Why the Elixir Energy (ASX:EXR) share price is down 20% in 3 months

Shares in the oil and gas exploration company have struggled lately. Here are the details

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The Elixir Energy Ltd (ASX: EXR) share price has faced headwinds over the last few months, despite several advancements in the company’s operations.

Whereas the S&P/ASX 200 index (ASX: XJO) has climbed 1.4% into the green over the last three months, Elixir shares are 20% in the red. At the time of writing, they are down 4.17% today to 23 cents.

Here’s why.

Quick rundown on Elixir Energy

Elixir Energy is in the oil and gas exploration business and has a number of government and other energy stakeholder relationships, according to the company.

Currently, it is “solely focused” on an exploration program in Mongolia targeting natural gas in the form of “coal-bed methane (CBM)”.

What’s up with the Elixir Energy share price lately?

The Elixir Energy share price has been on the way down despite a series of updates from its Nomgon IX CBM Production Sharing Contract (PSC).

It was in June when the company first established the presence of coal through one of its drill holes. At the time, it stated drilling had intersected 48 metres of coal.

The find wasn’t without setbacks, with the company encountering a number of mechanical issues and unlikeable drilling conditions.

Then in July the company’s extended drilling operations in the Kingston sub-basin of Nomgon discovered a further 12 metres and 8 metres of coal from two drill holes, respectively.

Elixir also released its quarterly earnings report in late July where it gave several potential investment highlights.

These included a successful capital raise that strengthened the cash position on its balance sheet to $33 million.

As a result of the finds in Kingston, the area of discovery in the sub-basin was extended to 50km2 on 25 August.

It also advised that several other drilling programs are underway in addition to identifying a new drilling target. The company has named the prospect “Lattice”.

Despite these advancements, investors continue to sell off Elixir shares.

In fact, the downward pressure on Elixir shares is a continuation of a longer-term downward trend over the last 6 months. This comes after a high of 45 cents for the Elixir Energy share price in April.

Not all doom and gloom for the Elixir Energy share price

Taking a long-term view, we see the Elixir Energy share price has gained 84% this year to date and 70% over the last 12 months.

This far outpaces the broad index’s return of around 25% over the past year.

Should you invest $1,000 in Elixir Energy right now?

Before you consider Elixir Energy, you'll want to hear this.

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The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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