Elixir Energy Ltd has sealed a farmout deal with Xstate Resources Ltd over the Diona sub-block of Authority to Prospect (ATP) 2077 in Queensland's Bowen Basin.
Under the terms of the agreement, Xstate will earn a 51% interest in the Diona sub-block by fully funding the drilling of one exploration well, Diona-1, scheduled for the third quarter of 2025, subject to rig availability and other operational considerations.
Elixir will retain a 49% interest in the sub-block and is fully carried through the initial exploration well.
Mutually beneficial deal
Elixir managing director Neil Young said: “We are very pleased to have struck this mutually beneficial farm-in deal with Xstate.
“Our respective technical teams have already identified a conventional gas target that we aim to drill in the months ahead.
“Given the location immediately adjacence to an under-utilised gas gathering system, success could rapidly be converted into positive cash-flows.
“Our acquisition of ATP 2077 last year was primarily driven by the additional acreage it gave us for the Taroom Trough focused Grandis Project.
“The work commitments for the licence will now be largely effectively met by this Xstate deal."
The planned Diona-1 well will target a conventional gas accumulation in close proximity to existing infrastructure, including the nearby under-used gas gathering line that connects to the Wallumbilla Hub.
The location offers the potential for rapid commercialisation if gas is discovered in commercial quantities.
Elixir confirmed that it retains full ownership of the Taroom Trough sub-blocks A and B within ATP 2077, which are not included in the farmout agreement.
The agreement marks a step forward in advancing exploration in the highly prospective Bowen Basin, with Elixir leveraging external capital to progress drilling activity while maintaining exposure to potential upside from a successful outcome at Diona-1.
Preparations for the well are currently underway.