Elixir Energy Ltd (ASX:EXR, OTC:ELXPF) says joint venture partner Xstate Resources Limited (ASX:XST) has commenced drilling at the Diona-1 conventional gas-oil exploration well in Queensland’s Surat-Bowen Basin, a program where Elixir retains a 49% interest.
The Ventia 101 rig has safely spudded the well, with casing and cementing completed at 549 metres’ measured depth.
Xstate is the operator and majority holder of the Diona sub-block with 51% equity and is fully funding the program under agreements finalised earlier this year. Elixir is fully carried through the drilling of the well and also holds 100% beneficial ownership of two highly prospective sub-blocks within the ATP2077 permit.
Permit strategy
Although the Diona-1 prospect sits outside Elixir’s core Taroom Trough focus, the well plays a key role in satisfying work commitments across the broader ATP2077 permit. Meeting those obligations allows Elixir to move its wholly owned Taroom Trough A and B sub-blocks into long-term retention — a central element of Phase 1 in the company’s strategic plan.
Diona-1 is strategically located between the Silver Springs Gas Plant and the Waggamba gas field, with pipeline infrastructure already in place nearby. The well is designed to test three proven hydrocarbon-bearing reservoirs — the Showgrounds, Tinowon and Wallabella formations.
Drilling is expected to take about 15 days to reach a total depth of 2,600 metres, with the Showgrounds formation encountered at around 2,300 metres. The relatively shallow target depth provides a lower-cost entry point compared with deeper unconventional plays.
Top Showgrounds Formation Depth (m)
If the well proves successful, its proximity to the Waggamba-to-Silver Springs pipeline — less than 100 metres from the pad and with a tie-in point roughly 1 kilometre away — could enable a rapid path to production and early cashflow.
Potential follow-on
Success at Diona-1 could also de-risk multiple follow-on prospects and leads within ATP2077. For Xstate, the program offers a low-risk entry into Queensland’s conventional gas sector, while for Elixir, the carry arrangement provides exposure to upside without near-term capital outlay.
Beyond Diona, Elixir’s primary focus remains its large acreage position in the Taroom Trough, where it is working to appraise an independently certified 2.6 trillion cubic feet (TCF) of 2C contingent gas resources.
The Taroom acreage sits close to the Wallumbilla Gas Hub, multiple pipelines and LNG export facilities, offering strategic advantages as demand for east coast gas supply intensifies.