Can Lorelle-3 Deliver Commercial Gas Flows to Validate Elixir’s Taroom Trough Bet?

Mobilisation Marks Start of Critical Drilling Campaign

Elixir Energy Limited (ASX, EXR) has officially commenced mobilisation of the Helmerich & Payne FlexRig 3 Rig 648 from Brisbane to the Lorelle-3 well site in Queensland’s Taroom Trough. This marks a significant operational milestone as the company prepares to drill an appraisal well that could validate the commercial potential of its substantial gas resources in the Bowen Basin.

The rig mobilisation is expected to take around two weeks, with spudding anticipated shortly thereafter. The Lorelle-3 well is positioned strategically about 10 kilometres from Shell’s Dunk-1 well, which recorded the best penetration of the Tinowon ‘Dunk’ Sands in the region. This proximity offers Elixir a unique opportunity to confirm the quality and materiality of its acreage on the upper western flank of the Taroom Trough.

Two-Phase Drilling to Unlock Basin Centred Gas Play

The drilling campaign will unfold in two phases. Initially, a vertical pilot hole will be drilled to a depth of 3,600 metres, collecting core samples and detailed logs across multiple Permian sandstone targets. The primary focus is the Dunk member of the Tinowon Sands, with secondary targets including the Overston and Lorelle Sandstones.

Following this, Elixir plans to drill a horizontal sidetrack of at least 1,000 metres into the primary target. This sidetrack will be cased and suspended for subsequent stimulation and production testing. The entire operation is expected to take approximately 55 days from the start of mobilisation.

Testing to Demonstrate Commercial Viability

Post-drilling, Elixir will conduct a multi-stage fracture stimulation and production test aimed at demonstrating commercial flow rates of gas and condensate. This test is scheduled for completion before June 2026 and is a critical step toward converting contingent resources into reserves, potentially unlocking significant value for the company and its shareholders.

Importantly, the Lorelle-3 appraisal activities qualify for a substantial financial incentive. The Federal Government’s Research and Development Tax Incentive program offers up to a 48.5% refund on qualifying costs, which include drilling, coring, logging, analysis, completion, stimulation, and testing. This support enhances the project’s economics and underscores its strategic importance.

Strategic Positioning in a Mature Gas Hub

Elixir Energy holds the largest acreage position in the Taroom Trough, a region geologically analogous to Canada’s prolific Montney Formation. The area benefits from proximity to established infrastructure, including the Wallumbilla Gas Hub, multiple pipelines, LNG export facilities, and refineries. This infrastructure advantage positions Elixir well to capitalise on any successful appraisal outcomes.

Managing Director Stuart Nicholls emphasised the significance of Lorelle-3 as one of the highest impact wells in the Taroom Trough for 2026. The well’s results will be closely watched by the market as they have the potential to validate Elixir’s acreage quality and underpin future development plans.