Highlights

• Elixir Energy shares climbed 13.04% on 6 July 2026 after the company reported favourable operational progress at the Lorelle-3H appraisal well.

• Sustained gas breakthrough occurred after only five days of well cleanup, with gas flow rates increasing as stimulation fluid recovery continued within expected ranges.

• The company said flowback operations remain on track, with the well transitioning from fluid recovery towards gas production ahead of gas-condensate production testing.

• Production testing is expected to continue throughout July, with peak gas-condensate flow rates and initial decline data to be assessed.

• Lorelle-3H is designed to demonstrate commercial gas and condensate flow rates and support a potential maiden reserve conversion of the underlying contingent resource.

Shares of Elixir Energy Ltd (ASX:EXR) advanced 13.04% to AUD 0.13 during the morning session on 6 July 2026 after the company released an operational update from its high-impact Lorelle-3H appraisal well in Queensland's Taroom Trough. The stock has also delivered a gain of 333.33% over the past year. Investors responded to encouraging progress at the appraisal well, where sustained gas flow has been achieved during flowback operations and the project has moved closer to the commencement of gas-condensate production testing.

Lorelle-3H Advances Into Gas Flow Phase

Elixir Energy announced that the Lorelle-3H appraisal well has successfully transitioned into the gas flow stage following completion of key post-stimulation activities.

After completing the milling of stage plugs from the well's 12-stage hydraulic fracture stimulation program, the company began a gradual and controlled drawdown of the well on 29 June 2026 using a 12/64th choke. The drawdown program has followed recommendations from recent SLB testing studies, which indicated that a maximum daily bottom hole pressure reduction of approximately 400 psi represented the preferred operating approach.

Throughout the early stages of flowback, recovered liquids consisted of clean stimulation fluid without any solids, including sand or proppant. According to the company, this outcome provides confidence that the fracture stimulation program has been executed as planned and that all stimulated intervals are settling appropriately.

The operational progress marks another milestone as the company prepares for formal production testing of the well.

Gas Breakthrough Achieved Within Five Days

One of the key developments highlighted in the operational update was the timing of sustained gas breakthrough.

Elixir reported that official gas breakthrough occurred on Saturday, 4 July 2026, after only five days of well cleanup. The company said sustained gas flow was achieved at a bottom hole pressure of approximately 6,300 psi, only slightly below the estimated reservoir pressure of 6,350 psi.

Management indicated that this relatively small pressure differential represents a favourable indicator for the well's future productivity index.

As cleanup activities progressed, gas production steadily increased while stimulation fluid volumes gradually declined, demonstrating the expected transition from fluid recovery towards gas production.

The company noted that gas rates continued rising over this period as the production profile shifted towards gas becoming the dominant flowing phase.

Flowback Performance Remains Within Planned Parameters

Elixir also provided additional operational detail regarding pressure and fluid recovery throughout the flowback process.

Flowing wellhead pressure initially measured around 3,200 psi while fluid recovery averaged approximately 1,600 barrels per day. As fluid recovery progressed, wellhead pressure declined to around 1,680 psi alongside fluid rates of approximately 800 barrels per day.

Subsequently, wellhead pressure increased to approximately 1,770 psi as of the morning of the announcement, with gas flow continuing to strengthen over the same period.

The company said this behaviour reflects the anticipated inflection point where gas production increasingly replaces stimulation fluid as the dominant production phase.

Management added that recovering additional stimulation fluid before increasing drawdown is expected to support higher peak gas production rates and improved ultimate recovery from the well.

Based on the operational performance observed so far, Elixir said progress indicates the potential for favourable well performance once drawdown is increased further.

Production Testing Scheduled Throughout July

With the well continuing through the flowback process, Elixir has outlined the next phase of the appraisal program.

The company will continue monitoring flowback operations until the transition from fluid-dominated production to gas-dominated production is fully established.

Following confirmation of that phase change, Elixir intends to progressively increase the choke size before commencing formal gas-condensate production testing.

