ELIXIR ENERGY LIMITED — Interim / Quarterly Report 2011

Jul 28, 2011

ASX ANNOUNCEMENT

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QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30 JUNE 2011

HIGHLIGHTS

Completion of technical studies relating to unconventional prospectivity at Moselle Permit

• Final integration of conventional prospectivity studies underway with a number of prospects mapped Moselle independent resource estimate well advanced and due Q3, 2011

• Conditional farmout achieved on 90mmbbl Tiger prospect in UK North Sea

• Work continuing on new project acquisitions

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 onshore France and in the UK North Sea.

A summary of the Group’s activities for the June 2011 quarter is set out below.

EXPLORATION

France

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

The Moselle Permit is a 5,360 km[2] (1.34 million acre) onshore exploration block located in north-eastern France. The Permit is prospective for a number of different play types, including conventionally reservoired oil and gas and unconventionally trapped hydrocarbons (i.e. tight gas sands and liquids rich gas shales).

Regionally, seventy one wells have penetrated the Triassic interval and a further twenty five wells have penetrated the Carboniferous interval, being the two primary targets in the basin. The wells have been drilled over a period spanning nearly 60 years and a number have recorded hydrocarbon shows throughout the target intervals. At least two wells are known to have produced gas to surface. The Permit was awarded in January 2009 for an initial five year term. Elixir acquired operatorship in April 2010 and holds a 100% working interest in the Permit.

A large geological database containing information on over 100 regional wells has been assembled. The database contains over 455 kilometres of digitised wireline well log data from 25 wells, core and cuttings samples from over 2,800 metres of available core from six key wells and over 550 geochemical assays conducted on rock samples from eleven wells located in, and adjacent to, the Permit.

The database also contains 534 line kilometres of 2D seismic data over the permit which was reprocessed and reinterpreted during 2010 and early 2011. This quarter saw the completion of the reprocessing and reinterpretation of an additional 464 line kilometres of 2D seismic data which has been used to provide an improved understanding of conventional exploration targets within the permit. The total reprocessed and reinterpreted 2D seismic dataset now stands at 998 line kilometres. The balance of the remaining digital raw seismic data over the permit of approximately 1,500 line kilometres has also been purchased.

ASX CODE: EXR

Elixir Petroleum Limited

www.elixirpetroleum.com

ABN 51 108 230 995 Level 20, 77 St George’s Terrace PERTH WA 6000, AUSTRALIA T: +61 8 9440 2650 F: +61 8 9440 2699 E: info@elixirpetroleum.com

Mapping of a number of conventional hydrocarbon prospects and leads was completed in the quarter and volumetric calculations are progressing. Additional sampling of cores and cuttings from key wells also took place in the quarter to improve the granularity of existing interpretations and to further improve our understanding of the conventional hydrocarbon potential within the permit.

Further studies designed to assess both the conventional and unconventional prospectivity within the permit area, including additional geochemical analyses, porosity/permeability analyses of sands, a detailed chemostratigraphy study and gravity data interpretation over approximately 28,400km[2] of land in, and adjacent to, the Moselle Permit, have all been completed. The studies are now at an advanced stage of integration and have significantly improved characterisation of the sub-plays within the permit and the hydrocarbon volumetric potential for both conventional and unconventional systems. To date, conventional prospectivity has been identified in five different stratigraphic intervals within the permit. Within these intervals have been mapped 8 large prospects and 4 leads.

When finalised, the integration of the conclusions from these studies will guide the forward exploration work programme at Moselle for 2011 and 2012.

As previously reported, Netherland Sewell & Associates Inc. (“NSAI”) has been engaged by the company to provide an independent report of the conventional and unconventional resource potential within the permit. NSAI remains on target to deliver its report in the coming quarter.

France legislates against the use of hydraulic fracture stimulation

During the course of the quarter the French Parliament enacted legislation which now precludes the use of hydraulic fracturing as a stimulation technique within France. The law became effective on 13 July 2011. The new law also established a National Commission responsible for reporting to Government and Parliament on developments in unconventional resource exploration globally and on advances made in hydraulic fracture stimulation technologies and practices.

