Elixir Energy - First Mover in Mongolia's Emerging Coal Seam Gas Industry

About Elixir Energy

Elixir Energy is an ASX-listed energy company focused on traditional natural gas exploration in Mongolia and Australia as well as participating in the global energy transition. The company is led by an experienced management team and board with decades of expertise successfully developing coal seam gas projects.

Interview with Neil Young MD & CEO, Stephen Keleman, Non-Executive Director & Richard Cottee, Non-Executive Chairman

Mongolian Gas Pilot Project Update

Elixir Energy recently provided an update on its coal seam gas pilot project in Mongolia, the first of its kind in the country. The Nomgon pilot commenced production late last year, achieving early gas breakthrough. Gas rates increased over the first months of 2022. The company undertook mechanical repairs and well workovers in recent months, bringing the pilot back online last week. One well was shut-in to measure communication with other wells. The Nomgon 9 well came back online but at a lower rate than previously recorded. However, overall Elixir remains encouraged by the pilot's progress. The company will extend operations to gather more data and add another well to boost information.

Encouraging Early Results

The early gas breakthrough demonstrates the targeted coals are nearly saturated, ideal for commercial production. Elixir is focused on reducing reservoir pressure to enable gas to flow while preserving optimal saturation levels. The company seeks to establish communication between wells to maximize drainage. Early results are promising, achieving solid initial gas rates. Lower recent rates are typical for early pilots as optimal operating parameters are determined through experience. Elixir believes the pilot has progressed as well as can be expected for a first attempt given the highly successful track records of management.

First Mover Advantage in Mongolia

The Nomgon pilot provides proof of concept in a country with no prior coal seam gas industry. Elixir Energy has first-mover advantage to build an unmatched position in a market with enormous potential. Mongolia shares a border with China, the world's largest gas importer. Prices in Asia are many multiples above Australia or the US. While the pilot has risks and uncertainties intrinsic to pioneering projects, Elixir is confident in the resource potential.

Seeking Strategic Partners

Elixir Energy continues assessing potential partners to enhance capabilities and moderate costs and risks. The company recently secured strong Australian government financial support, reducing capital requirements. Elixir seeks partners that bring more than just funding, such as drilling expertise or downstream offtake relationships. Management will evaluate financing options balancing risk-sharing and minimizing dilution.

Exposure to Global Energy Transition

Elixir also has prospective projects focused on hydrogen and carbon capture to enable coal-to-hydrogen production. This provides further upside exposure to the global energy transition. With strengthening Asian gas demand and supportive government policy, Elixir Energy offers investors leveraged exposure to high-potential gas resources in Mongolia's nascent industry.

Conclusion

With strengthening Asian gas demand and supportive government policy, Elixir Energy offers investors leveraged exposure to high-potential gas resources in Mongolia's nascent industry. Interested investors should consider acting quickly while the market cap remains under AUD$100 million.