Good morning, everybody. There is a short delay to the commencement of the Elixir AGM, as we have had a fire alarm test and evacuation procedure drill in the building that we're in. The members of the board are on their way back up to the meeting we'll be hosting the AGM in. Please bear with us. There'll be a short delay.
I note that it's 10:05 A.M., which is starting us beyond the appointed hour, and that we could not start on the appointed hour because of the building evacuation. I apologize for the lateness. I welcome you all to the 2026 Annual General Meeting of Elixir Energy Limited. My name is Richard Cottee. I am the Chairman of Elixir and today's meeting. A quorum is present. I declare the meeting open. May I introduce my fellow Directors present today. Stuart Nicholls is on my far right. Next to him is Stephen Kelemen. Ayten Saridas is participating online, but she gives apologies for not being here in person. It was beyond her control, and we welcome her. Anna Sloboda is on my immediate left, and Tony Tarr on my far left. Neither the far right nor the far left, just a political comment. The Company Secretary, Justin Ferravant, is also present.
Andrew Tickle, the BDO Audit Partner, is available online. The resolutions will be voted via a poll. Lee Jae Na from Automic Group will conduct the poll as a returning officer in relation to today's resolution. You should have been provided with a voting card. If you have not already voted prior to today's meeting, if you require a voting card, please raise your hand. The notice of meeting was prepared in accordance with the company's constitution and the Corporations Act 2001, and was circulated to members on the October 2nd 2026. If there is no objections, I will take the notice of meeting as having been read. No notice of other items of business for today's meeting have been received, and therefore, the only matters our meeting can consider are those set out in the notice of meeting agenda. Let me outline the format of the meeting.
One, the Chairman's address. I'll address questions at the relevant time if specifically related to the audit annual report or any resolution. All other questions will be addressed after the Managing Director's presentation. The second will be the Managing Director's presentation. The third will be questions. Fourth, business of the meeting and resolutions. We will then move to the business of the meeting and the accounts for the year ended June 30 2026, and any questions to the auditor. The resolutions included in the notice of meeting will then be tabled in order. You will then be invited to ask questions regarding the resolutions. Voting today will be conducted by way of a poll using your voting cards, and the last thing, the formal close of the meeting. Having outlined the agenda for the meeting, I now commence my Chairman's address.
On behalf of the board, I'd like to thank you for your continued support of Elixir Energy. Over the last 12 months, the region has increasingly been recognized as one of the most prospective emerging hydrocarbon provinces. At a time when concerns regarding East Coast gas supply and liquid fuel security have become more pronounced, the strategic importance of the new domestic energy resources have never been clearer. Against that backdrop, Elixir's decision several years ago to pivot its focus to the Taroom Trough has been strongly validated. Through our work at Lorelle, Daydream, and Diona, we've contributed meaningfully to advancing industry understanding of the plays and of supporting the broader efforts to demonstrate its commercial potential. The Basin Centred Gas play emerging within the Taroom Trough is still in its early stages.
As operators continue to gather, refine, and completion techniques and optimize production outcomes, our understanding of the basin will continue to improve. We're encouraged by the quality of the resource encountered to date and remain confident that Elixir owns an asset of both considerable scale and quality. Importantly, Elixir is not alone in pursuing this opportunity. The basin is attracting the attention and investment of well-capitalized industry participants, including Shell, Beach, Santos, Denison, OGT, Beetaloo, Amplitude, Tri-Star, and Omega. The collective effort of all operators are accelerating technical advancement and reducing the development risks typically associated with an emerging play. I'm well aware of the development risks of emerging play, having been involved in the early days of coal seam gas. What particularly excites us is the combination of resource quality and location. The gas produced to date exhibits a highly attractive composition regarding minimum processing.
When coupled with the proximity to existing infrastructure and ready access to both domestic and international energy markets, the Taroom Trough has many characteristics that could support a highly competitive development. In many respects, the opportunity resembles the emergence of the Queensland coal seam gas industry two decades ago. The difference today is that much of the downstream infrastructure and market demand already exists. In my view, the fundamentals are strengthening, the basin continues to mature, and the value of our position in the Taroom Trough will become increasingly apparent over time. In addition, recent transition with Beach represents a pivotal milestone for Elixir and a significant step towards unlocking the substantial value of our exceptional Taroom Trough acreage.
By partnering with Beach, we are accelerating the pathway to development and commercial production, positioning our assets to capitalize on the increasing strategic value of natural gas in a tightening global market. While there is still important work ahead, we believe Elixir is increasingly well-positioned to benefit from the significant opportunities emerging in the Taroom Trough. On behalf of the board, I thank all of our employees, joint venture partners, contractors, and shareholders for their continued commitment and support. We look forward to updating you on our progress through the coming year. I now invite Stuart Nicholls, the Chief Executive and Managing Director, to address the shareholders.
Thank you, Richard, and thank you, everybody, for having me. It has been a great last 12 months at the company. I have got to know many of you, so thank you for all your messages and your emails and whatnot. It has been great to be your representative and be your Chief Executive Officer over the last 12 months. I am just going to go through a bit of background about the company for sort of a re-education, and then we will talk about some of the achievements over the last 12 months or so, and then I will close with a bit of a look forward of what is to come. Just a reminder that the company, when I took over in April of 2025, had started to pivot its way out of the Mongolian coal seam gas assets. That pivot into the Taroom Trough has been amazingly rewarding to date.
The reason why that is that the Taroom Trough really does stand as the next major east coast supply of energy, both natural gas, LNG feedstocks, as well as liquid fuels. The reason why this play attracted me to want to deploy my efforts there is that the hurdles for success are as low as they can get in exploration in Australia. That is because the Taroom Trough sits in the absolutely best jurisdiction that it can be in Queensland, where we have seen a fantastically supportive government, and you would have seen some news from that government only just yesterday. The assets that we host, that we have, sit right next door to the Wallumbilla Gas Hub. It always seems to be the last place you look for natural gas is next to the gas hub.
