbls/d)	Change (%)
Project (100%)	60.9	177.5	0.66	2.93	-66%	13,294	21,737	145	237	-39%
Elixir (30% WI)	18.3	53.3	0.2	0.59	-66%	3,989	6,521	43	70.9	-39%

Well A1 maintained production rates averaging approximately 190 bopd during the quarter. If greater gas processing capacity had been available higher rates of oil production could have been achieved.

Well A2 was shut in as a result of compressor capacity restrictions on 5 November 2009 and apart from a short period where an attempt was made to flow the well in late December, the well provided no further contribution to the production result for the quarter.

Both wells have a second shallower reservoir with gas reserves at original pressures which will not require compression at the High Island 442 processing platform prior to export. The option to recomplete each well on the second horizons is currently being considered by the High Island joint venture. Any decision on recompletion will be dependent upon US gas prices forecasts and obtaining the approval of the US regulator.

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 and is approximately 12 km offshore the Texas coast and 150 km southwest of Houston. The field has two production wells, with each producing from two separate reservoirs. A third well drilled during Q3, 2008 has been temporarily suspended as a future sidetrack candidate.

The field has produced approximately 4.22 Bcf of gas and 4,873 Bbls of condensate (100% project) since the commencement of production in March 2008. The following table summarises the production data for the reporting period:

Pompano Field – Brazos Block 446-L		Gas Production	Gas Production	Gas Production			Oil Production	Oil Production	Oil Production
	Total Dec Qtr (MMscf)	Total Sept Qtr (MMscf)	Avg Daily Dec Qtr (MMscf/d)	Avg Daily Sept Qtr (MMscf/d)	Change (%)	Total Dec Qtr (Bbls)	Total Sept Qtr (Bbls)	Avg Daily Dec Qtr (Bbls/d)	Avg Daily Sept Qtr (Bbls/d)	Change (%)
Project (100%)	533	250	5.8	2.72	213%	158	14	1.7	0.2	1129%
Elixir (25% WI)	133	62.5	1.45	0.68	213%	40	3.5	0.4	0.05	1129%

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Production at the Pompano field has steadily increased over the reporting period. The average gas production rate for the quarter was 5.8 mmscf/d. During the month of December the field averaged 6.4 mmscf/d and achieved a production uptime of 99%.

The workover on the dual string Well #1 finished at the beginning of the quarter. During the workover 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 between the B sand reservoir and 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 was limited by the Operator and both water and sand production rates were closely monitored. Sand production has been minimal and the water production has trended down over the quarter from more than 100 bbls per day to less than 20 bbls per day. As the water rate has dropped, the gas production rate has correspondingly increased with a recent rate of 4.2 mmscf/d. When the water rate has stabilised at a sufficiently low rate, the well can be opened further and higher gas production rates are believed to be achievable.

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

Well #2 achieved an average flow rate in the December 2009 quarter of approximately 2.3 MMscf/d, with the majority of this originating from the deeper E Sand completion.

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. This resource estimate excludes the anticipated increase in resources from the award of Block 211/27d to the Mulle joint venture in 2009, which contains a mapped southern extension to the field.

A number of changed conditions, including marked reductions in drilling and development costs combined with the recently announced fiscal incentive from the UK Treasury for small field developments, has prompted the joint venture to reconsider its options for the further appraisal of the field. The JV is developing a revised, phased work programme that reduces upfront costs for potential farm-in partners with a view to re-marketing the project to industry in 1H 2010. The current licence term for Blocks 211/22b and 27d does not expire until late 2011.

Due to operational reasons the well head recovery operation which was anticipated to take place in November 2009 has been delayed into 2010.

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EXPLORATION

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 a newly mapped prospect named Tiger, 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 1.5 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. 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.

Elixir has now completed various technical studies in relation to the Tiger prospect. A data room is being prepared and it is anticipated that the marketing of the prospect to industry will commence early in 2010. The Block has a licence term of 4 years with a drill-or-drop decision required by February 2012.

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

Block 211/18b is a traditional licence which was awarded in the 23[rd] UKCS Seaward Licensing Round in December 2005. The licence is located in the northern sector of the UK North Sea and contains the Leopard prospect.

