Elixir Petroleum

AIM EPIC : ELP

(ASX EPIC : EXR)

Web Site : http://www.elixirpetroleum.com/

Elixir Petroleum Limited is an Australian company with a focused strategy of North Sea Exploration. The company is listed on the Australian Stock Exchange (ASX) and on the London AIM market
Elixir believes that the United Kingdom Continental Shelf region of the North Sea (UKCS) remains highly prospective for oil and gas exploration. The area also benefits from low political risk, relatively attractive fiscal conditions and established oil and gas infrastructure. Changes to the licensing regime in 2003 provided improved access for junior explorers. They created the opportunity for Elixir to rapidly build a portfolio with exposure to meaningful and prospective targets in the region.
The company listed in Australia in July 2004 with interests in one UK Licence covering Block 21/6b. Interests in five further UK licences were added in September 2004 as a result of the 22nd UK Licensing Round. One further licence was acquired in December 2004. Elixir has interests in 6 licences being awarded in the 23rd UK Licensing Round. This addition takes Elixir's portfolio to interests in 13 UK exploration licences covering 18 North Sea blocks.
Elixirs primary objective is to establish a successful North Sea focused oil and gas exploration and production business. This will be achieved through advancing exploration of prospects on its existing Licences, attracting farm-in partners for drilling wells on these prospects, progressing any discoveries to commercial production and aggressively pursuing opportunities to acquire further interests in prospective North Sea acreage.
The company is targeting participation in a minimum of five exploration wells over the two years from May 2005. With the best five prospects having an average success case reserves potential greater than 20 million barrels of oil net to Elixir, a discovery would have a material benefit to the company.
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** As with all O+G exploration, there is considerable risk involved, so not for widows or orphans !!
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Oz chart for Elixir (ASX:EXR)

Some old info showing why today we now have these smaller companies working in the NS, UKCS.