Also adjacent to the pipelines that service the 25 million tons of LNG infrastructure that was built off the back of the coal seam gas boom. You couldn't ask for better market demand in our immediate vicinity. There is also, given that the Taroom Trough is a Basin Centred Gas play, it is both oil and gas. We also have two refineries here in Queensland. So the IOR Group refinery, which is about three hours drive inland from our assets, and the Lytton Refinery here in Brisbane, run by Ampol, which is again about three to five hours drive towards the coast. The Taroom Trough is very big. As a small company, pre-revenue, cost of capital is obviously something that we need to consistently be conscious of. Sitting on the equity merry-go-round, our cost of capital is linked to our share price.
With very, very large-scale assets like we have here in the Taroom Trough, we can have a decent-sized market cap at a very early stage because of the scale of the opportunity. The size of the Taroom Trough is something that should really attract investors, is that much like coal seam, this is a resource play. We are talking about trillions of cubic feet of natural gas and hundreds of millions of barrels of recoverable condensates and oil. The size is not only that big, but it is a lot more mature than what people understand. The two sort of primary listed players, being Omega and Elixir, have put out some very supportive results to date about the path towards commerciality in the Taroom Trough.
But really, the thing to focus on is the fact that the number one risk investor in the Taroom Trough is actually Shell. There is no other basin that you can find in Australia where an international oil company is the leading risk investor in developing the technology and the extractive understanding of how to develop early-stage resource like we have here in the Taroom Trough. Shell's hundreds of millions of dollars that they have spent to date and the hundreds of millions of dollars that they are continuing to spend is a validation that we are in the right spot at the right time. Then finally, the quality and the cost of what we have. Again, these are the lowering of the hurdles that we need to overcome in order to be able to break through the commerciality and book our reserves.
The oil and gas that we have here in the Taroom Trough, through tests across the play to the north, south, east, and west, has demonstrated gas that is of pipeline specification, which means that we as a company will continue to spend and deploy our capital in extractive technologies and bringing that oil and gas out of the ground, not on insurmountable, for small-cap companies, amounts of infrastructure required to refine that gas and bring that up to pipeline specification. So our gas is already at pipeline specification, minus some basic dehydration and conditioning, but we are able to put that straight into the pipeline network.
Lastly, the condensates and light oils that have been produced by ourselves, by Shell, and by Omega demonstrate a middle distillate profile, or chooks in the boot, as I like to say, which shows that we can actually generate quite a significant amount of diesel from these condensates. They are not typical of a very light condensate, which is refined into kerosene, jet fuels, and into petrol. We are seeing a significant amount of heavier hydrocarbons, middle distillate chains available to be able to generate a meaningful amount of diesel from the barrels of condensate and light oils that we are producing in the Taroom Trough. So that's a fantastic benefit. Then as Richard has paved the way for us, we sit in the great state of Queensland, which has a prolific onshore oil and gas industry that has built significant amounts of supply and service infrastructure.
So we can actually call rigs and well heads off the shelf and wireline units out of Roma. You should not underestimate. I have spent most of the last decade operating in the Perth Basin, which is not blessed with these opportunities, where you were paying millions of dollars mobilizing equipment from the Cooper Basin or other areas of onshore scale to those locations. We have here in Queensland a very, very large onshore oil and gas service industry, and that helps to bring our costs down. We are already making significant inroads on the costs required to demonstrate commerciality. But when we look back at what has occurred since myself and my management team took over, I am pleased to be joined by all four Elixir employees today. Justin, our CFO, Kingsley, our Chief Operating Officer, and Matt, our GM of Exploration and Subsurface.
If any of those topics are of interest to you, please grab them at the end of the meeting. But over the last 18 months, we have really hit the five key things that we needed to do, which was that we validated the company's valuation. When I started, the day before I started, the share price was AUD 0.018. The company was trading with a AUD 30 million market capitalization and still had about AUD 6 million of cash on hand at the time. Elixir's assets were seen as almost the replacement value was less than the company's cash holdings at the time.
What we have done is not only participated in a significant amount of exploration and appraisal throughout our assets, but we've also been able to be present during a value accretive period of time in the Taroom Trough, demonstrated by our neighbors at Shell, at Omega, Tri-Star, Beach, et cetera. They are showing that we have got a significant amount of land, and that land is going to be more and more valuable over time. We've also validated that the value of these assets through transacting on them, and I'm going to spend a bit of time talking about that today. But that has given us a significant amount of look-through valuation of these assets. The stock market's going to play catch-up. I have no doubt of that in my mind.
We have the right ground and we have the right timing, and we're in the right location for all of this to occur. Over the last 18 months, we've also avoided dilution at the head co-level by raising capital or funding ourselves in innovative manners. You'll recall last November, we raised AUD 16.6 million, which we did at the market price at the time. We didn't pay a discount by bringing Omega onto our register, which also cross-validated what we were doing and the asset value that we were talking about. We recently have now funded the business for the next four years through the transaction with Beach Energy, which is a AUD 205 million transaction, which will include AUD 25 million of cash and AUD 180 million of work program over the next four years. We've demonstrated good commercial acumen, and we've dealt well.
If you think about the transactions that we have done, this board has done, one prior to my time, the farm into Santos, we essentially found an opportunity to move quickly. We acquired contingent resources at around AUD 0.011 per gigajoule. We traded with about AUD 0.04 a gigajoule, and we just transacted on those gigajoules at about AUD 0.12. So you can see just how these transactions are layering upon themselves to be value accretive to shareholders, and you can also see recently how we've done that. We've run a competitive process with Beach Energy that has resulted in a fantastic transaction, bringing Beach in as the operator and 50% holder of some of our key assets. We've executed complex operations. Not only have we drilled, we've drilled three wells in the last 12 months, the Diona-1 well, the Lorelle-3 vertical well, and the Lorelle-3 horizontal well.
