Elixir Energy (ASX:EXR) has announced that early results from flow testing at the Lorelle-3 appraisal well confirm that Queensland's Taroom Trough represents a globally significant development opportunity.

"It is a pleasure to announce positive initial results from the Lorelle-3H clean-up and flow testing, from what has been a monumental effort over the past 16 months by Elixir's team," said Managing Director and CEO Stuart Nicholls.

"We have been able to make significant advancements on our neighbouring results in terms of extending the play northward, completion integrity and initial productivity."

Nicholls noted that Lorelle-3H is only the fifth horizontal well drilled in the Taroom Trough but is already demonstrating a globally significant opportunity to develop a major gas and oil resource adjacent to three operating LNG facilities and the nation's wholesale gas trading point. The reference to proximity is commercially material: the Taroom Trough sits within Queensland's broader Bowen–Surat Basin system, where existing pipeline infrastructure connects gas fields to the three Gladstone LNG export plants — operated by Queensland Curtis LNG, Gladstone LNG, and Australia Pacific LNG — which collectively process coal seam gas for export to Asian markets. A new conventional gas and liquids-rich discovery near this infrastructure could offer a lower-cost development pathway compared with standalone greenfield projects.

"Lorelle-3H is more than a proof of concept and now provides a potential pathway to our first Reserves and subsequent development," he added.

The well has produced at peak rates of 10.4 million standard cubic feet per day (mmscfd) with 10 barrels per day (bblsd) of high-value light oil and condensate. Flow rates are expected to increase significantly once clean-up operations are completed.

The gas produced is of excellent quality, containing only 1.0% CO2, with 10% ethane and 4.0% propane, resulting in a high energy and sales conversion factor. The low CO2 content is notable because processing costs and emissions intensity rise with higher impurity levels, making low-CO2 gas commercially advantageous for both domestic sale and LNG feedstock.

Elixir informed shareholders that future development wells of 2,000 metres in length could deliver equivalent peak sales gas rates of 15 terajoules per day, based on the L3H flow test. Stabilised rates of six TJ/d underscore the significance of the L3H well results. By comparison, east coast Australian industrial and residential gas demand is measured in petajoules annually, and individual production wells across the Surat Basin CSG industry typically deliver in the low single-digit TJ/d range.

The company plans to undertake a 60-day soak period on the Lorelle-3H well before retesting at the start of October 2026 to assess comparative performance. This test will also provide critical information for development planning of any future pilot or production opportunities, given the "ready for production" status of the well.

Nicholls indicated that the soak period may be a critical step in maximising the productivity and recoverability of oil and gas within the Dunk reservoir.

Following the announcement, EXR shares declined 18.7% to 6.1 cents, with a market capitalisation of $140.1 million.