http://www.aapg.org/explorer/2003/08aug/northsea.cfm

UK door open for next generation

"Changing the Guard" at Buckingham Palace is an elegant metaphor for an industry hand-over that is currently under way in the United Kingdom Continental Shelf.
As bidders anxiously await the results of the 21st Offshore Licensing Round -- to be announced in August -- a new generation of E&P niche players is poised to enter the high stakes of the North Sea and the U.K. Continental Shelf (UKCS).
For the first time in the North Sea's exploration and production history, the stable of bidders includes numerous small- and mid-size oil and gas companies. They've stepped up to the plate, confident that they have the "right stuff" to win the newly created, 24-month promote licenses from the U.K. Department of Trade and Industry (DTI).
With more than 30 billion boe produced to date, production peaked in the North Sea in the late 1990s at approximately 4.5 million boed. During a 38-year run, the industry drilled about 4,000 wells, resulting in more than 285 producing fields and another 300 plus significant discoveries. Exploration and appraisal activity crested the UKCS in 1990, with just over 200 exploration wells drilled.
By 2001, however, fewer than 25 exploration wells were drilled in what was considered a mature oil and gas province.
According to the DTI, 10 major oil and gas companies control about 80 percent of the North Sea's current daily production. As the average pool size dwindled in the North Sea to about 30 million barrels, the major E&P companies exited this mature oil and gas province for "greener" exploration pastures in offshore South America, Asia and Africa to hunt for elephant-size discoveries.
In an attempt to attract new niche players to the North Sea -- and to arrest the projected production decline -- the DTI introduced the 24-month promote option in February for the 21st Offshore Licensing Round. Successful bidders have 24 months to "add value" to the licenses -- through technical evaluations -- before electing to continue for an additional two-year period with a prerequisite work commitment.
"We recognize that this is a basin where the opportunity is different than it was 25 years ago," says Peter Haile, DTI's Deputy Director of Promotion, Exploration and knowledge.
"We want to establish and promote an independent, new tier of companies working the North Sea."
Thus, the DTI needs to tap into a new level of technical expertise in order to exploit the remaining reserves of the UKCS, estimated at between 25 to 30 billion boe.
Haile recognizes a full spectrum of niche opportunities that have opened up for the smaller independents -- new fields, undeveloped acreage, old or decommissioned fields and fallow fields.
"We want to get the licenses into the hands of the hungry and innovative -- we're keen to realize the remaining reserves in the North Sea," he said. "We're concentrating on new entrants."
Toes in the Water
Haile cited the Fallow Field Initiative, which forces operators to surrender discoveries to the DTI if there has been no work activity for four years.
In order to generate interest in the 21st Offshore Licensing Round, the DTI teamed up with the British Geological Survey to compile data (maps, seismic sections, well logs) to showcase prospects, leads and undeveloped discoveries available for licensing in the UKCS.
Thirty-eight fallow fields and/or discoveries lie within the unlicensed acreage alone.
New players are attracted to this mature basin because of access to infrastructure and facilities with capacity for new product. Equally attractive is the fact that new discoveries are royalty free. In 2002, despite tagging an additional 10 percent to corporate taxes (they now total 40 percent), the DTI increased the capital expenditure allowance from 25 percent to 100 percent against general corporation tax.
Citing all of the above factors, Robertson Research International ranked the UKCS number one in its annual "International New Ventures Survey," published in May. Based on the confidential polling of E&P companies, the North Sea -- with its stable regulatory and fiscal regime -- was the top pick for new ventures in 147 countries outside of North America.
As the average pool size declines, Haile explained, "value must substitute for volume; the UKCS is competitive and offers an attractive environment for business.
"If the opportunity is small, in order to make money, then you must move very quickly," he added.
"We've seen a basin go from discovery to decline ... in one person's career," said Stephen Greer, president and CEO of Calgary-based Antrim Energy.
Greer, however, would be very content to find an average-size, 30 million-barrel-field in the North Sea. Antrim is a junior oil and gas company that focuses on high-risk, high-reward international targets in the North West Shelf of Australia, offshore Tanzania, Tunisia, Argentina and the Czech Republic.
Antrim also is familiar with the DTI, as it operates the South Larne License in onshore, Northern Ireland.
With production of just over 400 boed, Antrim is listed on the Toronto Stock Exchange with a market capitalization of about $C16 million. Greer, an AAPG member, says that the 24-month promote license has enabled Antrim and its partner to compete head-to-head with much larger companies for several offshore licenses.
The 24-month promote licenses form one component of Antrim's three-prong growth strategy in the North Sea. Antrim also is currently negotiating the acquisition of a producing field, and is proceeding with a secondary listing on the London Exchange's Alternative Investment Market to access U.K.-based investors.
"The 24-month promote licenses enable us to dip our toe into the North Sea before jumping in," Greer said. "It's a tremendous advance for the U.K."
Looking for the Right Stuff
As the name suggests, the DTI anticipates that many of the smaller companies will "promote," or farm out, the blocks prior to proceeding with the work commitment phase, which will include the drilling of at least one well or the conduct of an equivalent agreed, substantive activity.
Equally attractive for small players is the cost of entry for the 24-month promote: the DTI slashed the license rentals per square kilometer from 150 for a traditional license to 15 for a promote license. A block consists of approximately 220 square kilometers; licenses are comprised of one or more contiguous blocks.
In June, the DTI conducted interviews to qualify potential bidders for the 24-month promote licenses. Reminiscent of the questions posed on a first date, the DTI had a shopping list of prerequisites for the second date.
In other words, the companies had to possess the "right stuff," including technical acumen, new ideas and geological concepts, and the wherewithal to carry out the proposed 24-month evaluation.
"The DTI is sophisticated -- they can look you in the eye and tell whether you've got the technical ability to add value to the block," Greer said. "They're opening the door -- not everyone with the understanding of the North Sea has the financial ability to work there."
Bob Welty, chairman and CEO of Calgary-based Sterling Resources, concurs with Greer.
"It's your chance to show them what you can do -- you have to present your credentials," Welty said.
Indeed, the interview process enabled Sterling's team to present new geological concepts, analogs and technologies to the DTI for two licenses.
"Even though we're not a major, we can bring experience," he said.
No stranger to the international arena, Sterling holds licenses in Romania and in the Wessex, Weald and Cleveland sedimentary basins onshore U.K. Currently without production, this junior oil and gas company trades on the TSE Venture Exchange with a market capitalization of about $C9 million.
Sterling, in conjunction with partners, has applied for two offshore promote licenses, intending to operate one of the two. One license is 2.5 blocks in size, the other 3.0 blocks.
"This was an opportunity for us to enter the offshore sooner than we thought possible," Welty said.

Who Will Farm-In?

On the flip side, given that the majors are leaving the North Sea, how will the small- to mid-size E&P companies farm out their blocks in two years' time?
"The bigger issue," cautions Keith Skipper, Antrim's executive vice president and an AAPG member, "might become who will finance the farm-in wells? The capital markets are the ultimate key here, and they are not very supportive of exploration at the moment."
Antrim however, expects to finance its own offshore wells.
Tailored to the needs of those small- to mid-size companies who win the 24-month promote licenses, APPEX London will provide new venue for explorers to showcase their properties. APPEX London is AAPG's international Prospect and Property Expo, and it will be held March 2-4, featuring a three-day upstream business conference focusing on international E&P opportunities.
Steve Veal, AAPG's European regional consultant who is part of the organizing team for APPEX London, expects that the winners of the 24-month promote licenses will be exhibiting their prospects at APPEX.

"The DTI has essentially opened the doors for small- and mid-size companies," Veal said. "Until now, the North Sea has been a 'big boy' play.