That was only the fifth horizontal well drilled in the Taroom Trough at the time. It was the fourth, fifth horizontal also flow tested, the only fourth one that successfully flowed hydrocarbons to surface. These are complex operations in a play where there is very little technical understanding of how to extract this oil and gas. We know it is there, we know it is abundant, and we are honing in very quickly on what the appropriate and optimal production solution for that oil and gas is. Elixir has played a significant and pivotal role in that. I know we would all like the share price to be higher, we would like the flow rates to be bigger and better and stronger, but this is a journey. This is a staircase of understanding, of learning, of demonstrating. We are talking about multi-billion dollar assets here.
They do not just go from zero to multi-billion dollars in one day. Much like coal seam gas did, there will be a period of time where risk capital is deployed, where we will understand exactly how to extract this oil and gas, and then value will be ascribed by the generalist investor. Lastly, we are very pleased that we have met all of the work commitments of our tenure, and we have now put ourselves in the best position to retain 100% of our acreage, which you will have seen recently that we transacted on. We have done that at the lowest possible cost. Like I said, all four employees of Elixir are here today. We run an incredibly lean overhead.
We are probably one of the best value opportunities in terms of dollars of overhead per BCF of contingent resource of any listed company on the ASX at the moment, and I would struggle to find a more competent group of four people to assemble to be the custodians of your assets and take them forward at the moment. Outside of the drilling, we have also acquired seismic, the Teelba seismic. We have booked new contingent resources. As I said, we have validated the company's asset values twice. We brought Omega into the head co register. We then have dealt the assets through a competitive process to Beach.
We have raised a little bit of money to get us through that transactional period back in August, and we have flow tested, as I said, the only fifth horizontal well in the Taroom Trough, which has demonstrated that we have a sustainable, recoverable resource in the Taroom Trough. We have seen some really exciting peak flow rates. We have had our own operational issues, but like I said, we are cutting through the jungle here. We are forging a path that is not in front of us. We are pioneering how to extract the oil and gas.
We are learning as quickly as we can. I am confident that the Lorelle-3 horizontal well will be, in the fullness of time, will demonstrate a prosperous future, potentially through the Warkon Pilot operations, which we have also spent a bit of time and energy this year showing that there is a very viable low-cost path to market for our hydrocarbons. Let us just start to move through as we talk about the transaction that we have recently done, which must be front of mind for everybody here. We have just farmed out 50% of our core Taroom Trough permits. Those are all the ones in the center here, ATP2056, ATP2044, ATP2057, and Blocks A and B of ATP2077. We brought Beach Energy in for half of our equity. In some cases, that is a 50% position. In some cases, that is 25% in our joint venture with Santos.
We have given them operatorship in ATP2044 and ATP2077. Beach is a very well-regarded, very well-resourced, recognized operator of oil and gas assets throughout the east coast of Australia. They are actually the largest marketer of domestic gas assets in the east coast of Australia. As we start to now go from the appraisal phase into more of a deeper appraisal and development window, Beach is a fantastic partner to bring alongside of us. Beach has agreed to deploy AUD 180 million of new capital into the ground and give us AUD 25 million of cash for that opportunity. We will retain our 49% operated position in the Diona sub-block, where we are excited to get after some additional operations in the coming period. We still have the Diona-1 well that warrants a retest.
Secondly, there is additional prospectivity that has been driven in that sub-block by the success of OGT's Waggamba 6 and 7 horizontal wells in the block just next door to that. There is plenty for Elixir to get after itself. Let us talk more about what Beach is going to be doing. Really, the path to value, and these are the three things I want to leave with you for Elixir, is a function of three things: ground, time, and capital. No one would dispute a month and a half ago, we had all the ground that we could possibly ask for. We were the largest net acreage holder in the Taroom Trough with over 550,000 net acres.
That ground has given us a currency that we have been able to deal with, to bring Beach in, to give us the time and the capital to reach maximal valuation on our assets. The carry that we will receive is AUD 180 million of new capital. That is not net Elixir share, as some people like to talk about. They have to spend the gross capital number, AUD 180 million, to complete the transaction, which we will cover, and I will go through exactly what we can expect to start to see in that to deliver the work program over the next four years. That is the capital and the time. What we have seen in the last 12 months is the entry of, I think, five new companies into the Taroom Trough.
We've seen Shell start to step out of the shadows and talk publicly about the great progress that they're making in the Taroom, taking new acreage in bid rounds, demonstrating that they are here to continue to deploy capital. Even their global chairman has referenced the Taroom Trough in their AGM presentation. This is a fantastic postcode for us to be in, but it does cost money to be present, to own a house on this street. With Beach coming in, they will deploy this AUD 180 million over the next four years.
We can be here owning real estate in the right spot where money is being deployed into our real estate, demonstrating the quality of the assets that we have whilst the postcode rises in value around us, because there is now AUD 1.2 billion, as announced by the premier yesterday, of committed private investment from the companies that you can see on this map going into the Taroom Trough. AUD 1.2 billion. That is like nowhere else in Australia. I can assure you that there is no other location where there is AUD 1.2 billion of committed capital going into the exploration and appraisal phase. It's really important when we assess the various offers that we received that, as I said, time and capital were two of the key drivers for that. But really, one of the things that we looked at was retaining the diversity of our acreage.
There were offers that were around taking pieces of our puzzle out, and our puzzle getting ultimately smaller. What the transaction that we chose to do with Beach allows us to retain a footprint across that very diverse north, south, east, and west position that we have built here in the Taroom Trough, so that we are the beneficiary of those AUD 1.2 billion of capital going in, because people all around us are investing that money. That was one of the key decisions that we took when we were assessing this. Also, Beach agreed to pay a total transaction value of AUD 205 million, which has a look-through valuation of a significant premium to the company's current market capitalization, but for only less than 50% of the assets. We've got BCFs up here, but I can talk in square kilometers if you like.