Efforts to secure another farminee to contribute towards the cost of drilling of an exploration well at Leopard were not successful and consequently the licence was relinquished by the joint venture on 21 December 2010

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 December 2009 quarter.

NEW VENTURES

The Company examined a number of new business opportunities during the quarter. The opportunities represent both appraisal/development and exploration scenarios and are located within the United States and Europe. Several of the opportunities would represent meaningful extensions to the existing business model pursued by the Company.

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FINANCIAL SUMMARY AND OTHER MATTERS

At the end of the December 2009 quarter, Elixir held cash on hand of approximately $6.7 million. Receipts from production in the December 2009 quarter were approximately $438,000. The Elixir Group is debt free.

Please find attached the Company’s Appendix 5B for the 3 month period to 31 December 2009.

Yours sincerely,

ELIXIR PETROLEUM LIMITED

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Andrew Ross Managing Director

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

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 was compiled by Elixir or from material provided by the project operators and reviewed by the Elixir’s Exploration Director, Iain Knott, BSc, MSc, FGS, AAPG, who has had more than 25 years experience in the practice of geology, including more than 5 years experience in petroleum geology. Mr Knott consents to the inclusion in this report of the information in the form and context in which it appears.

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Appendix 5B Mining exploration entity quarterly report

Appendix 5B

Mining exploration entity quarterly report

Name of entity

ELIXIR PETROLEUM LIMITED

	ABN 51 108 230 995 Consolidated statement of cash flows		Quarter ended (“current quarter”) 31 December 2009	Quarter ended (“current quarter”) 31 December 2009
			31 December 2009
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other – Recovery from JV Net Operating Cash Flows			Current quarter $A’000	Year to date (6 months) $A’000
			438 (352) - (93) (256) - 68 - - 9	767 (693) - (556) (866) - 121 - - 135
			(186)	(1,092)
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 Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)			- - - - - - - - -	- - - - - - - - -
			-	-
			(186)	(1,092)

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Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(186)	(1,092)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other Convertible Notes Less underwriting fee Issue Costs Net financing cash flows	- - - - - - - - -	- - - - - - - - -
	-	-
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	(186) 6,953 (34)	(1,092) 8,081 (256)
	6,733	6,733

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

1.23 1.24 1.25	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10 Explanation necessaryfor an understandingof the transactions	Current quarter $A'000
		234
		Nil
	Payments include: Directors’ fees and salaries, and serviced office rental. All payments are o terms.	n normal commercial

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

N/A

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

N/A

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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	$A’000
	150
	100
Total	250

Reconciliation of cash

Reconciliation of cash	Reconciliation of cash
Reconciliation of cash at the end of the quarter (as		Current quarter	Previous quarter
shown in the consolidated statement of cash flows) to		$A’000	$A’000
the related items in the accounts is as follows.
5.1	Cash on hand and at bank	1,924	1,902
5.2	Deposits at call	4,809	5,051
5.3	Bank overdraft
		-	-
5.4	Other (provide details)
		-	-
	Total: cash at end of quarter(item 1.22)	6,733	6,953

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	Interest at beginning of quarter	Interest at end of quarter
	Leopard	Working Interest	56% WI	-
	None	Nil

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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(cents)	Amount paid up per security (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 Convertible Notes 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured,converted	-	-
	- -	- -
7.7 Options Ambrian Options Employee Options Tranche 1 Employee Options Tranche 2 Employee Options Tranche 3 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	637,148 1,750,000 3,250,000 2,750,000 8,387,148	- - - -	Exercise price $0.60 $0.25 $0.30 $0.35	Expiry date 16 May 2010 31 Mar 2011 31 Mar 2012 31 Mar 2013
	-	-	Exercise price -	Expiry date -
	-	-	-	-
	-	-	-	-
7.11 Debentures(totals only)	-	-	-	-
7.12 Unsecured notes(totals only)	-	-	-	-

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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.

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

Sign here: ............................................................ Date: 29 January 2010 ~~(Director~~ /Company Secretary)

Print name: Julie Foster

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