The Elixir Energy Ltd (ASX: EXR) share price is blowing off steam after the energy producer announced an operations update.
At the time of writing, Elixir shares are swapping hands for 27 cents, down 3.57%.
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What's driving the Elixir Energy share price lower?
Investors are selling off Elixir shares after the company provided an update of its operating performance over the last month.
This relates to its current exploration campaign at its wholly-owned Nomgon IX Coal Bed Methane (CBM) Production Sharing Contract (PSC). CBM is better known as coal seam gas in Australia.
The company said its Richcairn-1S exploration well, located within the Nomgon project in Mongolia, has now been completed. Up to 792 metres were drilled, and 16 metres of coal and 20 metres of highly carbonaceous mudstone (silty coal) were discovered.
The rig will move to another location, Richcairn-2S, with drilling due to start in the next day or so. In a possible boost for the Elixir Energy share price, the company noted that drilling further wells could lead to an extensive coal-bearing sub-basin for 2021 and beyond.
As the last 6 wells have all intersected their coal targets, the company will add a third rig to accelerate its 2021 drilling program.
The Nomgon Central-1 core-hole has reached a total depth of 559 metres and logged 65 metres of coal. Currently, the well is gathering data that will underpin the design of future production testing. A number of laboratory tests are expected to follow in the coming months.
Drilling at the next Nomgon sub-basin appraisal well – Nomgon 6 – will begin later this week. The results from this will be used in the technical design of the planned 2022 production testing. In addition, the results will help secure the required environmental and other approvals in Mongolia.
Lastly, Elixir's expanded seismic program is also due to begin shortly, targeting the acquisition of another 300 kilometres.
Management commentary
Managing director Neil Young commented on the news possibly driving the Elixir Energy share price:
With Richcairn, we have now added 3 new potentially productive sub-basins to our inventory in 2021 to date.
At Nomgon we continue to gather the data required to underpin our foreshadowed two-stage production testing process. As always in the last 18 months, we commend the resilience of our Mongolian team and sub-contractors in battling through the ongoing COVID-19 pandemic.
The Elixir Energy share price has doubled in value over the past 12 months and is up roughly 120% this year.