When you take the AUD 205 million and you divide that by the square kilometers that they received, that works out at about AUD 201,000 per square kilometer. We trade with a look-through market capitalization of about AUD 60,000 a square kilometer, so you can see that's about three times the multiple that Beach paid on a gross transaction value for coming into our portfolio. On a BCF basis, you can see it's about AUD 40,000 per BCF, and we've dealt that at around AUD 120,000 a BCF, so again, three times the valuation on our BCFs in the ground. Just again, a reminder, when we farmed into Santos, we farmed in for a commitment of about AUD 0.011 per gigajoule. We traded about AUD 0.04 a gigajoule, and we transacted at about AUD 0.12 a gigajoule.
You can see that this board wanted to demonstrate that valuations of companies like Omega out there, who have similar asset bases to us that trade with market capitalizations that are more than three times the size of Elixir at the moment, the industry recognizes that is the right valuation, not Elixir, because the industry peers that we have assessing offers from and with Beach Energy, who we've actually transacted with, has ascribed that valuation to Elixir's assets, not the market capitalization to Elixir's assets. You can have confidence that educated oil and gas investors out there see that our assets are worth a considerable larger amount than the current trading dynamic of our shares. Then finally, the other things that we chose to do was to bring Beach in. They've got a very big and competent and qualified team.
As I said, we are cutting through the jungle here. There's only four of us who have been learning, executing, going with this, bringing in Beach, and all of their understanding and operations, operating capability will reduce the risk of Elixir's forward investments, will hopefully reduce the costs and increase the quality of results that we should expect going forward. Beach, we'll be working very closely with them. They've got a lot to learn. The guys that put the Santos assets into Santos are the people running the exploration division of Beach these days. They know Taroom Trough assets very well, and they are very excited to get back behind the wheel and join us and joint venture there.
The AUD 180 million work program that Beach will be looking to execute alongside of Elixir will cover indicatively, and this is ultimately at Beach's final discretion, but there is some detail provided as part of our transaction, around about five new wells. Four of those wells will be extended reach horizontals, lengths that you have not seen demonstrated in any of the listed companies in the Taroom Trough to date. I'm talking 2 km horizontals at Lorelle-4, Daydream-3, Daydream-4, and potentially another horizontal in ATP2044. Those wells will be completed, they will be multi-stage fracture stimulated, and they will be tested, and that will be our pathway to a significant reserve base.
These wells will be very close to development style demonstrations and type curves and economics, which is exactly what our reserve certifiers need to see in order to be able to convert our massive 3.5 TCF of gross resource position, now 1.7 TCF or so post the transaction with Beach, to convert that 1.7 of 2C to 2P. Beach will also be looking to come in and drilling exploration wells where some of our work commitments are warrant and getting stratigraphic control through our portfolio, and they are very geophysically driven. They are looking to execute between 500 and 600 sq km of new 3D seismic across our portfolio, which is a fantastic following of what Shell is doing.
Shell has just recently acquired a blanket 3D seismic campaign over their primary area. We are going to receive some of that 3D seismic, which you can see in the map on this slide here in the green areas. Some of the wells that we have currently got slated with Beach will be drilled on that 3D seismic. We are looking to put our first series of wells with Beach into areas that we think that we can identify better quality reservoir through geophysical work, and they want to expand that geophysical work with 500 sq km of new 3D seismic. There will be a bit of additional 2D where required, and given that the Daydream-2 well sits with over 6,000 psi of wellhead pressure on it, the Lorelle sandstones there look very, very supportive of fantastic well economics when we look at things like Lorelle-4.
We want to do another little retest of Daydream-2 . We will be working with Beach to reopen that well in the near term to understand what a couple of years of soaking time, should we say, on the Daydream-2 well, what effect has that had? All of these work programs will also be covered by Beach's operating costs, and Beach will be paying for the operating costs in their AUD 180 million of work program as well. The draw on Elixir's financial base over the next three to four years will be very, very minimal, if not zero. I cannot say it is going to be zero because we have obviously got corporate costs and Diona operations that we want to get after. The Beach-executed work program will be at Beach's sole costs, including all of their geotechnical and geophysical work.
Just going into some of the things we have achieved this year. Let us talk about the Lorelle-3 vertical well. This is a fantastic well. I would encourage anyone to talk to Matt about just some of the upside that we see in this well. Not only did we have the Dunk Sands where we placed our horizontal, but we also had similar Kianga Sandstone reservoirs that have been seen at the Canyon wells by Omega that look very positive. When we line those Canyon sands up, or those Kianga sands up against the Canyon wells, they look very favorable and should be able to produce similar outcomes to what Omega has successfully demonstrated on the other side of the Taroom Trough. Then finally, the best untested play of scale that we have that is in the Taroom Trough is the Lorelle Sandstone at Lorelle-3 .
Trust me, we sat down and we thought very carefully about whether we should put the horizontal leg into the Lorelle Sandstone. Well engineering on the fly, given we had our pre-approved R&D funding package where we have just received our AUD 12.1 million refund from, which paid for 50% of the well costs, was aligned to demonstrating optimal fracture stimulation programs and flow testing in the Dunk Sands. We chose to leave that and keep going with our primary target in the Dunk. The Lorelle Sandstone is absolutely anomalously phenomenally good. It is 160 meters of traditional petrophysical pay, 100 meters of pay on the nuclear magnetic resonance logs, which are a special type of logging tool, which we think demonstrates a better reservoir characteristic. We think that that well, I will talk about the Lorelle Sandstones, but it has near conventional-like qualities to it.
We are talking about an unconventional play here. We put the horizontal into the Dunk sands because we knew 10 km down the road, Shell had been demonstrating very strong flow rates from their well. A lot of the decision-making as to the location of the well was geologically driven. We wanted to have a couple of kilometers of reservoir in front of us, therefore drilling from the location where we secured land access towards the west. That was a limited reservoir path, and we thought to ourself, "What does the reservoir get like? What does it look like as it pinches out towards the west?" We did not want to answer that question. We wanted the best reservoir that we could, so we wanted to go out to the east. We drilled it out to the east.
