Xstate Confirms Over-Pressured Gas Discovery with Strong Flow at Diona-1
Xstate Resources has confirmed a significant over-pressured Permian gas and condensate discovery at its Diona-1 well in Queensland, with ongoing flow testing revealing promising transient gas responses constrained by hydrostatic fluid columns.
- Diona-1 well confirms over-pressured gas and condensate resource
- Approximately 45% of completion fluids recovered, ongoing optimisation underway
- Strong transient gas flow demonstrated after fluid unloading
- Joint venture to pursue independently certified Contingent Resource
- Planning for tie-in and sustained production progressing
Breakthrough in Over-Pressured Gas Reservoir
Xstate Resources Limited (ASX:XST) and its joint venture partner Elixir Energy have announced that the Diona-1 well on ATP2077 in Queensland’s Surat-Bowen Basin has met its exploration objectives by confirming a recoverable, over-pressured Permian gas and condensate resource. The well’s recent flowback and production testing have provided valuable insights into reservoir behaviour at these shallow depths, with initial shut-in pressure readings indicating reservoir pressures around 4,300 psi.
The well has consistently flowed against a substantial hydrostatic fluid column, calculated to be at least 1,900 metres long, which is currently restricting gas flow. Despite this, assisted unloading has revealed a strong transient gas response, confirming reservoir connectivity and deliverability potential once the hydrostatic backpressure is alleviated. These findings align with the tight gas play characteristics being developed within the Taroom Trough region.
These latest results build on earlier positive signs from the well’s initial flowback phase, which showed early gas and condensate presence during stimulation and testing phases early gas and condensate flow. The JV has recovered approximately 45% of the roughly 6,400 barrels of completion fluids to date, with ongoing efforts focused on accelerating fluid recovery to enable natural flow and sustained production.
Optimisation Strategies and Resource Certification
The joint venture is actively evaluating several optimisation techniques to improve liquid lifting and reduce hydrostatic pressure, including velocity string installation, nitrogen lift, and soap injection. Continuous monitoring and analysis aim to refine reservoir and completion performance, with the ultimate goal of achieving consistent flow rates that support commercial production.
In parallel, the JV will pursue an independently certified Contingent Resource classification for the Diona-1 discovery, a critical step toward formalising the resource’s economic potential. Planning is also underway for tie-in and connection operations to bring the well into sustained production following the clean-up phase.
Managing Director Andrew Bald highlighted the significance of the discovery, stating that the consistent gas flare and significant over-pressure over a continuous gas column suggest the Basin Centred Gas play extends further west than previously recognised. This breakthrough provides the JV with valuable data to design more efficient future wells in the region.
These developments follow a series of strategic moves by Xstate, including a $1.69 million capital raise to fund testing and pipeline connection activities earlier in 2026 $1.69 million capital raise. The company’s steady progress from drilling through stimulation and now optimisation reflects a methodical approach to unlocking the Diona block’s gas potential.
Bottom Line?
The Diona-1 discovery offers tangible evidence of a viable over-pressured gas resource, but unlocking consistent commercial flow hinges on overcoming hydrostatic fluid constraints and successful resource certification.
Questions in the middle?
- How quickly can fluid recovery be accelerated to reduce hydrostatic backpressure?
- What production rates will the well sustain once natural flow is established?
- When will the independently certified Contingent Resource be finalised and what size will it confirm?
