ELIXIR ENERGY LIMITED — Interim / Quarterly Report 2011

Jan 30, 2012

ASX ANNOUNCEMENT

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QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31 DECEMBER 2011

HIGHLIGHTS

• Completion and integration of all ongoing technical studies on the Moselle Permit

• Discussions commenced with regional government authority concerning forward drilling programme at Moselle

• Additional 2D seismic reprocessing and interpretation underway to further refine conventional prospects and drilling pad locations for Moselle

• Appointment of CIBC as financial adviser on the farmout of Moselle

• Commencement of Moselle farmout process with a number of interested parties currently participating in the farmout and dataroom process

• Award of two new licences in the UK North Sea

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 December 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 the eastern part of the Paris Basin in North-eastern France. The Permit is prospective for four main play types within the Triassic and Carboniferous aged sequences, which include conventionally reservoired oil and gas and a giant tight gas sand play.

Regionally, seventy one wells have penetrated the Triassic interval and a further twenty five wells have penetrated the Carboniferous interval, being the two primary sequences in the Saar-Lorraine Basin. The wells have been drilled over a period spanning nearly 60 years with at least 78% of the Carboniferous well penetrations having recorded oil and/or gas shows throughout the target intervals. At least two wells are known to have produced gas to surface from the Carboniferous source rock interval. 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 107 regional wells has been assembled. The database contains over 800 kilometres of digitised wireline well log data from 25 wells, over 600 core and cuttings samples from 2,700 metres of available core taken from six key wells and over 550 geochemical assays conducted on rock samples from eleven wells located in, and adjacent to, the Permit.

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

The database also contains 998 line kilometres of 2D seismic data over the permit which was reprocessed and reinterpreted during 2011. During this quarter a further 364 line kilometres of 2D was reprocessed and is currently being interpreted. Once completed, the total reprocessed and reinterpreted 2D seismic dataset will stand at 1,362 line kilometres. The balance of the remaining digital raw seismic data over the permit of approximately 1,500 line kilometres has also been purchased, together with a 25km[2] 3D seismic survey.

Mapping of a number of conventional hydrocarbon prospects and leads was competed in September 2011 and volumetric calculations have been produced. A total of nineteen conventional prospects and leads have been identified on the Permit in the Carboniferous and Triassic sections. Netherland Sewell & Associates Inc. (“NSAI”) have independently verified the original hydrocarbon-in-place volume for the identified prospects and leads at a mean unrisked Original Oil In-Place (“OOIP”) of 2.1 billion barrels (“Bbbls”) of oil. Alternatively, if the prospects and leads are gas charged, a mean unrisked Original Gas In-Place (“OGIP”) estimate of 2.2 trillion cubic feet (“TCF”) of gas has been provided by NSAI.

In addition to the volumetric assessment of the conventional prospectivity, NSAI have provided an independent assessment of the unconventional resource potential on the permit. NSAI has provided an undiscovered, best estimate volume for unconventional resources of 165 Bbbls of OOIP and 650 TCF of OGIP. It has been assessed that, on average, over 3,000m of the Carboniferous aged source rock currently lies in the thermal maturity window.

Technical 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 and reports for these have now been finalised. 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.

The remaining technical work is focused on interpreting and integrating the most recently processed 2D seismic data to identify optimal well locations for the drilling of multi-horizon prospects. Efficient frontier analysis has indicated that a four well drilling programme will target approximately 80% of the currently mapped conventional prospectivity within the Permit. During the quarter discussions were held with the local authority based in Lorraine to establish the well permitting process and associated timelines. Well engineering services have been procured and activities over the coming quarter will establish well design and costs. At this stage we are targeting the commencement of drilling activities in Q4, 2012.

During the period under review, CIBC World Markets Plc was appointed to provide advisory and investment banking services in relation to the farmout of an interest in the Moselle Permit. Farm-out activities commenced in December with detailed management presentations being provided to a number of interested parties. Data room and seismic workstation reviews are currently ongoing with interested parties.

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.

A conditional farmout agreement relating to Block 211/12b was entered into by Elixir on 8 July 2011. The completion of the Tiger farmout was conditional upon the farminee obtaining the consent of the UK Secretary of State for Energy and Climate Change (“DECC”) to act as operator of the licence and to the assignment of an interest in the licence. The farminee received the necessary DECC consent on 25 October 2011, however the proposed farminee’s source of funding failed to perform its obligations under its contracted funding arrangements.

We were advised that the proposed farminee commenced legal proceedings to compel the funding source to meet its obligations and had commenced discussions with alternative funding partners. Ultimately, the proposed farminee was unsuccessful in securing funds and Elixir elected to terminate the conditional farmout agreement on 23 December 2011.

In the meantime, Elixir has recommenced efforts to secure a further farminee to the Tiger opportunity.

Project Name: Newly Awarded Licences (Block 12/18 and 12/19a (split)) Location: Inner Moray Firth, UK North Sea Ownership: 100% Working Interest Operator: Elixir Petroleum (Europe) Limited

On 3 January 2012 Elixir received notice that it had been offered two new adjoining licences in the Inner Moray Firth area of the UK North Sea. The licence awards are the completion of the 26[th] UK Seaward Licensing Round.

The Blocks were applied for in the 26th UK Seaward Licensing Round and have been offered to Elixir under promote licences as 100% interest holder and operator. The work obligation comprises the purchase of 3D seismic data and will require a drill-or-drop decision to be made on the licences by early 2014.