We wanted to be as close to the Lorelle-3 vertical well as possible. We went out in that direction. We went out 1.1 km, and the reservoir looks fantastic as we went down dip. Really, I have to say, truth is the mechanical functionality of the wellbore design was not the big driver of where we placed this well and why we drilled it where we drilled it. Now we are in the testing phase. Having a toe-down well is giving us some headaches. They are not insurmountable challenges by any stretch of the imagination, but going forward, we would certainly want to have toe-up wells to have that gravity-assisted drainage. The well itself, though, has actually produced, has done the job that we needed it to.
It has shown us that we have got a sustainable, recoverable oil and gas resource here in the Dunk sands in ATP2056. It has done its job to the point where Beach and others were willing to invest significant amounts of money into Elixir or to acquire some of Elixir's assets. We have seen peak flow rates, and it is probably the highest peak flow rate produced by any well in the Taroom Trough of 10.5 million standard cubic feet. We have seen it sustain over 12 and 24-hour rates in the second phase of testing until we finally observed a scale issue. Again, another great learning. Not something that we expected to see, but we are in the hole right now with coil, acid washing that out, and it will start milling through that scale shortly to then bring the well back online.
Sustainable rates that look very commercial on early blush, but we need to sustain those for longer periods of time, and we need to get the wellbore in the right state. That is why we are running our coiled tubing operations now, is to be able to do that. Let us get on to talk about what the point forward is. As I said, we want to drill the Lorelle-4 horizontal. That well will be drilled into this anomalously conventional-like sandstone reservoir at the bottom of the Lorelle-3 well. 98% of Daydream-2's successful flow test came from the Lorelle Sandstones at the bottom of Daydream-2, which was a vertical well, flowed at peak rates of 2.4 million standard cubic feet a day. Fantastic outcome for a vertical well.
If we put a horizontal in this and we fracture stimulate it appropriately, I am confident that we are going to have a very high flow rate well. Beach is very excited by this. We think this is the big sleeper play of the Taroom Trough. Certainly, this is anomalously thick. We have seen Overston-2, Daydream-2 all flow conventionally from this reservoir. When Daydream-2 was pre-fracture stimulated, they flowed at 1.2 million standard cubic feet a day out of this reservoir. You can understand just exactly the high flow rates that we would expect if we had to put enhanced permeability into that reservoir through a long horizontal with multi-stage fracture stimulation. These wells will all be drilled in similar locations where we have the opportunity to continue the work on the Warkon Pilot.
We know Beach is very keen to demonstrate that their capital is going into a productive setting. The Lorelle-3 well, the Lorelle-4 well, they will all be used as future producers. All of this appraisal efforts that we are going about today can be productive capital in the future. We do not have to plug and abandon these wells. We can suspend them as future producers. When I talked about the AUD 1.2 billion of capital that the premier announced has been successfully secured now from the companies through the bid round process. We literally border the AUD 1.2 billion on every side. We are sitting with acreage adjacent to drilling right now in the Canyon project and the Canyon North project with Omega. We have a lot of acreage that borders Shell's hundreds of millions of dollars of investment.
In fact, we are even the beneficiary of those hundreds of millions of dollars of investment, as we are receiving new 3D seismic of areas where they have acquired data across our permits. There is also an emerging third development area, which is in the southwest, where we have our Diona block. As I said, OGT has successfully drilled, fracture stimulated, and flow testing, or they are actually even producing now from two horizontal wells that they drilled in the Waggamba area down here, where they are flowing oil from two 1,000-meter horizontal wells, measured in the hundreds of barrels of oil per day, with strong wellhead pressures from an area and a reservoir that has traditionally hosted gas. If anyone thinks that there is only oil on the east or only gas on the west, there is just a very limited number of data points in the Taroom Trough still.
The paucity of data, people are very quickly trying to put it all together to understand how it all works. As I said, we are seeing oil production out of an area that has been producing gas since 1980. I know that the guys over at OGT are quickly trying to figure out how that has all evolved. There is oil in the west, there is oil in the east, there is gas in the east, there is gas in the west. This is one great big oil and gas opportunity. What do you need to benefit from that, to see your shares in Elixir rise to their potentially maximum value, is you need the ground, and you need time, and you need capital. We did not have two of those things only a month ago. Now we have all three.
We have a fantastic amount of acreage that, as I said, is bordering a large amount of investment from all of our industry peers, as well as Beach's new AUD 180 million of capital that will be sunk into that ground. We have that capital now secured, and we have a four-year runway to deploy that. Over those four years, you are not only going to see the rising value of the postcode around you, which will have an impact on our assets, but you will also see an increase in the issues about underinvestment in energy security continue to play out in global theaters around us as we become overly reliant on international supply chains. The lack of industry investment in the exploration and appraisal sense is being manifested now here in the Taroom Trough.
That is why companies with big logos that you see on petrol stations are willing to invest hundreds of millions of dollars in ground that is right next door to the assets that you own, is because there has been a significant amount of underinvestment. The world is short energy right now. Commodity prices are at multi-decade highs, even after the midterms yesterday. You have over 1,200 square kilometers of ground in the right jurisdiction, in the right place. I believe that we have the right team to take this forward, and we have just transacted with a fantastic new partner in Beach Energy, who I am really looking forward to working with Brett and his team. I look forward to reporting back in 12 months' time after another fantastic year at Elixir. Thanks very much.
Thank you, Stuart. Thank you. Are there any questions regarding the presentation? Obviously, there will be time after the meeting to actually get full and frank disclosure. I do not know who Frank is, but I know Paul.
I think I am the fool. Yeah.
That's important.
With the oil, do you send that to Eromanga or does that come into Lytton?
Right now, the Inland Oil Refinery, IOR Group, is very well set up to manage the logistics of the current small volumes of condensate and oil flows coming out of the appraisal wells in the Taroom Trough. So that's currently all going into IOR's business. I do understand that they also are using Port Bonython down in South Australia to do some of their monetization of the product. In the fullness of time, I think we will see infrastructure built in the Taroom Trough that will support the aggregation of liquids so that large parcels can be marketed appropriately. That will probably involve the construction of trucking and offloading infrastructure at the Lytton refinery, which currently doesn't exist. It's been fed through pipelines and through seaborne deliveries to date.
