ELP Elixir Pet.

    RNS Number : 0120H
  Elixir Petroleum Ltd
  30 October 2008
   
                                                               Elixir Petroleum Limited
    (AIM : ELP)

    30 October 2008


    QUARTERLY ACTIVITIES REPORT FOR THE
    PERIOD ENDED 30 SEPTEMBER 2008

    Elixir Petroleum Limited ("Elixir" or "the Company") is pleased to announce its operational report for the quarter ended 30 September
2008. A full copy of this report, as released today on the ASX, is available at the Company's website, www.elixirpetroleum.com.

    HIGHLIGHTS
    *     Production receipts received in the quarter of $4.3 million
    *     Cash on hand at the end of the period of $12.9 million (and at 29 October of approx $14.2 million)

    COMMENT AND OUTLOOK

    Elixir was active in the September 2008 quarter across our portfolio. We were pleased that no material damage was occasioned to our
facilities located in the Gulf of Mexico with the passage of three hurricanes through the region in the quarter. A regional export pipeline
system however, was damaged as a consequence of Hurricane Ike, meaning that production at High Island remains shut-in pending repairs to the
pipeline. 

    A significant drop in oil and gas prices was experienced in the quarter as a result of the global financial crisis and fears of a period
of recession grew. Between 1 July and late October, oil and gas prices have declined approximately 50% in value. At the same time the
Australian dollar has declined in value against the US dollar (the currency in which we receive our production receipts) by approximately a
third. The decline in the Australian dollar has had the effect of partially offsetting the decline in commodity prices. However, the impact
of the shut-in at High Island and the decline in gas prices in the US will have a negative impact on cash flow in the December quarter. 

    Elixir remains well funded, with cash on hand in excess of $14 million at the date of this report. Elixir continues to examine
opportunities which have the potential to be value accretive to the Company although it is fair to say that preservation of cash during the
current difficult economic climate will be a priority. 

    An update on our various projects follows.

    STRATEGY

    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. 

    Elixir's business strategy is to acquire interests in exploration licences with high impact potential, to work up prospects internally
and to farm these out to industry to drill, typically on a full carry basis. Complementing this exploration strategy is the addition of
lower risk oil and gas development projects with appraisal upside located in the shallow waters of the Gulf of Mexico. These projects
typically demonstrate a short cycle time to production and provide cashflow for the Elixir Group.

    The Board of Elixir considers it important to remain flexible in the pursuit of new business opportunities which are judged to be
complementary to its existing business activities and able to deliver superior growth in shareholder value. 


    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

    Wells A-1 and A-2 at High Island discovered gas and condensate pay in two separate accumulations, with each well currently only
producing from the lower of the two reservoir zones. In the three month period to 30 September 2008, the following production results at
High Island were achieved: 

 High Island 268-A                                            Gas Production                                                                
                     Oil Production
                       Total Sep Qtr         Total Jun Qtr       Avg Daily Sep Qtr*    Avg Daily Jun Qtr    Change (%)  Total Sep Qtr (Bbls)
 Total Jun Qtr (Bbls)   Avg Daily Sep Qtr*    Avg Daily Jun Qtr    Change (%)
                          (MMscf)               (MMscf)              (MMscf/d)             (MMscf/d)                                        
                             (Bbls/d)              (Bbls/d)
 Project (100%)             281                   442                   4.7                   4.9              (4%)            10,711       
        19,331                 178                   212             (16%)
 Elixir (30% WI)             84                   133                   1.41                  1.5              (4%)            3,215        
        5,799                   54                    64             (16%)
    * Daily rate and average calculated up to 29 August 2008 when wells were shut-in for Hurricane Gustav

    The field was shut in for just over 2 days primarily due to Hurricane Dolly up to 29 August 2008. Well A-1 was shut-in for a further 2
days during this period for wireline work and a choke change out. The platform as a whole achieved an up time of 96% up to 29 August 2008. 