The production test is expected to continue throughout July and is designed to assess several important performance indicators, including peak gas-condensate production rates and the initial production decline profile as the well stabilises.

The company confirmed it will provide another market update once peak production rates have been achieved.

Lorelle-3H Represents a Significant Appraisal Milestone

The Lorelle-3 project has been designed as an important appraisal well within ATP2056 in Queensland's Taroom Trough.

The project is jointly owned, with Elixir Energy holding a 50% interest while acting as operator of the Lorelle-3/Lorelle-3H appraisal well. Santos Limited also owns a 50% interest and will become operator of the permit following completion of the appraisal phase.

The drilling campaign was completed in two stages.

Initially, the pilot well reached a total vertical depth of 3,580 metres, allowing the company to collect core samples and geological logs across several Permian sandstone reservoirs within the Taroom Trough.

According to Elixir, petrophysical analysis exceeded expectations and identified multiple thick gas and gas-condensate bearing reservoirs. Across the evaluation program, the company measured 148 metres of net gas-condensate pay.

The second phase of drilling involved constructing a 1,157-metre horizontal sidetrack targeting the Tinowon "Dunk" Sandstone at a measured depth of 3,332 metres below the rotary table.

The horizontal section has since been cased and stimulated across 12 fracture stimulation stages ahead of the current production testing program.

Evaluation Program Supports Development Objectives

Data collected throughout the appraisal campaign has also supported the design of the stimulation program now being tested.

Elixir said information gathered from drilling, core analysis and laboratory work was used to optimise the stimulation design before executing the 12-stage hydraulic fracture treatment.

The current flow test has several objectives.

The first is to demonstrate that gas and condensate can be produced at commercial flow rates and pressures from multi-stage stimulated horizontal wells targeting the Tinowon "Dunk" Sandstone.

The second objective is to support reservoir modelling that indicates commercial quantities of gas and condensate may ultimately be recoverable from similarly completed wells.

The company also intends to measure gas and condensate compositions together with production ratios to support future development planning.

In addition, the testing program will collect pressure, temperature and other flowing data required for preparatory engineering work associated with any future development.

Successful completion of these objectives could support a potential maiden reserve conversion from the project's underlying contingent resource.

Project Benefits From Research and Development Incentive

Elixir also noted that a significant portion of the Lorelle-3 appraisal costs qualify for government support.

Eligible activities associated with drilling, coring, logging, analysis, completion, stimulation and testing of the well qualify for a refund of up to 48.5% through the Australian Federal Government's Research and Development Tax Incentive program, subject to the Advanced Finding and normal tax return process.

This applies to qualifying expenditure associated with the Lorelle-3 appraisal program.

Taroom Trough Position Continues to Advance

The company believes Lorelle-3H represents an important step in evaluating the broader Taroom Trough opportunity.

According to Elixir, the well extends appraisal activity beyond Shell's primary operating area and represents the first horizontal well drilled and tested outside Shell's acreage on the upper western flank of the Taroom Trough.

The company said results achieved to date continue to validate the quality, scale and potential value of its acreage position across the basin.

Elixir is the largest acreage holder in Queensland's Taroom Trough within the Bowen Basin. The basin is described by the company as a multi-trillion cubic feet basin-centred gas play located close to existing energy infrastructure, including the Wallumbilla Gas Hub, multiple gas pipelines, nearby LNG export facilities, operating refineries and Queensland's established onshore gas industry.

The company is seeking to appraise approximately 3.5 TCF of independently certified 2C contingent gas resources located adjacent to Shell's primary investment area within the basin.

What This Means for Investors

Elixir Energy's latest operational update reflects continued progress at the Lorelle-3H appraisal well as it advances from flowback into gas production testing. Sustained gas breakthrough after five days of cleanup, increasing gas flow rates and flowback performance within planned operating parameters represent important operational milestones ahead of formal production testing. Throughout July, the company expects to evaluate peak gas-condensate production rates, production decline characteristics and additional reservoir data that may support future development planning and a potential reserve conversion from the project's underlying contingent resource.