Trucking infrastructure at Lytton will then open up that 110,000 barrel a day refinery to the oil production and the condensate production of the Taroom. Then we're just going to get to a point where hundreds of wells are drilled, we've overcome all of the refining capacity, and there will be exported volumes of liquid hydrocarbons in the fullness of time as full-scale development happens in the Taroom Trough.
I understand the IOR refinery is at maximum capacity right now. Cannot take any more product.
Yeah. That is why I think they are using Port Bonython to also monetize some of the volumes. Yep.
You say there is a pipeline?
There used to be. It was the Jackson-Moonie pipeline, but it suffered-
Moonie.
Sorry, Moonie.
Moonie-Brisbane pipeline.
Moonie-Brisbane pipeline.
Yes.
Suffered some leaks in the 2000s and was-
A lot of petrol spilled over the top of it, unfortunately. Just in houses and God knows what else. Anyway.
With the seismic, will you be putting any of that seismic up on the website to see what the, like the, some of the 3D from Shell or 2D that you acquired because
I think when we do
because it's all
Yeah, when we do prospect evaluation, I think we'll demonstrate seismic sections that will show the things that we're looking at. To upload our seismic volumes onto the internet would probably breach our proprietary nature of our information. But much like we did with Lorelle, which we drilled on a 2D line that Santos acquired in 2023, we had that seismic section as a key investor piece of material. I think on bits and pieces there, we can share, if it makes sense.
Slide 12 on the match here, then 650% because the Who, who are they?
Santos.
Santos. Blue circle.
You also mentioned here kind of scale in a horizontal-
Yeah
expand on.
Yeah, I mean, we put a significant amount of scale inhibitor into the fluids that we used during the fracture stimulation program. However, like I said, there's very few data points for us to be able to rely upon, and not a lot of them are public. In terms of the chemistry that's going on down there, some of the fluids that we use in our fracture stimulation program, when mixed with the liquid hydrocarbons, when mixed with the gas and the fluids in the reservoir, obviously having a chemical reaction down hole, and we're seeing some form of carbonate form in a meaningful manner in the wellbore, where generally this occurs where there's a decent change in pressure differential.
We believe it's formed primarily at the bottom of the tubing string, where we go from 4.5 in down to two and three-eighths of an inch. We know that it's a carbonate because we've been able to take samples of this down hole and be able to dissolve it in acid. We're confident of overcoming it. We've obviously got those samples in the laboratory where we're going to try and understand exactly under what pressure, under what temperature, and what chemicals led to the creation of that scale. That will be a key part of our research and development project, which we've been very grateful to receiving significant amounts of refund as part of our investment.
Thanks, mate. You know, of course, Elixir's largest shareholder. I have several questions in relation to this transaction. I appreciate you gave some further context-
Yep
presentation. First relates to phasing or farming. Are you able to comment if you've ever arrived at a year-by-year commitment?
Yeah, sure. There's absolutely no phasing whatsoever. So there's no contingent aspects of the deal. It's AUD 180 million of gross capital to be spent across the portfolio. The explicit activities are at Beach's discretion, but there is an indicative program that we built as part of the transaction documents, which I've just outlined to you today. They've got to spend that AUD 180 million in four years. They could spend it in two if they want to. We could get all of that activity done in two years. Perfect. Then we're on the hook. We move into joint operations, and we will be contributing our pro rata share. But I'm confident that the business will be worth a lot more after another couple hundred million bucks is spent in the ground.
The other question.
Yes, sure. No problem. One of the key conditions as a part of the deal was that we would receive an ASX waiver. We worked with the ASX as part of the transaction to understand the necessity for a shareholder vote. Using examples like Carnarvon's farm-out to CPC, Buru's farm-out to Origin, 3D Energi's farm-out to, more recently, to Conoco. Those are transactions which demonstrate a precedent of not requiring a shareholder vote. And in the ASX's discretion, they made the decision that the transaction would not require a shareholder vote. Obviously, giving the board a higher degree of certainty that we could transact, and we were comfortable with that position. That's part of the transaction.
Finally, last question. In terms of the other proposals that you talked about, how did Elixir assess those as opposed to the Beach transaction?
Yeah, I tried to touch on that a little bit as part of my presentation. As I said, we were looking to wanting to reflect your market cap in the transaction. Getting a transaction value where we could see a look-through valuation closer to Omega's value versus Elixir's, because we thought that your value was more accurate than ours. You wouldn't want it to be the other way around. Secondly, as I said, maintaining a diverse acreage position. We didn't want someone to pick the eyes out of the company, because that could then result in people saying, "Well, the rump, is the rump not worth anything? Why did they only want to transact on those?" A transaction that was across the portfolio gives the understanding that a portfolio of exposure is valuable, rather than just bits and pieces here and there.
Those were probably three of the key things. We also, as I wanted to say, solve for time and capital. The Beach transaction gives us that time. It covers our operating costs across a very vast range of activities, across a very large acreage position. It's a decent amount of money to be putting into the ground, far in excess of any amount of capital that Elixir would be able to raise in more traditional settings in the capital markets. Yep.
What needs to be done to complete Elixir's farm in?
Yeah, sure. We have completed the 20. Yeah, no problem. It is traditional in joint ventures to have a timed opportunity for parties to be able to preempt deals. I mean, you would have seen Woodside recently preempted INPEX's acquisition of a piece of Browse. We will be completing our work shortly as per the Lorelle disclosures. At Lorelle, that buttons up our joint venture with Santos at ATP2056. The joint venture will be formed. We will then submit our transfer notices for Beach to come in and join in those joint ventures, and then Santos has a pre-prescribed amount of time. We are confident that we should have most of our conditions met to effect the transaction in the next few months. I would not be waiting. Yeah. Yeah.
