Xstate Resources Advances Diona-1 Stimulation and Raises $1.69M to Fund Next Steps

Diona-1 Stimulation Program Commences

Xstate Resources (ASX:XST) has initiated the stimulation phase at its Diona-1 well, with equipment already on site and preparatory work in progress. The company expects the stimulation operations, managed by Condor Energy, to begin by the end of the week, marking a critical step in assessing the well’s commercial viability.

The Diona-1 well, located in Queensland’s Diona block where Xstate holds a 51% interest, was drilled to a depth of 2,479 metres and previously revealed promising gas potential estimated at 200 billion cubic feet gross. This stimulation is designed to enhance flow rates and enable extended production testing, potentially unlocking early operational cash flow for the company.

Strategic Placement Raises $1.69 Million

In tandem with operational progress, Xstate has completed a placement issuing over 51 million shares at $0.033 each, raising approximately $1.69 million before costs. The placement attracted a select group of strategic investors who the board believes will strengthen the share register. Alongside the shares, the company is issuing one option for every three shares subscribed, totalling over 17 million options exercisable at $0.06 by April 2029, pending shareholder approval.

The capital raised will primarily fund the connection of the Diona-1 well to existing pipeline infrastructure about one kilometre west of the well pad, should the well prove commercial. Additionally, the funds will cover any immediate capital needs for extended production tests and provide a buffer against potential stimulation cost overruns.

Joint Lead Managers PAC Partners and Veritas Securities will receive a 6% fee on funds raised and are slated to be issued options on similar terms, subject to shareholder approval. This financial arrangement aligns incentives with the company’s near-term development goals.

Outlook and Market Positioning

Managing Director Andrew Bald emphasised the significance of the placement and the upcoming stimulation results, noting the strategic investors’ experience with junior resource companies. He highlighted that a commercial flow rate would enable the company to generate early revenue by connecting the well to the pipeline valve.

This update follows Xstate’s earlier report of a substantial gas discovery at Diona-1, which outlined prospective resources of 200 Bcf gross and secured $3.82 million for appraisal and flow testing earlier this year. The current placement and stimulation progress represent the next phase in the company’s development trajectory, moving from appraisal to potential production and cash flow generation.

While the stimulation program and placement address immediate funding and operational needs, the commercial success of the well remains uncertain until flow testing concludes. Investors should watch for results from the stimulation and any decisions made at the forthcoming shareholder meeting regarding option approvals.