Elixir Energy's (ASX:EXR) transition to sustained gas flow at the Lorelle-3H appraisal well in Queensland provides more evidence that reservoir deliverability is tracking as expected, Euroz Hartleys said in a Monday note.

The company confirmed the completion of post-fracture stimulation plug milling and the start of controlled flow back operations at the well, and Euroz Hartleys views the update positively.

The release of peak gas-condensate flow rates remains key near-term catalysts to determine if Lorelle-3H can demonstrate commercial flow rates. A successful test would represent "a significant technical milestone" for the Taroom Trough, where the well is located, and increase Elixir Energy's appeal as a merger and acquisition target, the investment firm said.

"While production rates have not yet been disclosed, the absence of operational issues and favorable pressure behavior appear to further de-risk the production test," the equity research firm said.

It maintained a speculative buy recommendation on Elixir Energy with an under-review target price of AU$0.28 per share.

Elixir Energy shares gained more than 17% in recent Monday trade.