    On 29 August 2008 the field was shut-in due to difficulties with export pipeline pressures and production was not restored before the
passage of Hurricane Gustav led to the precautionary evacuation of the platform in early September 2008. Hurricane Ike forced the evacuation
of the platform again in mid-September. The High Island facilities suffered only superficial damage as a result of the passage of the two
hurricanes, but the High Island Offshore System ("HIOS"), a regional pipeline system into which production from High Island is ultimately
transported to shore, was damaged preventing production being re-instated at High Island. 

    We understand that repairs to the HIOS are likely to be effected in November. Production will recommence at High Island as soon as
practicable following the completion of the repairs. Despite the passage of two hurricanes and the precautionary evacuation of the platform
on two occasions, there were no safety incidents reported during the quarter.

    The observed decline in total production for the quarter presented in the table above is predominantly due to the wells being shut-in
for the month of September, as explained above. Prior to the shut-in, Well A-1 was producing approximately 0.4 million standard cubic feet
per day ("mmscf/d") and 170 barrels of condensate per day ("bcpd") over the reporting period up to the 29 August 2008. Attempts to
manipulate sleeves in this well have been abandoned due to operational complications. However, the prolonged shut-in of the well will be
useful in providing a further source of information to assist with ongoing reservoir management. Ultimately, it is expected Well A-1 will be
recompleted on the logged shallower zone once the condensate rim in the deeper zone has been fully depleted.

    Production of gas and condensate from Well A-2 remains relatively stable, although the well is exhibiting a slow, natural decline in
production over time, which is in accordance with expectations. The well achieved an average of approximately 4.3 mmscf/d and 8 bcpd up to
29 August 2008.  

    In the normal course, a lag of two months is experienced from the month of production to receipt of sales proceeds. Accordingly,
receipts in the quarter were for production in the months of May 2008 to July 2008 inclusive. Sales receipts for these months totalled
US$1.51 million. The average price realised for the sale of gas produced in July and August was US$11.78/Mcf, and for oil was US$121.31/Bbl.


    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, in Brazos Block 446-L SE/4, which is approximately 90 miles southwest of Houston,
Texas. The first well on Pompano, SL103229�1 ("Well �1"), was directionally drilled from a new caisson installed adjacent to the field's
existing "B" satellite platform. The second well, SL 103230�1 ("Well �2") was drilled from a caisson adjacent to the existing main
processing facility, the "A" platform. Well ATO�1 was placed on production on 10 March 2008 and Well ATO�2 on 1 May 2008.

    A third well on Pompano, SL 103230�4 ("Well �3") spudded on 22 September 2008 and reached planned total depth 21 days later on 13
October 2008. Unfortunately, the well only encountered potentially commercial sands in one horizon, the 6700' Sand, with the deeper sand
targets being wet. At the time of this report, Well �3 has been temporarily suspended pending a detailed review of data before a decision is
made as to whether to complete the well over the 6700' sands or to use the well bore as a sidetrack candidate in the future.

    In the three month period to 30 September 2008, the following production results were achieved at Pompano:

 PompanoField -                                                Gas Production                                                               
                      Oil Production
 Brazos Block 446-L
                        Total Sep Qtr         Total Jun Qtr       Avg Daily Sep Qtr     Avg Daily Jun Qtr    Change (%)  Total Sep Qtr
(Bbls)  Total Mar Qtr (Bbls)   Avg Daily Jun Qtr     Avg Daily Mar Qtr    Change (%)
                           (MMscf)               (MMscf)              (MMscf/d)             (MMscf/d)                                       
                              (Bbls/d)              (Bbls/d)
 Project (100%)              988                   903                   10.9                  9.9               9%              388        
         3,237                  4.3                   35.6            (88%)
 Elixir (25% WI)             247                   226                   2.7                   2.5               9%               97        
          809                   1.1                   8.9             (88%)

    Gas production in the quarter was 9% higher due to the reporting of a full period of production from Well ATO�2. Condensate rates have
declined from the last quarter, but the impact of this change to project cashflow is relatively minor.

