Diona-1 Well Drilling Contract Signed: Rig to Spud by September 26

Drilling Contract Secured and Timeline Confirmed

Xstate Resources Limited (ASX – XST) has taken a significant step forward in its Queensland oil and gas ambitions by signing a drilling contract with Easternwell Group Operations, a subsidiary of Ventia Services Group. This agreement sets the stage for the company’s inaugural well, Diona-1, located on the Diona Block of ATP 2077 in the Surat-Bowen Basin.

The company has requested rig mobilization for September 21, 2025, with drilling expected to commence around September 26. Managing Director Andrew Bald expressed confidence in the swift progress, noting that early drilling results could be available within the first weeks of October, underscoring a rapid operational tempo.

Strategic Positioning of the Diona Project

The Diona project is strategically positioned adjacent to the Waggamba to Silver Springs gas pipeline, a critical infrastructure advantage that could facilitate expedited market access if hydrocarbons are discovered. The well targets three proven conventional hydrocarbon reservoirs – Showgrounds, Tinowon, and Wallabella, with a planned total depth of 2,600 meters. The relatively shallow depth suggests a drilling duration of less than 15 days, which could translate into cost efficiencies and faster appraisal.

Xstate’s 51% stake in ATP 2077, acquired from Elixir Energy Limited (ASX – EXR), places it in a controlling position for the Diona Block, while Elixir retains full ownership of the adjacent Blocks A and B. This partnership structure allows Xstate to focus on development while leveraging Elixir’s broader regional expertise.

Implications and Market Context

The timing of this drilling campaign follows the recent reinstatement of Xstate’s shares to ASX quotation, signaling renewed investor interest and operational momentum. The proximity of the well to existing pipeline infrastructure could enable a rapid transition from discovery to production, a critical factor in the current energy market environment where supply responsiveness is prized.

While the drilling contract terms remain undisclosed, the commitment to mobilize the rig within days highlights Xstate’s readiness to advance its exploration objectives. The company’s broader portfolio, including assets in California’s Sacramento Basin, positions it as an emerging player with diversified exploration interests.