Elixir Energy Ltd (ASX:EXR, OTC:ELXPF) is moving closer to a new drilling milestone, with joint venture partner and operator Xstate Resources Limited (ASX:XST) (ASX:XST) confirming that the Diona-1 well in Queensland’s Surat-Bowen Basin is scheduled to spud at 5:00 pm local time on Friday, September 26.
The update, announced by Xstate this morning, follows the successful mobilisation and rig set-up at the Diona Block of ATP 2077, where Xstate holds a 51% working interest. Elixir retains 100% beneficial ownership of Blocks A and B, making the outcome of the well significant for its shareholders.
Well objectives and timeline
Diona-1 will target three proven hydrocarbon reservoirs — the Showgrounds, Tinowon and Wallabella formations. Drilling is expected to reach the top of the Showgrounds, the primary target, at a depth of 2,300 metres within the first week, with wireline logs to be run to assess its prospectivity.
Read more: Elixir Energy’s JV partner Xstate advances Diona-1 well preparations
If hydrocarbons are confirmed, the well will be cased before drilling continues through the lower Tinowon and Wallabella formations to a planned total depth of 2,600 metres. The program is forecast to take less than 15 days in total.
Xstate noted the setup phase had gone smoothly, with clear weather expected to help keep the campaign on schedule.
Strategic location
The Diona project sits between the Silver Springs gas processing facility and the Waggamba gas field. A key attraction of the acreage is its proximity to existing infrastructure — the Waggamba-to-Silver Springs pipeline runs less than 100 metres from the Diona-1 well pad, with a valve tie-in point just 1 kilometre away.
This could enable a fast-track path to commercialisation if the well delivers positive results, supporting both Xstate’s ambitions as operator and Elixir’s exposure to the project as JV partner.
“The mobilisation and set-up of the rig in preparation for drilling has been a thoroughly professional operation, and the team have done a great job moving this drilling program along this quickly,” said Xstate managing director Andrew Bald. “We are looking forward to drilling and discovering what this target has to offer.”
Next steps
The spudding of Diona-1 marks the first well to be drilled in the Diona Block under the joint venture. Success could open the door to future development options, leveraging the project’s shallow conventional gas targets and immediate access to pipelines and processing facilities.
For Elixir Energy, which has been expanding its portfolio across Australia and Mongolia, the outcome of Diona-1 will provide additional insight into its Queensland gas interests at a time when domestic supply and infrastructure advantages remain key themes for the sector.