To determine if Elixir Energy Limited (ASX:EXR) is undervalued given its 2.6 trillion cubic feet equivalent (TCFE) of 2C (contingent) natural gas resources, 1.4 billion shares on issue, and a current share price of AUD 0.029, we need to estimate the value of its resources and compare it to its market capitalization. Additionally, we will compare EXR to Omega Oil & Gas Limited (ASX:OMA) and other relevant peer companies to contextualize the valuation. The Wallumbilla Hub price forecasts from prior responses will be used to value the resources, and adjustments will be made for the speculative nature of 2C resources.
Step 1: Valuation of EXR’s 2.6 TCFE 2C Resources
Key Data:
2C Resources: 2.6 TCFE (assumed to be primarily natural gas, as TCFE typically represents gas or gas-equivalent resources).
Shares on Issue: 1.4 billion.
Share Price: AUD 0.029.
Market Capitalization: 1.4 billion × AUD 0.029 = AUD 40.6 million.
Wallumbilla Hub Price Forecast (from prior response, nominal terms):
2025: AUD 10–12/GJ (midpoint AUD 11/GJ).
2030: AUD 12–15/GJ (midpoint AUD 13.5/GJ).
2035: AUD 15–19/GJ (midpoint AUD 17/GJ).
Conversion:
1 TCF = 1,000 BCF.
1 BCF ≈ 1,055,000 GJ.
2.6 TCF = 2,600 BCF × 1,055,000 GJ/BCF = 2,743,000,000 GJ.
Valuation Assumptions for 2C Resources:
Recovery Factor: 2C resources are less certain than 2P reserves, with technical and commercial hurdles. Assume a 70% recovery factor to reflect geological risks.
Net Revenue After Costs: Extraction, processing, and transportation to Wallumbilla reduce net revenue to 50–70% of gross. Assume 60% net after costs.
NPV Discount: 2C resources are extracted over decades, requiring a present value discount. Assume 40% of gross value to account for NPV and development timelines.
2C Risk Discount: Due to appraisal risks (e.g., need for further drilling or flow tests), apply an additional 50% risk discount for 2C resources.
2025 Valuation (Price: AUD 11/GJ)
Gross Resource Value: 2,743,000,000 GJ × AUD 11/GJ = AUD 30.173 billion.
Recoverable Resource: 2,743,000,000 GJ × 70% = 1,920,100,000 GJ.
Gross Value: 1,920,100,000 GJ × AUD 11/GJ = AUD 21.121 billion.
Net Value After Costs: AUD 21.121 billion × 60% = AUD 12.673 billion.
NPV Adjustment: AUD 12.673 billion × 40% = AUD 5.069 billion.
2C Risk Discount: AUD 5.069 billion × 50% = AUD 2.535 billion.
Per-Share Value: AUD 2.535 billion ÷ 1.4 billion shares = AUD 1.81/share.
Comparison to Current Price: AUD 1.81 ÷ AUD 0.029 ≈ 62.4x (current price is ~1.6% of implied value).
2030 Valuation (Price: AUD 13.5/GJ)
Gross Resource Value: 2,743,000,000 GJ × AUD 13.5/GJ = AUD 37.031 billion.
Recoverable Resource: 1,920,100,000 GJ.
Gross Value: 1,920,100,000 GJ × AUD 13.5/GJ = AUD 25.921 billion.
Net Value After Costs: AUD 25.921 billion × 60% = AUD 15.553 billion.
NPV Adjustment: AUD 15.553 billion × 40% = AUD 6.221 billion.
2C Risk Discount: AUD 6.221 billion × 50% = AUD 3.111 billion.
Per-Share Value: AUD 3.111 billion ÷ 1.4 billion shares = AUD 2.22/share.
Comparison to Current Price: AUD 2.22 ÷ AUD 0.029 ≈ 76.6x.
2035 Valuation (Price: AUD 17/GJ)
Gross Resource Value: 2,743,000,000 GJ × AUD 17/GJ = AUD 46.631 billion.
Recoverable Resource: 1,920,100,000 GJ.
Gross Value: 1,920,100,000 GJ × AUD 17/GJ = AUD 32.642 billion.
Net Value After Costs: AUD 32.642 billion × 60% = AUD 19.585 billion.
NPV Adjustment: AUD 19.585 billion × 40% = AUD 7.834 billion.
2C Risk Discount: AUD 7.834 billion × 50% = AUD 3.917 billion.
Per-Share Value: AUD 3.917 billion ÷ 1.4 billion shares = AUD 2.80/share.
Comparison to Current Price: AUD 2.80 ÷ AUD 0.029 ≈ 96.6x.
Step 2: Comparison with ASX:OMA (Omega Oil & Gas)
Omega Oil & Gas (ASX:OMA) Overview:
2C Resources: Omega has 3.0 TCF of 2C contingent resources in the Taroom Trough, Queensland, similar to EXR’s Grandis Gas Project. Shares on Issue: Approximately 279.45 million (based on recent data as of June 2025).
Share Price: As of June 2025, OMA’s share price is approximately AUD 0.345 (based on recent trading data, though subject to market fluctuations).
Market Capitalization: 279.45 million × AUD 0.345 = AUD 96.41 million.