    There were approximately seven days downtime during the reporting period, six of which arising as a result of the precautionary shut-in
during the passage of Hurricane Ike. Excluding the precautionary shut-in period, the platform achieved an average uptime of 98.6%. There
were no safety incidents reported in the period. 

    Well ATO�1 achieved an average of approximately 3.5 mmscf/d and 3 bcpd in the quarter, with the majority of the production being
delivered from the deeper B Sand. Production from ATO �1 has been restricted due to sand forming bridges in the short production string
which produces from the 6700 ft Sand. Water production is also affecting gas rates in the long production string which produces from the B
Sand. The water is believed to be originating from the deeper B2 Sand and is channelling up to the B Sand through a channel formed in the
annulus cement. 

    In early October, Well ATO�1 was shut-in as the operator made preparations to undertake a workover of the well to rectify some of the
issues described above and thereby attempt to increase production rates from the well. As part of the preparations a wireline entry will be
carried out on both strings to gather further planning information.

    Well ATO�2 achieved an average of approximately 7 mmscf/d and 7 bcpd for the quarter, with the majority of the production being
delivered from the deeper E Sand. The well continues to produce in accordance with expectations.

    In the normal course, a lag of two months is experienced from the month of production to receipt of sales proceeds. Accordingly,
receipts in the quarter were for production in the months of May 2008 to July 2008 inclusive. Sales receipts for these months totalled
US$2.45 million. The average price realised for the sale of gas produced in these months was US$8.46/Mcf, and for oil was US$118.06/Bbl. 

    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.

    During the quarter, the Red Fish lease was awarded to the Pompano joint venture participants. Work continues to evaluate the
opportunities within the block and Elixir is currently considering participation in two further extensions of the Red Fish area.


    APPRAISAL

    UK North Sea

    Project Name:          Mulle Prospect (Block 211/22b) 
    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 which has achieved flow rates from an appraisal well of up to 14,500 barrels of oil per day on test. The operator of
Block 211/22b, DNO (UK) Limited, published in late May 2008 a most likely contingent resource estimate for Mulle of 18 million barrels of
oil. This equates to a most likely net contingent recoverable oil resource to Elixir of almost 7 million barrels.

    The joint venture has developed a two well appraisal and testing programme for the Mulle accumulation and is seeking a further partner
or partners to enter the Block to assist with the funding of the programme. To that end, an online dataroom in respect of the Mulle
accumulation was opened in mid- September 2008 and the initial level of interest shown by industry has been very encouraging. A number of
companies have been admitted to the dataroom and it is thought likely that the anticipated closure of the dataroom at the end of October
will be delayed by two weeks because of the level of interest.


    EXPLORATION

    UK North Sea

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

    Block 211/18b (Licence P1381) is a traditional licence awarded in the 23rd Seaward Licensing Round in December 2005. The interest
holders in P1381 are Elixir (UK) (56%), RWE Dea UK SNS Limited (30%) and Sosina Exploration Ltd (14%). Under the terms of a farm-in
agreement finalised with RWE in August 2007, RWE will be contributing on a promoted basis to the cost of drilling an exploration well on the
Leopard prospect which lies within the block. 

    Efforts to secure another farminee in order to largely cover Elixir (UK)'s cost exposure in the proposed Leopard well are ongoing with
several companies currently assessing the opportunity.

    Testing of 3D seismic data with a new processing technique is expected to commence in November. The technique could replace the need for
a shallow seismic acquisition over the well location, representing a considerable time and cost saving to the project. The availability of
suitable drilling rigs is still tight, however the licence partners are committed to drilling a well in 2009 subject to finalisation of farm
out and rig availability.

    Project Name:           Bobcat Prospect (Block 21/16b) 
    Location:                   Central UK North Sea
    Ownership:               40% Working Interest
    Operator:                   Elixir (UK)

    Block 21/16b contains four clustered Jurassic Fulmar Sand prospects named Bobcat. During the June quarter, a marketing campaign for the
block commenced and a data room opened. There has been a consistent level of interest in the online dataroom during the September quarter.
Several companies have visited the dataroom, but no firm offers to farmin have yet been received.  