The Blocks are contiguous and are located approximately 150 km north east of Inverness, in a water depth of approximately 75m. The Blocks lie to the north east of the Beatrice oil field located in Block 11/30a and to the west of the Captain oil field in Block 13/22a. A single large stratigraphic prospect has been identified in the Middle Jurassic Beatrice Formation on the northerly edge of the Smith Bank High.

The prospect is predicted to have Beatrice Formation sands as the reservoir, which has been identified as an acoustic impedance anomaly on several 2D seismic lines. No wells to date have targeted the Smith Bank High in the Blocks. The forward work programme in 2012 will focus on the interpretation of the 3D seismic data set to evaluate and further de-risk the prospect.

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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 4.53 billion cubic feet (“Bcf”) of gas and approximately 187,000 barrels (“Bbls”) of condensate (100% project).

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

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 Sept Qtr (Bbls/d)	Change (%)
Project (100%)	44.1	53.2	0.48	0.58	-17%	4,746	6,590	52	72	-28%
Elixir (30% WI)	13.2	16.0	0.14	0.17	-17%	1,424	1,977	15.5	21.5	-28%

The field maintained an average uptime performance of 90% for the period. The downtime was due to compressor issues on the HI-442 regional processing facility. There were no safety incidents reported in the period.

As indicated previously, Elixir is considering its options for its interest in the High Island field, including possible divestment.

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 been producing from two 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.

As previously reported, workovers undertaken on the two previously producing Pompano wells were unsuccessful at re-establishing production from the wells. In the quarter under review, the operator has been producing the wells cyclically on a monthly basis by blowing-down built up pressure in the wells which has resulted in the production of small quantities of gas.

Elixir elected not to participate in the unsuccessful workover operations and consequently is not a participant in the wells. Elixir is considering its options for its interest in the Pompano field.

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FINANCIAL SUMMARY AND OTHER MATTERS

In early October 2011, the Company placed 28,300,000 new ordinary shares at a price of $0.04 per share to predominantly existing shareholders of the Company to raise $1.13 million (before costs). At the end of the reporting period, Elixir held cash on hand of approximately $1.4 million. Sales receipts from oil production received in the December 2011 quarter were approximately $185,000. The Elixir Group remains debt free.

At the end of December, Elixir announced the establishment of an Unmarketable Parcel Program to provide an opportunity for eligible small shareholders to either sell their shareholding without incurring any brokerage or handling costs, or (in the case of Australian and New Zealand based small shareholders), the opportunity to instead top-up their shareholding, again without incurring brokerage or handling costs. A small shareholder is a holder of Elixir shares with a market value of less than $500 as at 22 December 2011. Elixir has undertaken the program to reduce the significant administrative cost of managing small shareholdings. The closing date for small shareholders to elect to either retain, sell or top-up their shareholding in Elixir is 5pm (AEDT) on Tuesday, 14 February 2012.

In early October, Mr Alan Watson was appointed to the Board as a non-executive director. Immediately prior to the AGM of the Company, Mr Jon Stewart retired as Chairman of Elixir and Alan Watson was elected to the Chair.

Please find attached the Company’s Appendix 5B for the 3 month period to 31 December 2011.

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 Tiger Project 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	ABN 51 108 230 995 Consolidated statement of cash flows	Quarter ended (“current quarter”) 31 December 2011	Quarter ended (“current quarter”) 31 December 2011
			31 December 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 (6.months) $A’000
		185 (334) ‐ (49) (309) ‐ 7 ‐ ‐ ‐		309 (558) ‐ (114) (623) ‐ 7 ‐ ‐ ‐
		(500)		(979)
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)		‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐		‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
		‐		‐
		(500)		(979)

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Appendix 5B Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought forward)	(500)	(979)
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) ‐Issue Costs Net financing cash flows	1,132 ‐ ‐ ‐ ‐ (81)	1,132 ‐ ‐ ‐ ‐ (81)
	1,051	1,051
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 ofquarter	551 901 (39)	72 1,320 21
	1,413	1,413

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
		99
		‐
1.25	Explanation necessaryfor an understandingof the transactions
	Directors’ fees, salaries and superannuation entitlements. 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 reportingentityhas an interest
	N/A

• 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.

		Amount available	Amount used
		$A’000	$A’000
3.1	Loan facilities	‐	‐
3.2	Credit standby arrangements	‐	‐

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	250
	‐
	‐
	300
Total	550

Reconciliation of cash

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.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	1,055	894
	358	7
	‐	‐
	‐	‐
Total: cash at end of quarter(item 1.22)	1,413	901

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

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 4

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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	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	217,288,472		217,288,472	Various	FullyPaid
	‐ 28,300,000 ‐		‐ 28,300,000 ‐	‐ $0.04 per share ‐	‐ Fully Paid ‐
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 – lapsed pursuant to terms and conditions of employee share plan		2,250,000 2,000,000 4,250,000		Exercise price $0.30 $0.35	Expiry date 31 March 2012 31 March 2013
		1,000,000 750,000		$0.30 $0.35	31 March 2012 31 March 2013
7.11 Debentures (totals only)
7.12 Unsecured notes(totals only)

• See chapter 19 for defined terms.

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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: 31 January 2012 ~~(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.

== == == == ==

• See chapter 19 for defined terms.

Appendix 5B Page 6

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