Elixir Energy Ltd (ASX:EXR, OTC:ELXPF) has provided an update via its joint venture partner Xstate Resources Limited (ASX:XST), which today confirmed drilling progress and a key tenement milestone at the Diona-1 gas well in Queensland’s Surat-Bowen Basin.
Xstate, operator of the Diona Block, has now formally registered its 51% interest in ATP 2077 on title, while Elixir retains 100% beneficial ownership in the adjacent Blocks A and B. Xstate spudded Diona-1 on 27 September, marking the first well drilled in the block.
Read more: Elixir Energy JV spuds Diona-1 gas well in Queensland’s Surat-Bowen Basin
Drilling update
As of Thursday morning, drilling had reached about 1,130 metres with a penetration rate of 60 metres per hour using the Ventia 101 rig. Xstate expects to encounter the Showgrounds formation — the first of three targeted reservoirs — late Friday or early Saturday, in line with forecasts.
Xstate operations manager Mike Andronov with MD Andrew Bald on the drill rig
Once wireline and mudlogging are completed, the JV will decide whether to case the Showgrounds before drilling on to the Tinowon and Wallabella formations, which together form a stacked reservoir target between 2,300 and 2,600 metres.
The well is expected to take less than 15 days to reach total depth.
Positioned for rapid development
Diona-1 is a shallow, conventional gas prospect located between the Silver Springs gas processing facility and the Waggamba gas field, adjacent to the Waggamba–Silver Springs pipeline. With the pipeline less than 100 metres from the well pad and a tie-in point about 1 kilometre away, any discovery could be brought to market quickly.
Location of the Diona Block
The well is designed to test a low-risk, four-way dip closed anticlinal structure at the Showgrounds, Tinowon and Wallabella sandstone levels. Additional stratigraphic upside is present in the Tinowon and Wallabella sandstones, which pinch out to the west.
Depth map illustrating structural closure and the stratigraphic pinch-out at Tinowon Sandstone level
Attractive risk-reward profile
Xstate estimates the Diona-1 well cost at around A$2.7 million, with a 55% chance of geologic success and 12.5 billion standard cubic feet equivalent (Bscfe) of gross unrisked mean prospective resources if hydrocarbons are encountered across all three reservoirs.
The company said the well represents “an excellent risk-reward proposition,” benefitting from both the favourable geology and proximity to infrastructure.