Xstate Resources Limited (ASX:XST) earlier this week confirmed it had completed civil works and signed a drilling contract for the Diona-1 conventional gas well in Queensland’s Surat-Bowen Basin. Managing Director Andrew Bald joined Proactive to discuss.
Highlights
- Xstate Resources relaunched on the ASX with the Diona-1 conventional gas well in Queensland’s Surat-Bowen Basin.
- The company holds a 51% working interest and is the operator of the Diona block, while Elixir Energy retains 49%.
- Diona-1 is a shallow vertical well targeting a total depth of 2,600 metres, with drilling expected to begin on 26 September.
- Civil works are complete and the rig will be mobilised on 21 September.
- The project is low-cost ($2.70 million) and close to infrastructure, including the Roma to Brisbane pipeline.
- Discussions have taken place with pipeline operator IGT, who expressed interest in purchasing gas directly.
- Xstate expects to reach the target formation (Showgrounds) within 5–7 days of spudding and will test for hydrocarbons.
- A test period of a few weeks is planned if gas is encountered.
Drilling imminent
Xstate will start drilling by September 26, with rig mobilisation scheduled for September 21. It holds a 51% working interest and is the operator of the Diona block, with the remaining 49% retained by Elixir Energy under a farmout arrangement.
Bald said Diona-1 will be drilled as a vertical well to a total depth of 2,600 metres, targeting the Showgrounds, Tinowan and Walloon formations. “We will know in 7 to 10 days from the start of drilling if we've got any high-pressure zones,” Bald said. “If we see any hydrocarbons in the drilling, then the tender will be put on test.”
Low cost well with advantages
Xstate expects the well to be low cost at approximately AU$2.70 million and noted the project’s advantage lies in its proximity to infrastructure. The well is located less than 100 metres from the Roma to Brisbane pipeline, with a tie-in valve just one kilometre away.
The company highlighted that discussions with pipeline operator IGT indicated strong buyer interest. Bald said the gas, if discovered, is “readily marketable” at current prices of more than AU$13 per gigajoule.
Drilling results are expected within 7 to 10 days of spudding.