"It's a great campaign to revitalize a national oil and gas industry," he added. "It's going to spawn a whole new breed of independents in the U.K."
To date, 88 percent of the North Sea's discovered fields consist of conventional, structural traps; the more subtle, stratigraphic traps constitute only 5 percent of producing fields.
The remaining 7 percent of the producing fields are of a combined structural-stratigraphic nature.
"The capability of finding big discoveries is still out there," Veal continued. "All the giants of the North Sea have not been found."
The discovery of the Buzzard Field in 2001 by North Sea-newcomer PanCanadian Energy Corporation, proves that elephants can often lie just beneath your nose. It also proves that there's still significant life (reserves) left in the North Sea.
Calgary-based EnCana Corporation, North America's largest independent, currently operates the Buzzard Field. With 1.1 billion barrels of light oil in place, Buzzard represents the biggest find in the North Sea in more than 20 years.

Next week should be a strong week too, I can see more people getting into ELP ahead of results on the Jaguar drill. We should know in 1 to 2 weeks time if its been a success or not.

Another good post by Edgein answering a few questions :

"Edgein - 25 Feb'06 - 19:47 - 439 of 445
No problem guys and gals happy to give my views.

Dr Square,

It used to be 30mmbbls for a declared commercial find in the North Sea. The RBOS funds north sea developement. Oilexco had 21mmbbls at Brenda and secure a 90m facility as a result. Finds now between 21-25mmbbls of light oil are deemed commercial and will be able to secure significant bank finance.

Sharebuff,

North sea light oil is valued at approximately $13/bbl undeveloped, lifting costs can be as low as $4-5/bbl. Tax has unfortunately increased (approximately 50%), but due to the fallow oil inititive you can claim back ALL of your development costs from the first year of production. That's why the NS is one of my favourites, name another part of the world where that applies?

Firstly the combined total shares in issue for ELP, EXR is 63.7m. There are also 15.5m options. A find of 30mmbbls would be worth $390m usd $156m to ELP. A find of 450mmbbls has an undeveoped value once proven (P2) of $5.85bn usd or $2.34bn to ELP some 20 odd pounds per share. ELP or the broker note mention AU$28 per share if Jaguar is proved up (read those two brokers reports, they're a must for all holders).

James T,

Its speculative where they are depth wise. They could relatively speed to target depth, the slow part will be gettin through the shale seal and then slowly progressing through the reservoir sections. I wouldn't be totally surprised if they weren't already in the top of the upper Jurassic sandstone. The last 5 days of the schedule would probably take into account wirelining and casing to total depth. If she's dry I would imagine we'll hear within the 45 days.

Regards,
Ed."

Oz market open soon, so lets hope is a strong day for Elixir there, so we can get some decent moves on ELP here tomorrow.

Another rise in Oz today, just short of the 1$ offer price now, as its presently 0.99A$ on the offer.

PapalPower

good volume as well

regards

Morning gents

See this is up again this morning
An R trade just gone through

R Risk less Principal transaction at a different price

Can someone please explain what the hell that means.
Cheers
Ted

Ted1, not really, but nice to see the price rising again :)

L2 is 2 v 2 and getting stronger, could be in for some more rises this afternoon.

Elixir said they would not make any annoucements before 45 days from Jaguar drilling start (due in around 2 weeks) unless they hit a major oil find.

There is a second announcement now on ASX:EXR (Elixir in Oz), it says the suspension is due to "Results on Jagaur Drilling" Link is below :

http://www.asx.com.au//asxpdf/20060228/pdf/3vmz225dg021q.pdf

This could be it, if we have major oil, this is a no brainer multi bagger, so is it going to be a major oil find ?? ;) Exciting times ahead, and could be a very well done to all ELP holders, we hope. A large find on Jaguar could make the VOG/EME rise small by comparison.

Fingers and toes crossed !!!!

The news this morning in Oz :

This looks promising lets hope your right PP. Maybe what we have been waiting for :) Fingers crossed........

Fingers crossed not enough.

News out that no oil so far, but continuing drilling to target depth. Thats the risk, and this was high risk.

Next drill on a new license is Q4 if nothing else comes of Jaguar.

Large fall and a rebound later should happen.

Bad luck here, buts the nature of the game, good price forecast pp, spot on.

Oh my, bit of a drop.

The chances of them finding oil 50/50?

Considering how many oil stocks have been goin potty lately, it's maybe no bad thing that we've had a reality check on this one. Too many people counting chickens all over the place lately. Thankfully I can wait around as I got in at this level so nowt lost as of yet.

Does anyone know; are they still hoping to find oil if drilling continues?

There is the lower Brent to go, this is the next stage of drilling, so there is a chance as yet of an oil find on this drill.

Luckily I say, Elixir have shown great concern for shareholders, but stopping the price getting too high, and "announcing no oil yet, we keep on drilling ".

They are not a one horse show, they have cash in the bank and other licenses, more drill planned and still this present drill could turn up something yet, in the lower Brent area !!

The risk level went from high, to a bit higher for this present ongoing drill........ ;)

Try UEN for a safer bet, it acually produces oil and much more to come, see advfn for more info.

only a 42% drop today, a drop in the ocean, hope TAG does a bit better!!! please!

Kivver, this was and still is high risk. Its not a one horse show either. An overreaction on a bad day in the markets to not very good news.

High risk remains.