Elixir Energy (ASX:EXR) strikes gas deal with Xstate that could turn molecules into money – fast

Junior energy explorer Elixir Energy (ASX:EXR) has pulled off a savvy deal that ticks both strategic and financial boxes — without spending a cent on drilling.

In a move likely to sharpen interest in the often-overlooked Surat Basin, Elixir has farmed out a 51% stake in the Diona sub-block of ATP 2077 to fellow ASX-lister Xstate Resources (ASX: XST).

In return, Xstate will foot the full bill for an exploration well — Diona-1 — expected to spud in Q3 2025, subject to rig availability.

It’s a textbook example of exploration de-risking.

For Elixir, the arrangement preserves upside while outsourcing the cost and early-stage risk of a conventional gas play sitting tantalisingly close to existing infrastructure.

Highlights

• Xstate earns 51% in Diona sub-block of ATP 2077 by funding exploration well

• Drilling of Diona-1 slated for Q3 2025

• Target: conventional gas, a stone’s throw from a pipeline feeding into the Wallumbilla Hub

• Elixir retains 100% of Taroom Trough sub-blocks A & B, central to its Grandis Project strategy

While many junior oil and gas explorers pin hopes on long-lead LNG exports or unconventional targets, this well is eyeing a conventional gas accumulation “only a few hundred metres from an underutilized gas gathering line” that connects directly to the critical Wallumbilla Hub — Australia’s east coast gas crossroad.

In other words: find gas, flick the switch, flow to market.

Few juniors can boast such an immediate path to monetisation.

Elixir Energy Managing Director Neil Young put it succinctly:

“Given the location immediately adjacent to an under-utilised gas gathering system, success could rapidly be converted into positive cash-flows.”

Critically, this is no core asset divestment.

Elixir’s acquisition of ATP 2077 last year was driven by the Grandis Project’s Taroom Trough acreage — and it still holds that 100%. What the Diona deal offers is optionality: letting Elixir meet work commitments on ATP 2077 through a partner-funded well while concentrating on its primary asset.

“Our acquisition of ATP 2077 last year was primarily driven by the additional acreage it gave us for the Taroom Trough focused Grandis Project,” Young said. “The work commitments for the licence will now be largely effectively met by this Xstate deal.”

In a sector where cost control, infrastructure access and gas market exposure are often mutually exclusive, Elixir seems to have found a rare triangle of all three.

If Diona-1 hits paydirt, Elixir could be flowing gas into the east coast market while its peers are still waiting on permits — or funding.

Not bad for a company that hasn’t yet turned the drill bit.