The other conditions are ministerial consent, signs the transfers, ASX waiver as well. Yep.
Is that sort of what you expect?
The AUD 180 million at the moment is sort of largely focused on an area of land that could be tied all back to the Warkon Pilot. Daydream-3 , Lorelle- 4, Daydream- 4 are all drilled within 20, 30 km of where we have earmarked the beginning of the Warkon Pilot. I would say it is a progressive process for the joint ventures and the company, rather than saying, "Hey, we have done all the AUD 180 million, now we are moving into development operations." I think we sort of do it in tandem. It is one of the benefits of onshore operations versus offshore, where you have to do things very in sequence because of the different style of ops. We can do things and just sort of like, cross the line. Yeah.
I think you'll find staggered commercialization. The precedent is more like coal seam gas than conventional oil. Diona might go first, followed by Daydream, and probably different smaller pilots. But as long as the money keeps rolling in, I don't care.
Separate sort of question. The Lorelle Sandstone, the anomalous thickness that you-
Yep
talked about. Is the seismic reading giving you an idea of what sort of area that affects the anomalous?
Fantastically, we are going to Where did we find the slide? Fantastically, we're going to get Shell's incredibly dense, high-resolution 3D seismic over Lorelle. I'd rather answer that question then. Certainly on the 2D line that we have. We are doing seismic well ties at the moment, and we think that we can see the appropriate loop that thickens there. But 3D seismic is really If you're going to make any geophysical assessments of areas pre-drilling, you really want to have that high-quality data to be able to do it on. So, yeah.
But no other holes around the shot test?
Overston-2 free-flowed from the Lorelle Sandstone on a drill stem test, and then Daydream- 2 free-flowed from the Lorelle Sandstones, and then flowed fracture-stimulated after that as well in the Lorelle Sandstones. The play itself, there haven't really been a lot of wells that have been drilled to basement towards the south. So, it is incorrect to say that the play doesn't exist to the south, but we currently, under the basin modeling work that we've been doing, think that it's more in this area than it is down there. But that is a function of the limited data set that's making that conclusion. Yes, sir.
Can I make a comment on that? You said you think it's not going to be down the south.
I didn't say that. I just said that there haven't been any wells drilled down to basement down there, so we can't say conclusively. But the basin modeling suggests that the Lorelle Sandstone play is more towards the top end of our portfolio.
Yeah, so it picked up that trend down there.
It sure did. Some of our AUD 1.2 billion of investment on our borders.
This is a whole new Basin Centred Gas play, obviously extension. If we didn't have to have learnings, it would be so wonderful. But whenever you're doing something that your grandpappy didn't do, let alone your pappy, you are always going to learn something every time you do something there. And this is really relatively virgin. We are learning a lot. Everyone's learning a lot. Each time you drill a new well, you will do it slightly differently and find the learnings that you've got from the earlier ones.
Look, a good example, one of Shell's 2024 horizontals did not flow. So, the whole range of distribution of results have been seen from oil flows with Omega, beautiful sustained decent gas rates from Shell, to not flowing at all. So, the distribution results that we're seeing is the normal evolution of this play.
Well, Stephen Kelemen and I are actually chewing the fat, which old people do a fair bit these days. But we were just talking about at the turn of the century, how coal seam gas was really difficult to see ever coming about because of pancake shearing and the failures in the Galilee Basin, and just how much you learned by 2003, 2004. You had overcome pancake shearing, you had overcome this, you had overcome that. And lo and behold, now it is one of our largest export earners. The same is going to happen here. There is going to be learnings as you go through. It is, what, nearly 2 mi deep? I mean, 4,000 m.
And the soaking issue, which we have gone through and we are going through, is a learning as well, which I had never heard of before and never seen before, this example.
Yeah. Soaking, charging, don't care what it is, it is just requiring time for Mother Nature to equalize. God bless her. Okay.
Just one question on the trading on the day.
Yeah.
Well, you did later on, you went later. Did you, at any time during the day, the CEO or the Board look at that?
Certainly, Stephen, certainly the Managing Director and Chairman spoke about whether or not we should go into trading hold. Given the fact that we had not actually consummated a deal at that time, we thought that that was putting a gun to our negotiator's head. Anyone who has ever been involved in commerce knows that it is the last 10 minutes that you uncover the "I love you in the morning" type promises.
I mean, it is just odd. It was up 20%.
It was odd, and it dropped as soon as the stuff was announced. It didn't stay there.
Oh, I know that.
We don't know. There is
the headlines, they put them.
Right. At that stage, there was still a possibility we wouldn't do the deal. We would have had to announce that we're going to do a deal, then we would have had to announce we didn't go and do a deal. Then we have to announce that the reason we didn't do a deal was because we announced to the market that we were going to do a deal, and they got rid of all the negotiating power. By the end of the day, you disappear up your fundamental, and you don't have a toothbrush. It's one of those really difficult judgment decisions that you've got to make at the time. When there's nothing obvious that has changed, you're sitting there. Yeah, look, it was simple. Yeah.
Yeah.
Yeah. Unfortunately for us, there's a lot of day traders in our stock, and they're gambling. I'm not a gambling man. For me to understand the psychology of a gambling man and how I have to deal with it is somewhat difficult, because you don't know what's gone on HotCopper or where else. You just got to live your life as honestly as possible, taking into account all of the issues that you know at the time. The enormous experience that we have on this board, I mean, Stephen Kelemen got involved in the oil and gas industry in the 70s. I got involved in the 80s. I'd like to actually say we're young pups. I can say that we are still learning. You've got a fair wealth of experience to try and apply that judgment. Are you always going to be correct?