The hydraulic fracture stimulation of wells is currently the standard industry technique used to mobilise hydrocarbons from low permeability rock. The technique has been used successfully several dozen times in France in the past in conventional oil and gas fields and over 2 million times globally since its inception in the late 1950’s. The legislative position taken by the French Parliament is contrary to the recent preliminary recommendations of the joint committee of the French Ministry of Industry and the Ministry of Ecology (“CGIET/CGEDD”). The CGIET/CGEDD published the first of a two part study into the possible economic, social and environmental impacts of unconventional hydrocarbon resource exploitation within France on 21 April 2011.

The report was supportive of the examination of unconventional oil and gas shale potential within France and proposed that certain regulated exploration activity be permitted so that the size, potential and commerciality of unconventional resources can be assessed, and then a further decision made concerning its extraction through development and production activities. The final instalment of the report of the CGIET/CGEDD is due to be published in the near term.

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 was awarded in February 2009 and has a licence term of four years.

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The Block contains the Tiger prospect, which lies five kilometres to the east of the giant 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 by BP 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 Tiger data room closed at the end of January, 2011. Following an evaluation of offers received from industry participants, a preferred bidder was selected and transaction documentation was negotiated during the course of the reporting period. A conditional farmout agreement was entered into by Elixir on 8 July 2011. The terms of the farmout will see Elixir carried on partially promoted terms through the drilling of one firm exploration well and an optional appraisal well. Elixir has also secured an option to be carried on attractive terms through the development phase of the project in the event a commercially developable discovery is made.

The completion of the Tiger farmout is conditional upon the farminee obtaining the consent of the UK Secretary of State for Energy and Climate Change to act as operator of the licence. It is anticipated that the approval process will complete in late September 2011. Upon the completion of the transaction, the farminee will pay to Elixir a substantial cash contribution towards past costs.

Project Name: Dumas Project (Block 30/25a (split)) Location: Central UK North Sea Ownership: 100% Working Interest Operator: Elixir Petroleum (Europe) Limited

On 1 November 2010, Elixir announced that it had been successful in its application for the southern part of Block 30/25 in the 26[th] Seaward Licensing Round. Block 30/25a contains a Lower Cretaceous and three Upper Cretaceous aged oil prospects that have been mapped on 2D seismic data.

During the quarter a 3D seismic survey over the licence area was purchased, satisfying Part I of the work programme obligations under the terms of the licence agreement. It is expected that the four Cretaceous aged prospects will be worked up to drill ready status by Q4, 2011 and a farmout of the opportunity will then be initiated.

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 June 2011 quarter.

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

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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.

During the quarter the Operator held discussions with stakeholders in the area with a view to establishing a viable export route for a one well development of the Mulle accumulation. At the conclusion of the quarter, the discussions concerning co-venturing Mulle were ongoing.

The current license term for Blocks 211/22b and 27d expires in September 2011. To retain the licence following that point would require the approval of the Secretary of State for Energy and Climate Change and a commitment to undertake significant activity; likely to be the drilling of a well.

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 east Texas coast in the Gulf of Mexico. The field commenced production in September 2007 from two wells and has produced to date in excess of 4.1 billion cubic feet (“Bcf”) of gas and approximately 177,000 barrels (“Bbls”) of condensate (100% project).

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

High Island 268A		Gas Production	Gas Production	Gas Production			Oil Production	Oil Production	Oil Production
	Total Jun Qtr (MMscf)	Total Mar Qtr (MMscf)	Avg Daily Jun Qtr (MMscf/d)	Avg Daily Mar Qtr (MMscf/d)	Change (%)	Total Jun Qtr (Bbls)	Total Mar Qtr (Bbls)	Avg Daily Jun Qtr (Bbls/d)	Avg Daily Mar Qtr (Bbls/d)	Change (%)
Project (100%)	58.2	6.9	0.64	0.08	843%	12,186	1,717	134	19	710%
Elixir (30% WI)	17.5	2.1	0.19	0.02	843%	3,656	515	40	6	710%

At the commencement of the reporting period, modifications to surface pipework were in the process of being completed to allow the use of gas lift on Well A1 utilising gas from Well A2. The operation of the gas lift resulted in a significant improvements in both oil and gas production rates during the reporting period. The field maintained an average uptime performance of 77% for the period, however this included non-productive periods associated with the finalisation of the installation of the gas lift system. In the month of June, uptime performance was 98%. There were no safety incidents reported in the period.

The Bureau of Ocean Energy Management Regulation and Enforcement (“BOEMRE”) 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 continued to produce at rates above the prescribed BOEMRE rate of 50 bopd. The intention of the operator is to approach BOEMRE in the coming weeks to seek its approval to the recompletion of the two wells at High Island over the shallower gas sands within each well as soon as possible. A successful workover at High Island would result in a significant increase in gas production and sales revenue from the field.

