ASX energy stock Elixir Energy Ltd (ASX: EXR) is having a day to forget.
As are the company's shareholders.
Yesterday the Elixir Energy share price closed the day at 16.5 cents. In early trade, shares crashed all the way to 7.0 cents apiece, down 57.6%. After some likely bargain hunting, shares are trading for 7.4 cents each, down 55.2%.
For some context, the All Ordinaries Index (ASX: XAO) is down 0.1% at this same time, while the S&P/ASX 200 Energy Index (ASX: XEJ) is up 1.3%.
This stark underperformance for the junior ASX energy stock comes on the heels of an operational update.
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ASX energy stock hammered on well results
Elixir Energy has been keeping the market regularly updated on the progress at its Daydream-2 well. The well is situated in its 100% owned Project Grandis in Queensland's Taroom Trough.
Over the previous month, investor optimism over the potential on tap here saw the ASX energy stock gain more than 21%. Until this morning's opening bell, that is.
Today, Elixir shares are under pressure after the company announced that it has concluded its testing program.
While Daydream-2 delivered gas flow rates from five out of the six stimulated zones – including for the first time in two separate deep coal zones – the stabilised flow rate was less than previously measured.
The company revealed a maximum flow rate of 2.6 MMSCFD with a stabilised rate of 1.0 MMCFPD prior to shut in.
Management attributed the reduction in the stabilised rate to condensate or water banking immediately around the wellbore. The cause was said to likely be the multiple open and closures of the well during recent operations or by adverse reactions to fluids introduced into the wellbore.
While the ASX energy stock stressed that these kinds of issues are "common in early stage tight gas plays globally" and said this can be remedied by operational changes to fluid use and well management, investors are still favouring their sell buttons.
The company also noted that the well is being retained through a process of suspension as a future gas producer, and that it is proceeding with a process of applying for the licence to be deemed a retention lease.
Commenting on the well test results putting the ASX energy stock under heavy pressure today, Elixir's managing director Neil Young said, "The Daydream-2 appraisal program has massively exceeded our expectations of more than two years ago when we acquired Project Grandis."
Young added:
Our work – combined with that of our various neighbours – is opening up vitally needed and very material gas resources for Gladstone, Queensland and Australia. The extensive data gathered to date will inform possible pathways to production.
We expect our discussions with potential partners will now likely be accelerated as the global oil and gas industry turns its eye to the enormous opportunities in the Taroom Trough.
The ASX energy stock said the planning of the Daydream-3 appraisal well in the Grandis Project is in progress. This will focus on further de-risking the gas resources its now established.
