Elixir Snaps Up Unconventional Gas Play Onshore France

Elixir Petroleum has agreed to acquire the large Moselle Permit located in the East Paris Basin, onshore Northeastern France. The Permit is prospective for a number of different play types including conventional gas, unconventional gas (i.e. tight sand and shale gas) and coal bed methane ("CBM").

In the United States, advances in drilling and hydraulic fracturing techniques have opened huge reserves of unconventional gas that now mean the country is virtually self-reliant in terms of its gas-supply needs. A 2007 study from the National Petroleum Council, an advisory body to the US Department of Energy, estimated that the European continent could hold up to 549 trillion cubic feet ("Tcf") of shale gas, 431 Tcf of tight gas and 275 Tcf of CBM. For a continent whose hydrocarbon production peak is thought to have passed, these resources present an enticing prospect in the continuing effort on the part of European nations to secure energy independence.

Shale gas, which is considered the most promising hydrocarbon resource in Europe, is drawing significant investment into the continent. The last 18 months have seen ExxonMobil, ConocoPhillips, Shell, OMV and other large producers acquire significant land positions across the EU. A number of independent oil and gas companies, including Elixir, have joined the pursuit.

The Moselle Permit is 5,360 km2 in area (or approximately 1.32 million acres), making it the largest single exploration block onshore France. The Permit was awarded in January 2009 to East Paris Petroleum Development Limited ("EPPDL") for an initial five year term. EPPDL is required to spend €3 million on exploration activities within the Permit during the initial term, of which a proportion has already been expended by EPPDL during 2009. There is no obligation to drill any wells during the initial term.