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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 east Texas coast and 110 kilometres south of Houston. The field has two producing wells, with production from three separate reservoirs. The field has produced approximately 6.35 Bcf of gas and 6,300 Bbls of condensate (100% project) since the commencement of production in March 2008.

The following table summarises the production achieved from Pompano for the June quarter:

Pompano Field – Brazos Block 446-L		Gas Production	Gas Production	Gas Production				Oil Production	Oil Production
	Total Jun Qtr (MMscf)	Total Mar Qtr (MMscf)	Avg Daily Jun Qtr (MMscf/d)	Avg Daily Mar Qtr (MMscf/d)	Change (%)	Total Jun Qtr (MMscf)	Total Mar Qtr (Bbls)	Avg Daily Jun Qtr (MMscf/d)	Avg Daily Mar Qtr (Bbls/d)	Change (%)
Project (100%)	87	165	0.96	1.83	-47%	63	127	0.69	1.4	-50%
Elixir (25% WI)	22	41	0.24	0.46	-47%	16	32	0.17	0.3	-50%

The field achieved an uptime of over 99% during the quarter. There were no safety incidents reported in the 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. During the reporting period gas production from the ‘B’ Sand in Well ATO#1 dropped significantly from that reported in the prior quarter. It seems that the completion over the ‘B’ Sand may have become restricted due to water breakthrough destabilising the reservoir interface which has resulted in sand packing off the completion. This has reduced the production rate from this horizon, even though the well currently maintains sufficient pressure to flow naturally to surface. This horizon continues to be closely monitored.

FINANCIAL SUMMARY AND OTHER MATTERS

At the end of the reporting period, Elixir held cash on hand of approximately $1.34 million. Sales receipts from production received in the June 2011 quarter were approximately $321,000. Receipts in respect of production sold during the reporting period from both projects in the Gulf of Mexico totalling approximately US$115,000 were received immediately following the quarter. Upon completion of the Tiger farmout, which is expected in the current quarter, Elixir will receive a substantial cash payment from the farminee. The Elixir Group remains debt free.

Please find attached the Company’s Appendix 5B for the 3 month period to 30 June 2011.

Yours sincerely,

ELIXIR PETROLEUM LIMITED

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Andrew Ross Managing Director

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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 Manager, 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 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity

ELIXIR PETROLEUM LIMITED

	ABN 51 108 230 995 Consolidated statement of cash flows		Quarter ended (“current quarter”) 30 June 2011	Quarter ended (“current quarter”) 30 June 2011
			30 June 2011
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 (provide details if material) Net Operating Cash Flows			Current quarter $A’000	Year to date (12.months) $A’000
			71 (388) - (531) (428) - 1 - - -	1,232 (1,786) - (1,564) (1,282) - 43 - - -
			(1,275)	(3,357)
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)			- - - - - - - - -	- - - - - - - - -
			-	-
			(1,275)	(3,357)

• See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 1

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)	(1,275)	(3,357)
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		(1,275) 2,668 (73)	(3,357) 5,148 (471)
		1,320	1,320
Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities
1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10		Current quarter $A'000
			151
			-
1.25	Explanation necessaryfor an understandingof the transactions
	Directors’ fees, salaries and rent. All payments are on normal commercial terms.

			Current quarter
			$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2		151
1.24	Aggregate amount of loans to the parties included in item 1.10		-
1.25	Explanation necessaryfor an understandingof the transactions
	Directors’ fees, salaries and rent. All payments are on normal commercial	terms.

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

• See chapter 19 for defined terms.

Appendix 5B Page 2

17/12/2010

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
	160
	-
	-
	250
Total	410

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	1,273	2,607
5.2 Deposits at call	47	61
5.3 Bank overdraft	-	-
5.4 Other (provide details)	-	-
Total: cash at end of quarter(item 1.22)	1,320	2,668

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.

17/12/2010 Appendix 5B Page 3

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	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 (description and conversion factor) Employee Options Tranche 2 Employee Options Tranche 3 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter		3,250,000 2,750,000 6,000,000		Exercise price $0.30 $0.35	Expiry date 31 March 2012 31 March 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 5).

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

Sign here: ............................................................ Date: 29 July 2011 ( ~~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 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting 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.

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• See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 5