Xstate Resources - Diona-1 Operations Update - All About the Gas
- Noel Ong
- 2 days ago
- 7 min read
Announcement
Xstate Resources Limited (ASX: XST) has provided an operations update for Diona-1 within the Diona block, ATP 2077, in the Surat–Bowen Basin, Queensland (Figure 1). As at the time of writing, the well had reached 2,479 m MD, intersected its Jurassic primary target (non-hydrocarbon-bearing), and on entering the Permian encountered an ~181 m hydrocarbon-prone sequence with a significant overpressured gas column. Drilling is continuing to a planned ~2,530 m TD, with wireline logging to follow immediately after completion.
Figure 1: Location of the Diona Block (source: XST)
Managing Director, Andrew Bald, commented:
“The Diona-1 well has proven the presence of (moveable) hydrocarbons across an unanticipated 180m+ (gross) column of the Permian section of this well. We cannot rule out that Diona-1 has intersected the updip edge of the Taroom Basin Centred Gas play, which, if present, could offer us the opportunity to prove up a significantly larger unconventional resource.
The strategy of targeting a multi-stacked play has paid dividends and early signs are that this could be a remarkable outcome for the team and the Company. It is a credit to the geologists and geophysicists who have identified the opportunity. We are all very excited and looking forward to seeing the outcome of the wireline logging.”
2,479 m (MD) drilled; primary and secondary targets intersected.
~181 m Permian-to-basement hydrocarbon-prone sequence with a significant overpressured gas column; kick controlled via mud-weight increases and circulation.
Wireline logging is pending after reaching ~2,530 m TD.
Figure 2 shows a controlled flare from circulating gas from Diona-1 well.
Figure 2: Controlled flare of circulating gas from Diona-1 well (source: XST)
Project overview - A Developing Gas Producer Story
The Diona project lies between the Silver Springs Gas Processing Facility and the Waggamba Gas Field, adjacent to the Waggamba–Silver Springs gas pipeline. Diona-1 targets three proven reservoirs — Showgrounds, Tinowon, Wallabella — with early signs of flowing hydrocarbons in the lower two formations. Crucially, a pipeline is <100 m from the pad, with a valve tie-in ~1 km away, indicating a potentially rapid path to market if commerciality is established. Xstate owns 51% of ATP 2077; Elixir Energy (ASX: EXR) retains 100% beneficial ownership of Blocks A & B. Diona-1 spudded 27 September 2025.
What’s new?
LWD indicates several Permian hydrocarbon-bearing sandstones warranting additional logging and testing. Drilling continues to ~2,530 m before a wireline program acquires the dataset required for final interpretation. Preliminary observations are encouraging pending wireline confirmation.
Why this matters - Diona Prospectivity
Diona-1 is testing a low-risk four-way dip closed anticlinal structure at Showgrounds, Tinowon, and Wallabella levels, with stratigraphic pinch-outs to the west in Tinowon/Wallabella (Figure 3). The structure sits on a prominent nose plunging east into the Permian source kitchen, providing a credible charge model for gas (and possibly oil). Combined with evidence of overpressure and multiple sandstones, the play concept remains compelling, subject to reservoir quality and deliverability to be confirmed by logs/tests.
Figure 3: Tinowon depth map highlighting structural closure and westward pinch-out—key trap geometry. (source: XST)
23 m net gas pay (116 m gross) across three Permian intervals: Bandanna/Black Alley (13 m), Tinowon (1 m), Wallabella (9 m); avg. porosity ~10% (max up to ~14% by interval).
Wallabella upside: part of the interval wasn’t fully logged due to downhole constraints; LWD/mud logs indicate additional pay potential.
Well reached TD 2,479 m, then cased to ~2 m of TD and cemented; testing program to be finalised (perforate/stimulate each zone independently).
Wireline logs at Diona-1 confirm three intervals of net gas pay in Permian sandstones, consistent with LWD and mud-log data. Downhole conditions limited full tool coverage over the Wallabella Sandstones, leaving that unit only partially evaluated. Net-pay figures were derived using cut-offs aligned with ERCE-Sproule’s contingent resource methodology applied to Elixir’s nearby tight-gas permits.
Table 1: Pay Zones (ERCE–Sproule Cut-offs)
Managing Director, Andrew Bald, commented:
“These are extremely encouraging results for Diona-1. We now need to flow test each of the Permian reservoirs and we are very optimistic that we could see more upside from the unlogged Wallabella formation. Production testing will confirm flow rates from what could be a new gas discovery.
Drilled, cased & suspended (Oct 2025); significant gas shows over ~181 m; net pay 23 m over 3 zones; avg. porosity 10%.
Figure 4: Ventia Rig 101 at Diona 1 (source: XST)
Gas kick at base not fully covered by logs suggests an additional partially evaluated gas zone; gas safely flared at wellsite.
Formations intersected: Bandanna, Tinowon, Wallabella (Permian).
Figure 5: DIONA -1 Pay on Wireline Logs (source: XST)
BCG angle: Large continuous pay interval suggests basin-centred gas potential beyond mapped closures; testing to determine flow rates.
Figure 6: Closure & pinch-out suggesting BCG potential (source: XST)
Location advantage reaffirmed: <100 m to Waggamba pipeline, ~1 km to tie-in, ~15 km to Silver Springs plant (see Figure 1).
Next steps
Formalise the Operations Committee and finalise the completion & testing plan.
Perforate (and possibly stimulate) each of the three Permian pay zones independently to obtain clean, zone-specific data.
Execute flow tests to determine deliverability and pressures; management explicitly flags flow-testing of each reservoir.
Assess the partially logged Wallabella interval for additional pay indicated on LWD/mud logs during testing/design.
Update resource estimates and forward work program based on measured test results; planning contemplates revisions after data acquisition.
If results support it, progress tie-in options leveraging proximity to pipeline (<100 m) and valve (~1 km).
About Xstate Resources Limited
Xstate Resources (ASX: XST) is an ASX-listed oil & gas company focused on its Diona project in Queensland, where it owns 51% of ATP 2077 (with Elixir Energy retaining 100% beneficial ownership of Blocks A & B). The Company spudded Diona-1 on 27 September 2025 and also holds exploration assets in the Sacramento Basin, California.
Samso Concluding Comments
This is our first Samso News for the Oil & Gas sector, and deciding to cover Xstate is based on my uptake of some IPO shares. I liked the concept and the understanding that this investment is a bet on the outcome of the drilling.
My limited understanding of the outcome, at that time, was purely a binary result; however, the more I read into the sector, I see similarities in the thinking, but the way the information is presented is the main difference.
For an investor that is not attuned to the oil and gas sector, my decision to sell or buy more was solely dependent on the reaction of the market. What that means is I was just going to follow the market. However, as I learned more about the reasons behind management optimism was all about the Taroom Trough.
The Taroom Trough is why management is openly entertaining basin-centred gas at the up-dip edge. That is not a claim of scale — it’s a vector for upside, pending data.
My assessment of Risk is now based on whether the pressure from the drilled hole is sufficient to sustain any flow. If the logs are supportive and testing proceeds, the proximity to the pipeline is the key to the difference in a mineral mining scenario and one that is just about the ability to connect a pipe to the main line — a valuable advantage in any development scenario.
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