Key Highlights

  • Lorelle-3H recovered approximately 32% of injected stimulation fluids during the initial clean-up phase.
  • The well recorded fluid rates of up to 1,700 barrels per day and gas flow rates of up to 3 million standard cubic feet per day (mmscfd) during dual-phase production.
  • Elixir will install a 2-3/8-inch tubing string to stabilise well flow before resuming production testing.
  • Gas samples confirmed low impurity levels, with CO₂ at 1% or less and no detected H₂S.

Elixir Energy (ASX: EXR) has provided an operational update on its Lorelle-3H appraisal well within ATP2056 in Queensland's Taroom Trough, reporting progress in the initial clean-up and flow testing program. The update outlines encouraging production indicators during the early testing phase while detailing the next operational steps aimed at stabilising well performance before full production testing resumes.

The latest announcement comes as investors continue to monitor Elixir Energy's efforts to evaluate the commercial potential of its Basin Centred Gas assets. Share market attention has remained focused on operational milestones at Lorelle-3H, as successful testing could support future reserve conversion and project development across the company's Taroom Trough acreage.

Initial Flowback Delivers Encouraging Operational Results

Elixir Energy reported that Lorelle-3H has substantially completed its initial clean-up phase, recovering approximately 32% of the injected stimulation fluids. According to the company, this recovery rate compares favourably with nearby offset wells and indicates effective connectivity between the well and the targeted reservoir.

During this stage, the well produced both stimulation fluids and gas-condensate through sustained dual-phase flow. Importantly, the company observed no production of sand or fracture stimulation proppant, suggesting that the hydraulic fracture network remains intact following completion activities.

Operational measurements recorded fluid production rates of up to 1,700 barrels per day alongside gas flow rates reaching approximately 3 million standard cubic feet per day while operating on a 24/64-inch choke. Flowing wellhead pressures ranged between approximately 750 psi and 1,500 psi throughout the testing period.

While these production rates were achieved under unstable flow conditions, management noted that the observed productivity during the clean-up phase provides encouraging indications regarding the potential performance of the Lorelle-3H well.

Production Surging Leads to Temporary Operational Pause

As production volumes increased, the company observed significant surging behaviour involving both gas and stimulation fluids. According to Elixir, these fluctuations occurred as various stimulation zones transitioned into gas-condensate production while other intervals continued returning stimulation fluids.

Management explained that rapid pressure changes within the wellbore could temporarily affect bottom-hole conditions, potentially leading to condensate dropout and reduced flow stability. Similar operational behaviour had previously been observed during testing at the company's Daydream-2 well.

To manage these conditions, Elixir has decided to temporarily shut in the well while installing a pre-prepared 2-3/8-inch tubing string. The tubing is expected to reduce flow surging, improve production stability and allow the well to be opened further beyond the existing choke setting.

The installation process is expected to take up to seven days before clean-up operations and production testing recommence.

Gas Quality Results Support Reservoir Assessment

During the clean-up program, Elixir collected gas and condensate samples for laboratory compositional analysis. Initial field measurements indicated favourable gas quality, with carbon dioxide levels measured at approximately 1% or less and no hydrogen sulphide detected.

The low impurity levels provide additional information regarding reservoir characteristics and may assist future development planning. Laboratory analysis of the collected gas and condensate samples will provide more detailed compositional data once testing is completed.

The company also noted that continued production testing will enable further measurement of gas-condensate ratios and other production characteristics that are required for future engineering assessments.

Lorelle-3H Represents a Key Appraisal Well

Lorelle-3H forms part of the ATP2056 permit, where Elixir Energy holds a 50% interest and currently operates the appraisal well alongside joint venture partner Santos, which will become operator of the permit after the appraisal program.

The project was drilled in two stages. The initial vertical pilot hole reached a total depth of 3,580 metres and collected extensive geological information across several Permian sandstone reservoirs within the Taroom Trough.

The evaluation program identified approximately 148 metres of measured net gas-condensate pay, with petrophysical results exceeding the company's earlier expectations.

Following the vertical appraisal, Elixir drilled a 1,157-metre horizontal sidetrack targeting the Tinowon "Dunk" Sandstone. The horizontal section was completed with casing and stimulated across 12 hydraulic fracture stages before entering the current production testing program.

The company stated that laboratory studies, geological analysis and engineering work completed following drilling helped optimise the stimulation design implemented at Lorelle-3H.

Production Testing Targets Commercial Flow Rates

The primary objective of the ongoing testing program is to demonstrate commercial production rates of gas and condensate from horizontally drilled and multi-stage stimulated wells within the Tinowon "Dunk" Sandstone.

Successful testing would support future modelling of commercial recoveries and potentially assist in converting existing contingent resources into reserves, subject to further technical assessment and regulatory processes.

In addition to measuring production volumes, the testing program aims to collect pressure, temperature and fluid composition data that could contribute to future development planning across the Taroom Trough acreage.

Following completion of the tubing installation, the company plans to reopen the well and continue production testing to determine maximum sustainable gas and condensate flow rates.

Financial and Strategic Position

Elixir Energy noted that qualifying expenditures associated with the Lorelle-3 appraisal program remain eligible for a refund of up to 48.5% through the Australian Federal Government's Research and Development Tax Incentive, subject to applicable processes.

The company believes Lorelle-3H represents an important milestone within the broader Taroom Trough development program. The appraisal well is the first horizontal well tested outside Shell's core acreage on the upper western flank of the basin, providing additional geological and production data across an area where Elixir holds a substantial acreage position.

Elixir currently holds independently certified contingent gas resources of approximately 3.5 trillion cubic feet across its Taroom Trough portfolio, with infrastructure advantages including proximity to gas pipelines, LNG export facilities, refineries and Queensland's established onshore gas industry.

EXR Share Performance and Latest Market Focus

Elixir Energy shares remain closely watched by investors as operational updates from Lorelle-3H continue to shape expectations around the company's appraisal activities. Resource companies in the exploration and appraisal stage often experience market attention as production testing provides new information regarding reservoir performance and potential future development.

The latest operational update highlights encouraging early flowback results while also demonstrating the company's decision to prioritise production stability before advancing testing. Investors are expected to monitor upcoming announcements, particularly once the tubing installation is completed and full production testing resumes.

Future laboratory analysis, sustained production rates and additional operational data are likely to remain key areas of market focus as Elixir continues evaluating the commercial potential of the Taroom Trough project.

Conclusion

Elixir Energy (ASX: EXR) has reported encouraging operational progress at the Lorelle-3H appraisal well, with the initial clean-up phase delivering favourable stimulation fluid recovery, measurable gas production and low impurity gas quality. Although temporary well shut-in and tubing installation are required to stabilise production, the company remains on track to resume flow testing in the coming days. The results generated during the next phase of testing will play an important role in assessing the commercial potential of the Tinowon "Dunk" Sandstone and supporting future development planning across Elixir's Taroom Trough assets.