How Will Elixir Energy’s New Gas Licence Boost Its Strategic Position in Queensland?

$EXR How Will Elixir Energy’s New Gas Licence Boost Its Strategic Position in Queensland?

Elixir Energy Limited (ASX: EXR) has successfully expanded its Project Grandis with the formal award of ATP 2077 by the Queensland Government. The new licence, which adds 173 billion cubic feet (BCF) of independently certified 2C contingent gas resources, significantly enhances Elixir's gas asset portfolio. This strategic acquisition aligns with Elixir's broader objectives of capitalizing on the Taroom Trough's geology to bolster its gas reserves at minimal cost.

Strategic Expansion with ATP 2077 Award

Elixir Energy has received the formal award of ATP 2077, a new exploration licence located in Queensland, adjacent to the company’s existing ATP 2044 licence. The award, granted by the Queensland Government, solidifies Elixir's presence in the Taroom Trough, a region recognized for its substantial gas potential. The licence covers three geographically distinct sub-blocks, each offering unique exploration opportunities.

Resource Certification and Strategic Importance

The highlight of the ATP 2077 award is the independently certified contingent resource of 173 BCF ... of 2C gas resources in Sub-block A. This certification, conducted by international firm ERC Equipoise Pty Ltd (ERCE), reflects the successful application of Elixir’s exploration expertise in ATP 2044 to the adjacent ATP 2077 area. The contingent resources are classified as "Development Unclarified," indicating significant potential, though further work is required to confirm commercial viability.

Sub-block A shares similar geological characteristics with ATP 2044, which underpinned the resource certification. Meanwhile, Sub-block B, also overlying the Taroom Trough, is yet to be fully assessed, with resource evaluation planned for the future. Sub-block C, situated outside the Taroom Trough but near existing gas infrastructure, has been identified as having potential shallow drilling targets by Elixir’s technical team.

Technical Evaluation and Future Prospects

Elixir's technical team, in collaboration with ERCE, conducted a comprehensive analysis of the drilling, logging, and test data to certify the resources in ATP 2077. The evaluation included seismic interpretation, core analysis, wireline petrophysics, chromatographic gas analysis, Diagnostic Fracture Injection Tests (DFITs), production test analysis, and gas sampling. These rigorous assessments underscore the strategic importance of ATP 2077 in Elixir's portfolio.

The resource estimates are currently focused on the Kianga and Back Creek reservoirs within Sub-block A, with additional prospective coal resources yet to be evaluated. The key uncertainty, as identified by Elixir, is achieving a commercial flow rate and defining a viable development plan. The company has already demonstrated a promising flow rate of 2.5 million cubic feet per day from the lower-most Lorelle Sandstone in ATP 2044, with further testing planned for the upper zones.

Strategic Rationale and Future Outlook

Elixir’s Managing Director, Neil Young, emphasized the strategic rationale behind securing ATP 2077, highlighting the significant resource addition at minimal cost. The recent achievements in ATP 2044 were instrumental in successfully leveraging the same geological play in ATP 2077, resulting in a substantial increase in the company's gas reserves.

Looking ahead, Elixir plans to continue its exploration activities in Sub-blocks B and C of ATP 2077, with a focus on evaluating their prospective resources. The company’s strategic expansion in the Taroom Trough positions it well to capitalize on future gas demand, particularly as the energy sector increasingly values secure and substantial gas reserves.

Elixir’s continued success in expanding its resource base underscores its commitment to strategic growth and exploration excellence. The award of ATP 2077 marks a significant milestone in Elixir’s journey, with the potential to drive long-term value for shareholders as the company advances its exploration and development plans.

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