This ASX-listed energy smallcap has doubled output at its pilot gas plant in three weeks

Wed 01 Mar 23, 12:45pm (AEST)
Generic image of a gas pipeline with one tubular section painted in a contrasting red
Source: Unsplash

Key Points

  • Elixir Energy, operating a coal bed methane (CBM) project in Mongolia, has doubled initial gas output from its first pilot plant
  • Elixir Energy boasts the title of the first ASX smallcap to successfully flow gas from Mongolia’s Gobi Desert
  • The Nomgon CBM project is Elixir’s flagship offshore asset, with an onshore QLD asset also being built up

Elixir Energy (ASX: EXR) shares were up approximately 4% heading into lunchtime trade on Wednesday, after announcing it has reached another key milestone. 

At its Mongolian Nomgon IX CBM plant, gas flow rates have reached 200,000 standard cubic feet (scfpd) for the first time, as the pilot continues to depressurise. This is up significantly from the 100,000 scfpd announced on 7 Febrauary this year. 

The pilot plant in question is tapping hydrocarbon deposits via the Nomgon-8 and Nomgon-9 CBM ‘fracking’ wells—described by Elixir chief Neil Young as a technical record for the jurisdiction. 

“This is a first for Mongolia,” Young commented in November, adding: “faring gas so soon after starting our production pilot is an incredible result for the Company.”

Water-gas ratio 

As noted above, Elixir hit 100,000 scfpd in early February, with water stable at 180 barrels a day (bpd).

In hydraulic fracture stimulation operations, frack fluid is pumped underground in a strategic manner before being sucked back up and safely disposed of. 

After this stage, there can often be groundwater to deal with, so in the early days of any fracking well, the first things that come back to surface is a mix of water and, ideally, gas. 

The “cut” ratio of that water-to-gas balance, in a well-executed well, will eventually see the water component get smaller and smaller over time until eventually only gas comes out. 

For all intents and purposes, that process appears to be underway. 

On Wednesday, Elixir revealed water rates from the pilot plant are stabilising, now sitting at 150bpd. 

Milestone after milestone at Nomgon 

In a little more than three weeks, Elixir’s Nomgon CBM pilot plant has gone from producing 100,000scfpd of gas to 200,000scfpd, highlighting the strength of Elixir’s acreage. 

The pilot plant has now remained in operation for over 100 days since November 2022.

With that continuation of operations, and water rates continuing to diminish, Elixir is now gearing up to launch a new drilling campaign in April, reflecting a 2QCY23 exploration campaign. 

“The pilot will continue in the weeks to come and we will provide further updates as it moves towards its conclusion,” Elixir CEO Neil Young said. 

A look at Elixir's one year performance chart
A look at Elixir's one year performance chart
Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Elixir was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.


Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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