    The dataroom will remain open until the end of 2008. A formal well commitment must be declared by late Q1, 2009 or the licence will be
relinquished.

    Project Name:          Fat Cat Prospect (Block 13/25) 
    Location:                  Central UK North Sea
    Ownership:              12.5% Working Interest
    Operator:                  Petro-Canada 

    Block 13/25a (Licence P1404) is a promote licence that was awarded in the 23rd Seaward Licensing Round in December 2005. The initial
approval of the merger of Block 13/25a with the adjacent Block 13/24d was achieved in late 2007, with Petro-Canada assuming operatorship of
the merged block. The relinquishment of part of the northern section of 13/25 was also approved at the same time.  

    A Deed of Variation was lodged with the UK regulator and the two blocks are now merged, with Petro-Canada as operator. While the two
licences are separate (P1404 & P1459), they are both operating under the same work programme and obligation to commit to a contingent well
in 2009.

    A meeting of the joint venture was held on 17 September 2008 during which recently completed 2D seismic mapping was presented, forward
plans discussed and the 2009 budget was introduced. The seismic data is of high quality although the on-block in-place volume has decreased
as a result of the mapping activities.  Elixir (UK) is currently considering its options with respect to its interest in the block.

    West Africa - Sierra Leone

    Project Name:           Block SL-4 
    Location:                   Offshore Sierra Leone 
    Ownership:               15% Working Interest
    Operator:                    Elixir (UK)

    An interest in Block SL-4 was assigned to Elixir (UK) on 20 February 2008. At that time, Elixir (UK) was also approved as operator of
the licence. Block SL-4 comprises an area of 4,429 km2 lying in water depths from 100m to over 3,500m offshore Sierra Leone, West Africa.
The acquisition of a 1,222 km2 3D seismic survey over the Block was completed in early June.

    At the conclusion of the current quarter approximately 85% of the processing sequence of the 3D data set was completed and it is
anticipated that the full sequence will be completed by end of October 2008. 

    Elixir announced on 26 September 2008 that its subsidiary, Elixir (UK), had placed its joint venture partner, Prontinal Limited, into
default for failing to meet its obligations with respect to the payment for the 3D data acquisition and various other joint venture costs.
Elixir also advised the market that Elixir (UK) had received a letter of demand from the seismic contractor in relation to the outstanding
amount. Elixir (UK) has sought from the seismic contractor, but not received, clarification in relation to the alleged debt and letter of
demand. Elixir (UK) is in discussions with its partner and the seismic contractor in an effort to resolve the dispute.


    MINERAL ASSETS

    During the quarter Elixir continued to market the seven mineral asset licences it holds in the Northern Territory and South Australia
which were acquired as a result of the merger with Gawler Resources Limited. Discussions have been held with a number of parties with
respect to a possible sale or farm-out of the licence interests, but to date no offers have been forthcoming. Failing receipt of offers for
the licences, it is expected the licences will not be renewed at the conclusion of their current terms. 


    FINANCIAL SUMMARY

    At the end of the September 2008 quarter, Elixir held cash on hand of approximately $12.9 million.

    The full year financial report for the Company was issued on 30 September 2008. The accounts reported an Earnings Before Interest, Tax,
Depreciation, Amortisation and Exploration Write-offs (EBITDAX) result of $5.9m for the period and a consolidated loss of $6.4m.

    REPORTING SCHEDULE

    A notice of meeting together with the 2008 Annual Report for the Company was posted to shareholders on 24 October 2008. The 2008 Annual
General Meeting of the Company is due to be held on Monday, 24 November 2008 in Perth, Western Australia.

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

 Elixir Petroleum Limited                     Blue Oar Securities Plc
 Alex Neuling                                 Jerry Keen / Olly Cairns
 Tel: (+61) 8 9440 2650                       Tel: (+44) 207 448 4400 / (+61) 8 6430 1631


 Conduit PR
 Jonathan Charles
 Tel: (+44) 207 429 6666


    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 Block SL-4 offshore Sierra Leone, 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.

This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
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