Flow Testing at Diona-1 Could Make or Break Elixir’s Gas Production Ambitions
Elixir Energy has confirmed 23 meters of net gas pay across three Permian formations at its Diona-1 well in Queensland, setting the stage for flow testing and potential near-term gas production.
- 23 meters of net gas pay identified in three Permian formations
- Average porosity of 10% across Bandanna, Black Alley, Tinowon, and Wallabella formations
- Flow testing planned to confirm additional pay and production viability
- Proximity to Waggamba pipeline offers rapid market access
- Elixir holds 49% interest; drilling carried by Xstate Resources
Exploration Success at Diona-1
Elixir Energy Limited has announced encouraging results from its Diona-1 exploration well located in the Surat-Bowen Basin of Queensland. The well has revealed three distinct zones of net gas pay within the Permian geological section, totaling 23 meters with an average porosity of 10%. These findings mark a significant milestone for Elixir, potentially adding a new gas discovery to its portfolio.
Geological Highlights and Testing Plans
The net gas pay zones span the Bandanna/Black Alley, Tinowon, and Wallabella formations, with the latter showing potential upside that remains to be confirmed through upcoming flow testing. Despite challenging drilling conditions that limited some data acquisition, wireline and logging-while-drilling tools have collectively validated the presence of gas-charged reservoirs. The company plans a detailed completion and testing strategy, including individual zone stimulation and co-mingled production tests, to assess reservoir pressures, fluid characteristics, and permeability.
Strategic Location and Market Access
One of the standout advantages of the Diona-1 well is its proximity to existing infrastructure. The Waggamba pipeline lies less than 100 meters from the well pad, connecting to the Silver Springs Gas Plant and ultimately to the Wallumbillia Gas Hub, the key pricing point for eastern Australian gas markets. This close infrastructure linkage could enable a rapid path to commercial production and cash flow generation if flow testing confirms the reservoir's productivity.
Partnership and Future Outlook
The drilling of Diona-1 was fully carried by joint venture partner Xstate Resources Limited, with Elixir retaining a 49% interest in the ATP2077 Diona sub-block. Managing Director Stuart Nicholls emphasized the well’s potential to transition Elixir into gas production, highlighting the strategic importance of the discovery within the broader Taroom Trough region. As Elixir awaits flow test results, the company is positioned to refine its resource estimates and production strategies, potentially accelerating its entry into the gas market.
Bottom Line?
With flow testing imminent, Elixir Energy stands on the cusp of transforming exploration success into commercial gas production.
Questions in the middle?
- Will flow testing confirm the additional net gas pay in the lower Wallabella Sandstone?
- How quickly can Elixir move from testing to production given the nearby infrastructure?
- What impact will this discovery have on Elixir’s contingent gas resource estimates and valuation?
