Elixir Energy Ltd (EXR.AX) (ASX: EXR) is an ASX listed gas exploration and development company. It is currently primarily focused on an appraisal program targeting natural gas in the form of tight gas in Queensland, Australia.
It has called this the Grandis Gas Project, which covers an extensive area located close to existing gas transmission infrastructure centered on the Wallumbilla gas hub. This hub is connected to domestic and international markets. In the Grandis area there is easy access to well locations by road. The Taroom Trough has been an established oil and gas province for many decades. The Grandis Gas Project has booked contingent resources (2C) of 3 trillion cubic feet (Tcf) of gas.
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Farm-in Highlights
- Farm-in deal with Santos secures Elixir a 50% Working Interest in 2 additional permits in the Taroom Trough
- Contingent Resource attributed to the deal is 1.1 trillion cubic feet of gas (2C net to Elixir)
- Up to $9 million dollars equity capital raising to fund the farm-in work
- Deal & fund raising is highly accretive on a contingent resource per share basis
We asked CEO Neil Young
Could you discuss the significant increase of 68% to the TCFE and what this means for Elixir stakeholders?
“This recent deal with Santos gives Elixir the largest land position in the Taroom Trough – a location that is emerging as the hottest new source of the large volumes of gas that are required for Eastern Australia’s gas market – as well as the nearby LNG plants.
With now around 3 trillion cubic feet of discovered gas resources – each owner of a single share of EXR owns nearly 2.5 mmbtus of gas. That single share costs ~4c, whilst the revenue generation potential of those resources is ~A$35!”
Discuss the strength of this Private Placement, particularly noting the addition of new institutional investors?
“The capital raise associated with the Santos deal was supported by existing shareholders and introduced some new institutional investors onto the register.”
Elixir conducted an equity placement where it received binding firm commitments to support this expansion of its Taroom Trough position, on the following terms:
Placement to raise $7 million (before costs) through the issue of 199,468,466 new shares to institutional and sophisticated investors at a price of 3.5 cents per share (a 20.5% discount to the last close and a 16.3% discount to the 5 day VWAP). Each two new shares issued will receive an attached listed option of the class currently on issue
Gas Exploration and Extraction in the Taroom Trough
The Taroom Trough, a prominent geological feature located within the Bowen Basin in Queensland, Australia, represents one of the country’s most vital regions for natural gas exploration and development. Stretching over hundreds of kilometers, this deep structural trough is rich in reserves of both conventional natural gas and coal seam gas (CSG), positioning it as a key pillar of Australia’s energy sector and a significant contributor to the nation’s liquefied natural gas (LNG) exports.
Geological and Resource Significance
The Taroom Trough is characterized by thick sequences of Permian-aged coal measures and sandstone reservoirs, which contain highly concentrated methane gas deposits. The deep coal seams and associated sandstone formations serve as some of the most productive gas reservoirs in the Bowen Basin, supporting both coal seam gas (CSG) extraction and conventional gas drilling.
Exploration and Development
The exploration and development of natural gas in the Taroom Trough involve comprehensive geological assessments, including extensive seismic surveys, core sampling, and exploratory drilling. These methods have validated the region’s substantial gas potential, sparking significant investments from major domestic and international energy companies. The development process incorporates several key activities:
-Coal Seam Gas Wells: These wells are specifically designed to extract methane trapped within the coal deposits, which is a critical component of the region’s gas output.
– Conventional Gas Drilling: Targeting the deep sandstone reservoirs, this method aims to tap into conventional natural gas resources that complement the CSG extraction.
– Advanced Extraction Techniques: Technologies such as hydraulic stimulation are employed to enhance gas flow from the reservoirs, ensuring more efficient extraction processes.
Located strategically within Queensland’s energy network, the gas produced from the Taroom Trough is transported via an extensive pipeline system to processing facilities along the eastern coastline. This infrastructure is essential for supplying both the domestic market and international export destinations. The region significantly bolsters Australia’s position as a leading LNG exporter, contributing to major markets across Asia, including Japan, South Korea, and China. The economic implications are profound, creating jobs, stimulating local economies, and generating substantial revenue for both the state and federal governments.
Environmental and Regulatory Considerations
Given the scale and intensity of gas extraction activities, operations in the Taroom Trough are governed by stringent environmental regulations. These regulations focus on critical areas such as water management, land rehabilitation, and emissions control to mitigate the environmental impact of extraction. Balancing economic growth with sustainable resource management remains a top priority for both industry stakeholders and regulatory bodies. Initiatives include ongoing advancements in carbon capture technologies, methods for water recycling, and comprehensive ecosystem conservation strategies that aim to protect local biodiversity.
As the global demand for energy continues to rise, the Taroom Trough is poised to remain a crucial energy hub. Its potential will not only shape the future of gas production in Australia but also reinforce the country’s competitive standing in the international energy market, ensuring it meets burgeoning energy needs while prioritizing sustainability and environmental stewardship.
