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Elixir Energy grows prospective resource at Nomgon IX
3 minute read
Elixir Energy Limited (ASX:EXR) has updated the Nomgon IX prospective resource prepared by independent reserve auditor ERCE Equipoise (ERCE).
The updating of the prospective resources for Elixir’s 100% owned Nomgon IX CBM PSC follows the successful 2020 drilling campaign where seven CBM (coalbed methane) exploration and appraisal wells spanning a distance of 62 kilometres all intersected coal.
An initial contingent resource estimate for the Nomgon sub-basin discovery area will be prepared and issued once all of the data from the appraisal drilling program has been compiled, modelled and analysed.
In the interim, a summary of the prospective resource range is outlined below:
It is important to note that the estimated quantities of petroleum that may be potentially recovered by the application of a future development project relate to undiscovered accumulations.
These estimates have both an associated risk of discovery and a risk of development.
Further exploration, appraisal and evaluation are required to determine the existence of a significant quantity of potentially movable hydrocarbons.
Substantial increase in prospective resource achieved quickly and cheaply
Management was encouraged by the resource update given that it is a significant increase at all levels compared with the 2018 report.
The overall Risked Mean Prospective Resource for the Nomgon IX CBM PSC is now 19.9 trillion cubic feet (Tcf).
Importantly, the geological chance of success (COS) as estimated in the ERCE report has increased from 19% to 30%.
In commenting on these developments and casting an eye to 2021, Elixir’s managing director Neil Young said, “We are naturally delighted to see that our work over the last 18 months has delivered such a substantial increase in our prospective resources with the best case nearly doubling.
‘’To achieve this level of de-risking of the asset with what in oil and gas terms has been a very modest outlay over a short period of time makes a real statement about how readily the enormous potential of the PSC can be realised.
‘’Next year’s program will be multi-faceted with exploration and appraisal elements, but ultimately it is all about continuing to reduce risks in a very economic and demonstrable fashion.”
Strong incentives to continue to grow resource
With its extensive PSC landholding providing ready access to high demand markets in China, Elixir represents a compelling investment play for Australian investors in that it is one of only a few ASX- listed companies that offers exposure to the globally significant thematic of a de-carbonising and increasingly energy security-conscious China.
China’s new “5 year plan” dramatically reduces its reliance on other global powers for key resources, especially its energy supply with the added advantage of transitioning from burning dirty coal to cleaner forms of energy.
Commenting on results received last week, Elixir’s managing director Neil Young noted that the consistent adsorption result from Nomgon-2 indicated that earlier high gas saturation levels from Nomgon-1 were not a one-off, highlighting that they were already feeding into production testing plans for next year.
Despite volatility in the energy sector, Elixir’s shares are still up some 400% since January, a reflection of management’s astute handling of costs and the operational expertise demonstrated across all of the wells drilled.
The company has a robust platform to build on in 2021, and it will also benefit from gaining a better understanding of the region’s broader geological characteristics in 2020.