Quarterly Activities Report

31 October 2007 ELIXIR PETROLEUM LIMITED ("Elixir" or "the Company") QUARTERLY ACTIVITIES REPORT FOR PERIOD ENDED 30 SEPTEMBER, 2007 HIGHLIGHTS * Merger approved by Gawler shareholders and Second Court Hearing * Enlarged entity's new shares start trading around 13 November * Panther farmout negotiations at advanced stage * Encouraging technical results on 24th Round Block 21/16b * Production commences at Gawler's High Island project ACTIVITY OVERVIEW OPERATIONS Block 211/18b (EXR 56% interest) The assignment of a 30% interest in Block 211/18b and the execution of the Joint Operating Agreement with farminee RWE Dea UK SNS Limited ("RWE") were completed in early August. Block 211/18b (Licence P1381) is a Traditional licence awarded in the 23rd Seaward Licensing Round in December 2005. The initial interest holders in P1381 were Elixir (80%) and its joint venture partner, Sosina Exploration Ltd ("Sosina") (20%). Under the terms of the farmin, RWE will earn a 30% interest in Block 211/18b by contributing on a promoted basis to the cost of drilling an exploration well on the Leopard prospect within the block. Efforts to secure another farminee in order to largely cover Elixir's and Sosina's cost exposures in the proposed Leopard well are ongoing with several companies assessing the opportunity. The availability of suitable drilling rigs has improved significantly over recent months with a number of well slots becoming available during 2008. Provided that the Leopard farmout can be concluded over the coming months, we remain confident that the well can be drilled next year. Block 21/16b (EXR 40% interest) Good progress has been made on Promote Block 21/16b (Licence P1507) during the quarter towards finalising pre-requisite technical work prior to farmout. State-of-the-art fluid inclusion studies of a number of wells already drilled in the area have demonstrated the movement of hydrocarbons through a well previously classified as a dry hole and proved a hydrocarbon migration path across the block. An interesting Jurassic prospect has been identified on this trend within Block 21/16b and will now form the focus of farmout attention. Block 211/8b (EXR 80% interest) Block 211/8b (Licence P1379) is a Promote licence awarded in the 23rd Licensing Round in December 2005. Under the terms of the Promote licensing scheme, a drilling commitment or similar substantial work program is required by the Department of Business, Enterprise and Regulatory Reform (BERR, formerly known as the DTI) by the second anniversary of licence award. Negotiations with a prospective farminee are at an advanced stage which, if successful, will lead to retention of the licence and drilling of the Panther well potentially sometime in 2008. Elixir and its partner, Sosina, would see their respective 80% and 20% licence interests diluted in return for a cost-carry through the Panther well. CORPORATE Progress on Gawler Resources Merger The Scheme documents for the proposed merger of Elixir and ASX-listed Gawler Resources Limited ("Gawler") were lodged with the Australian Stock Exchange ("ASX") and the Australian Securities and Investments Commission ("ASIC") on 31 July 2007. Following ASX and ASIC review, the First Court Hearing in the Federal Court in Perth, Western Australia, approved the dispatch of the Scheme booklet to Gawler security holders. Subsequent to period-end, Gawler share and option holders voted overwhelmingly in favour of the merger at a meeting held on 19 October. The meeting results were then tabled at a Second Court Hearing on 25 October where the Court formally approved the Scheme of Arrangement which then became effective on 26 October. The new Elixir shares and options will be allotted to Gawler shareholders on 12 November and normal trading of these new shares in the enlarged entity is expected to commence on the ASX on 13 November. The board and management of Elixir are very pleased that the Gawler merger has finally been concluded. The creation of a balanced pan-Atlantic exploration and production company will provide an ideal platform for further growth. During the quarter gas and oil production commenced at Gawler's High Island A268 project in the Gulf of Mexico. Full details are available in Gawler's September Activities Report (www.gawlerresources.com.au). Convertible Note Issue The issue of 10.7 million Elixir unsecured convertible notes at a subscription price of A$0.25 was completed in early August raising a total of approximately A$2.7 million before expenses. The convertible note issue was arranged and underwritten by Argonaut Capital Limited. The issue was made to Macquarie Bank Limited, AFM Perseus Fund Limited and two other clients of Argonaut under Section 708 of the Australian Corporations Act. The notes are not quoted on the ASX or AIM. The funds subscribed are being employed in Gawler's enlarged field development program in the Gulf of Mexico at High Island and Pompano under a bridging loan arrangement that has operated during the merger process. Following the successful finalisation of the merger, the notes are convertible into Elixir shares at a price of A$0.25 per share at any time up until 31 October 2008, or are redeemable at face value plus interest on 30 November 2008. 2007 Annual General Meeting The Company's Annual General Meeting for the 2006-07 year is scheduled to be held at Level 31 Allendale Square, 77 St George's Terrace, Perth, Western Australia, on 30 November 2007. The 2007 Annual Report has been finalised and is being sent to shareholders who have requested copies either by post or email. An electronic version will be available for viewing and download from the company's website (www.elixirpetroleum.com) shortly. For further information please contact: Elixir Petroleum Limited Russell Langusch, Managing Director +44 207 484 5623 (UK Office) +44 7840 523 771 (UK Cell) +61 411 725 858 (Australia Cell) E-mail: rlangusch@elixirpetroleum.com Bankside Consultants Michael Padley / Susan Scott +44 207 367 8888 Seymour Pierce Limited +44 207 107 8000 Jonathan Wright ---END OF MESSAGE---