Elixir Energy: An Emerging Gas Player Well Positioned to Capitalize on Favorable Market Dynamics

• Oil and gas prices are high, energy security is valued, and consolidation emerging in the sector. Elixir's assets in Australia and Mongolia offer security of supply.
• The Grandis gas project in Queensland, Australia is close to infrastructure and markets. Drilling upcoming in a rapidly growing market.
• The well program at Grandis is nearly 50% funded by the Australian government. Goal is to book reserves and upside potential.
• Success could bring interest from majors looking for assets like Grandis in a "super basin". Optionality for development capital.
• Near term catalysts with drilling at Grandis and Mongolian pilot results. Experienced team and funding sources secured. Assets 100% owned.

About Elixir Energy

Elixir Energy is an Australian oil and gas exploration company focused on the appraisal and development of natural gas resources in Australia and Mongolia. The company's primary asset is the 100% owned Gobi Desert Project in Mongolia, which encompasses one of the largest coalbed methane (CBM) resources in the country. Elixir also holds a 100% interest in the Grandis Gas Project which is very well located in the southern Taroom Trough. The Grandis Gas Project covers an area of 1,000 km² located close to existing gas transmission infrastructure centred 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.

With global gas prices at multi-year highs and energy security concerns at the fore, Elixir Energy finds itself strongly positioned to capitalize on highly favorable market conditions. The company is led by an experienced management team with decades of oil, gas and CSG experience at leading Australian E&P companies like Santos and QGC. Elixir Energy is listed on the Australian Securities Exchange (ASX) under the ticker EXR and has a modest market capitalization of around A$67 million.

Interview with Neil Young, MD & CEO of Elixir Energy Ltd

High Impact Exploration Provides Near-Term Catalysts

Elixir Energy has several potentially high impact exploration events on the horizon that could significantly re-rate the stock:

• The company is set to spud the Daydream 2 appraisal well at its Australian Permit within the next month. Daydream 2 aims to prove up contingent resources and book initial reserves at the project. Success would firmly establish it as a potentially substantial gas resource and catalyze further appraisal.
• Elixir Energy is also carrying out an ongoing CBM pilot production program in Mongolia, with results expected over the coming months. Positive results would prove commercial gas flow rates and set the stage for larger-scale CBM development.
• With majors like Shell also active in the hydrocarbon prospective Terum Trough region of Queensland, there is M&A potential for consolidation. Elixir has an attractive asset in a region attracting increasing industry interest.

Large Gas Resources in Strategic Locations

Elixir Energy's projects contain substantial prospective gas resources, estimated by the company to be in the order of 12-15 trillion cubic feet (TCF) net to Elixir. Importantly, both the Australian and Mongolian projects enjoy strategic proximity to key gas demand centers:

• The Australian project area in Queensland's Surat Basin is well positioned to supply the underserved and tightening East Coast Gas Market. Existing pipeline infrastructure provides connectivity to major demand centers like Brisbane and Gladstone.
• The Mongolian project in the South Gobi basin is favorably located to supply gas to northern China via pipeline. Location and scale position the project well to alleviate China's severe gas supply shortfalls.

Elixir's Mongolian acreage also provides a first-mover opportunity in that market and offers leverage to the region's vast coal resources. As the world's largest coal producer, China has growing interest in CBM as a means to cut emissions by utilizing coal mine fugitive methane.

Strong Macro Trends Underpin Upside Potential

The confluence of several positive macro trends bodes well for the natural gas sector broadly and Elixir Energy specifically:

• The global gas supply crunch triggered by the Ukraine crisis has focused attention on energy security. Domestic gas production is increasingly prioritized by gas-import dependent countries like Australia.
• Long-term Asian gas demand growth remains very strong despite economic headwinds, driven by the transition from coal to gas in China and India. LNG import growth is forecast to be robust.
• Governments are providing support for gas development, with Elixir benefiting from Australian federal funding for its upcoming appraisal well. Fiscal terms also remain attractive in Mongolia.
• Industry consolidation is picking up, evidenced by Exxon's move to acquire Permian gas producer Pioneer. As a junior player, Elixir offers attractive consolidated upside potential.
• Oil and gas equities remain depressed, with investors wary given economic volatility and ESG concerns. However, this backdrop provides opportunity to gain exposure at a compelling valuation point.

Conclusion

Elixir Energy represents an intriguing investment opportunity in the gas sector, providing leverage to strengthening market fundamentals and regional gas demand growth. With potentially company-making exploration catalysts imminent, compelling valuation metrics, strategic assets and an experienced team, Elixir warrants strong consideration by investors seeking intelligent natural gas exposure. Execution of its focused exploration strategy over the coming year could propel significant share price upside.