Pompano

Elixir (through its wholly-owned US subsidiary) has acquired a 25% working interest in the Pompano gas field development and exploration project (“Pompano Project”) located in Brazos Block 446-L SE/4, which is 7 miles offshore the Texas Gulf Coast. The lease holder and operator of the project is a private US company.

The Pompano Project is located in 60 feet of water and has existing production infrastructure, including a platform and two satellite caissons tied back to the platform. The field has pipeline access to intrastate gas markets. Access to this infrastructure will significantly reduce project capital costs and the time required to first production.

The Pompano field ceased production in 1995 after producing 120 billion cubic feet (“BCF”) of gas from Miocene reservoirs in a faulted structural high. The high trend has produced more than 800 BCF of gas from several fields. Similarly to High Island, the field was discovered, explored and, in the case of Pompano, developed with wells based only on 2D seismic data.

At Pompano, a new 3D seismic interpretation generated in 2005 by the Operator clarified the field structure and has located undrained reservoir sands up-dip of previously producing wells. The seismic interpretation also identified undrilled fault block compartments which were not apparent on the previous 2D seismic interpretation. This has resulted in the defining of substantial Proved and Probable reserves together with the identification of significant exploration potential.

Development planning activities are well underway. The development programme presented by the Operator has identified six possible wells targeting a number of different reservoir horizons. The first two wells in the proposed programme will target a combination of proven undeveloped reserves and probable reserves, while the later wells will target identified exploration upside, including deeper sands in an undrilled fault block compartment. The first three wells proposed will be able to be produced from existing infrastructure with only limited refurbishment of the existing facilities. The respective participants in Pompano are yet to approve a development plan for this prospect

Drilling of the first well is anticipated to commence around year-end.