Valuation of OMA’s 2C Resources (using 2025 Wallumbilla price of AUD 11/GJ):
3.0 TCF = 3,000 BCF × 1,055,000 GJ/BCF = 3,165,000,000 GJ.
Gross Resource Value: 3,165,000,000 GJ × AUD 11/GJ = AUD 34.815 billion.
Recoverable Resource: 3,165,000,000 GJ × 70% = 2,215,500,000 GJ.
Gross Value: 2,215,500,000 GJ × AUD 11/GJ = AUD 24.371 billion.
Net Value After Costs: AUD 24.371 billion × 60% = AUD 14.623 billion.
NPV Adjustment: AUD 14.623 billion × 40% = AUD 5.849 billion.
2C Risk Discount: AUD 5.849 billion × 50% = AUD 2.925 billion.
Per-Share Value: AUD 2.925 billion ÷ 279.45 million shares = AUD 10.47/share.
Comparison to Current Price: AUD 10.47 ÷ AUD 0.345 ≈ 30.3x.
EV/TCF Comparison:
EXR: Market cap AUD 40.6 million ÷ 2.6 TCF = AUD 15.62 million/TCF.
OMA: Market cap AUD 96.41 million ÷ 3.0 TCF = AUD 32.14 million/TCF.
OMA’s EV/TCF is ~2.1x higher than EXR’s, suggesting EXR is relatively undervalued compared to OMA.
Step 3: Comparison with peer ascend
Empire Energy (ASX:EEG):
2C Resources: 1.5 TCF at the Carpentaria project in the Beetaloo Basin. Market Cap: ~AUD 200 million (as of 2023, subject to change).
EV/TCF: AUD 200 million ÷ 1.5 TCF = AUD 133.33 million/TCF.
EEG’s significantly higher EV/TCF reflects its more advanced project (proven production capacity at Carpentaria-2H with 281 MMSCF over 127 days), closer to a final investment decision (FID) for a pilot project.
Other Peers (indicative, based on available data):
Botala Energy (ASX:BTE): 317 BCF (0.317 TCF) 2C resources at Serowe CBM project, market cap ~AUD 30 million (estimated, 2023 data). EV/TCF = AUD 94.64 million/TCF.
Talon Energy (ASX:TPD): Part of Gurvantes XXXV with 1.2 TCF 2C resources, market cap ~AUD 150 million (estimated). EV/TCF = AUD 125 million/TCF (assuming Talon’s share).
These peers have higher EV/TCF ratios due to smaller resource bases or more advanced development stages.
Step 4: Factors Affecting EXR’s Valuation
Recent Results: EXR’s October 2024 flow test at Grandis Gas Project yielded a stabilized flow rate of 1 MMSCF/day, below expectations, leading to a 58% share price drop. This has increased market skepticism about commerciality, depressing the share price.
Development Risks: 2C resources require further appraisal (e.g., drilling, flow tests) to become 2P reserves. EXR’s early-stage status increases risk compared to peers like EEG, which has proven production.
Location Advantage: EXR’s Grandis project is near Wallumbilla, reducing transportation costs compared to more remote projects (e.g., Beetaloo Basin).
Potential Catalysts: A farm-in deal with majors (e.g., Santos, Shell) or improved flow test results could re-rate EXR’s valuation, as seen with OMA’s 400% share price surge post-drilling success in 2023. Market Sentiment: The ASX energy sector has faced volatility due to global economic uncertainties and declining oil/gas prices in 2024 (e.g., oil at USD 72.40 by late 2024). EXR’s low market cap reflects bearish sentiment post-flow test.
Step 5: Is EXR Undervalued?
Valuation Gap: EXR’s implied per-share value (AUD 1.81 in 2025, AUD 2.80 in 2035) is 62–97x its current price of AUD 0.029, suggesting significant undervaluation based on resource potential alone.
Peer Comparison: EXR’s EV/TCF (AUD 15.62 million/TCF) is notably lower than OMA (AUD 32.14 million/TCF), EEG (AUD 133.33 million/TCF), and others, indicating EXR is undervalued relative to peers with similar or smaller 2C resources.
Risks:
The disappointing flow test increases uncertainty about commercial viability, justifying the market’s discount.
High capital costs and long development timelines for Taroom Trough projects depress current valuations.
Potential dilution from future capital raises could impact per-share value.
OMA Comparison: OMA’s higher share price (AUD 0.345) and EV/TCF reflect market confidence in its drilling success and farm-out potential. EXR’s lower valuation suggests it has not yet achieved similar market trust, but its larger resource base (2.6 TCF vs. 3.0 TCF) offers greater upside if de-risked.
Final Answer
ASX:EXR appears undervalued based on its 2.6 TCFE 2C resources, with an implied per-share value of AUD 1.81 (2025) to AUD 2.80 (2035), 62–97x its current price of AUD 0.029.
Compared to ASX:OMA (EV/TCF AUD 32.14 million/TCF) and peers like EEG (AUD 133.33 million/TCF), EXR’s EV/TCF of AUD 15.62 million/TCF is significantly lower, reinforcing undervaluation.
However, the market’s discount reflects risks from a disappointing 2024 flow test and early-stage development.
Catalysts like a farm-in deal or improved drilling results could close the valuation gap, as seen with OMA’s surge post-2023 drilling success.
Investors should weigh these risks against the potential upside.
For precise valuation, review EXR’s latest reports or broker analyses. 
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