No, I don't have holes in my feet. There is no way can I ever claim to be infallible and always will make the right judgment in hindsight. I do think that in this case, I did make the right judgment in hindsight. You're put on this earth to use the best judgment you have using your background metrics of fact, your background experience. I think that this board has actually, for a small oil and gas company, I don't think you've got as much small oil and gas company experience of how to develop companies as this. You may think that we made the wrong judgment on that day. That's fine. I'm glad we live in a democracy and we can disagree. My point is, I don't resile from the decision Stuart Nicholls and I made at the time, based on the facts I knew at the time, even with the benefit of hindsight. I hope that explains it at least. Yes.
Oil and gas is a big subject all the time. Coal is too crude to be bothered with these days.
Put it this way, I have had experience in coal. I am not convinced that the world is still increasingly using coal. The worldwide demand for coal has increased. The political climate for Australia for coal is presently nonexistent. There is a degree to which I think the present generation would find that 1950 song, "The knee bone's connected to the thigh bone, it's connected to the hip bone," as being too deeply philosophical for the internet generation. The idea that tractors need diesel is absolutely incomprehensible. You get food without using any diesel. Really interesting stuff. You do not need fertilizer. But there is a degree to which there will be changes. At this stage, there is nothing I see that is going to decrease the demand for natural gas in particular. It is necessary for glass manufacturing, it is necessary for tiles, it is necessary for fertilizer.
By the time you say AI is going to replace the need for shelter, AI is going to replace the need for food, AI is going to replace the need for human interaction, I think that is pretty interesting. We are going to stick with oil and gas. Okay. That being the case, I will now move to the If there are any further questions, ask them after the meeting. I will move fairly to the next item of business, which is the resolutions. The accounts is the first resolution. Is there any discussions or questions in respect of the accounts? The auditor is here. None that have come through.
There being no further discussion, we will move to the first item, which receive and consider the annual financial report of the company for the financial year ended 30 June 2026, together with the declaration of the directors, the directors report, the remuneration report, and the auditor's report. The accounts and reports were approved and signed by directors, and in accordance with the Corporations Act, they are received and tabled at this meeting. There is no requirement to formally adopt the accounts. However, I invite any questions relating to the accounts and the report. The audit partner, Andrew Tickle from BDO, is available to assist with any of the inquiries.
Are there any questions for the auditors regarding the annual report? In which case, I will now move to the resolutions, as set out in the notice of meetings. The first resolution number one, adoption of the remuneration report. To consider, and if thought fit, pass with or without amendments as an ordinary resolution the following: that the remuneration report required by Section 300A of Corporations Act 2001, as contained in the company's director's report for the year ended 30 June 2026, be adopted by shareholders on the terms and conditions in the explanatory memorandum.
Oh.
The next page.
Okay. There being no further questions on that matter, I'll go to resolution number two, to consider, and if thought fit, to pass with or without amendment as an ordinary resolution the following: that Ms. Anna Sloboda, who retires in accordance with Article 6.3 of the Constitution, Listing Rules 14.4 and 14.5, and for all other purposes, retires, and being eligible and offering herself for re-election, is re-elected as a director of the company on the terms and conditions in the explanatory memorandum. Are there any questions? There are no questions. I now put the motion.
Resolution number three, to consider, and if thought fit, to pass with or without amendment as an ordinary resolution the following: that for the purposes of Listing Rule 14.4, Article 6.3 of the Constitution, and for all other purposes, Ms. Ayten Saridas, a director who was appointed as a director by the board of directors in accordance with Article 6.2 of the Constitution on the 20th of August 2026, retires, and being eligible, is elected as a director of the company on the terms and conditions set out in the explanatory memorandum. Are there any questions? If there are no questions, I now put the motion.
Resolution number four, election of Mr. Tony Tarr as a Director, to consider, and if thought fit, to pass with or without amendment as an ordinary resolution the following: that for the purposes of Listing Rule 14.4, Article 6.3 of the Constitution, and for all other purposes, Mr. Tony Tarr, a Director who was appointed as a Director by the Board of Directors in accordance with Article 6.2 of the Constitution on January 1, 2026, retires, and being eligible, is elected as a Director of the company on the terms and conditions in the explanatory memorandum. Are there any questions? If there are no questions, I now put the motion.
Resolution number 5 , to consider, and if thought, to pass with or without amendment as an ordinary resolution the following: that pursuant to and in accordance with Listing Rule 7.4, and for all other purposes, shareholders ratify the prior issue of 125 million placement shares on terms and conditions set out in the explanatory memorandum. Are there any questions? There being no questions, I now put the motion.
Resolution number six, approval of the performance rights to Mr. Stuart Nicholls, a Director, to consider, and if thought fit, pass with or without amendment each as a separate ordinary resolution, the following: that for the purposes of Listing Rule 10.14, and for all other purposes, shareholders approve the issue of 2,911,450 short-term incentive performance rights, and the 3,782,609 long-term incentive performance rights to Mr. Stuart Nicholls, Director of the company, or his nominee, under the plan on terms and conditions in the explanatory memorandum. Are there any questions? If there are no questions, I now put the motion.
Special business resolution number seven, approval of the 10% placement facilities, to consider, and if thought fit, with or without amendment as a special resolution, the following: that pursuant to and in accordance with Listing Rule 7.1A, and for all other purposes, shareholders approve the company to have the additional capacity to issue equity securities under Listing Rule 7.1A of up to 10% of the issued capital of the company at the time of issue, calculated in accordance with the formula prescribed in Listing Rule 7.1A.2, and under the terms and conditions contained in the explanatory memorandum. Are there any questions? There being no questions, I now put that motion. Thank you. We will now conduct the polls. Please lodge your votes on the voting card. The returning officer will collect them once complete. The returning officer has her little black box. Oh, I haven't
Get the torch.
I haven't looked at the back of. I'll go ahead. Stuart, do you want to close the meeting? Do you want to close? I now declare the poll closed and request the returning officer to count the votes. After the votes have been counted, the results of the polls will be released to the ASX and placed on the company's website as soon as possible. Ladies and gentlemen, that concludes the meeting. Thank you for your attendance, and on behalf of the directors, we look forward to updating you as and when new information come to hand. The meeting is now closed. Thank you for attending.