EXR wraps up a strong year at its 3 energy projects

This morning our 2019 Energy Pick of the Year, Elixir Energy (ASX:EXR), provided an on progress made this year across its portfolio of energy projects.

Let’s take a look...

Mongolian CBM gas project

EXR discovered multiple new sub-basins, drilling ~17 exploration and appraisal wells in 2022.

More importantly, EXR recently announced that gas had flowed in sufficient quantities to ignite a flare from a two-hole pilot production test program – a first for Mongolia’s petroleum industry. This ​​is a demonstration of a repeatable process for EXR of exploration to appraisal to pilot production.

This was EXR’s third year drilling its CBM gas project in Mongolia, and although the project appeared to be ‘running in background’ at times for EXR, there was very strong progress made in particular with securing a gas flow from the production testing wells.

This was the number 1 objective that we wanted to see EXR achieve this year, and we feel that the company accomplished this and even exceeded expectations with a gas flow result.

What’s next for the Mongolian gas project?

The ultimate aim for the production testing program is to produce a commercial flow-rate from the pilot production program early in 2023 before a reserves number can be booked for the project.

Alongside the pilot production, EXR drilled 11,576m in 2022 across the project area. Analysis and interpretation of this program is underway and will supplement the emerging results of the pilot program as the key inputs for EXRs Mongolian CBM plans in 2023.

Mongolian green hydrogen project

Back in June EXR signed a Memorandum of Understanding (MOU) with SB Energy Corp (a wholly owned subsidiary of Japan’s second largest company, SoftBank Group Corp) to develop a hydrogen project in Mongolia.

This came as a big surprise to us, and with the support of a major investor like SoftBank, we think this project could gain traction, particularly given the vast wind and solar assets of the project’s location in the Gobi desert.

According to the MOU, both SB Energy Corp and EXR are progressing different parts of the Pre-Feasibility (PFS) work required for a pilot green hydrogen project including:

• water procurement
• site selection
• engineering studies
• offtaker engagement
• project financing

What’s next for the green hydrogen project?

In 2023 we expect EXR together with SB Energy Corp to focus on getting all of the data required to complete the PFS.

We think that this could be the ‘dark horse’ project for EXR going into 2023. Particularly if hydrogen continues to be prioritised by governments and corporations looking to transition to renewable energy.

Gas project in Queensland

In response to the upheaval of global energy markets, in August EXR acquired a gas project in Queensland’s Taroom Trough and just south of Australia’s premier gas hub, and EXR has since done technical work that resulted in the booking of an independently certified contingent gas resource of 395 billion cubic feet (BCF).

Click here if you want to read our deep dive into this project: EXR to drill for gas in Queensland - Next Door to Shell and Santos

What’s next for the QLD gas project?

EXR is planning a drilling program in late 2023 aiming to increase contingent resources and produce a commercially viable flow rate.

EXR had ~$19M in cash in the bank (as at 30 September 2022), meaning it can work on progressing its projects without having to worry about the need to raise capital in the short-medium term.

We are looking forward to updates across EXR’s projects in the new year.