Elixir Energy JV partner Xstate lines up testing as Diona gas well moves towards flow phase

Elixir Energy JV partner Xstate lines up testing as Diona gas well moves towards flow phase Proactive uses images sourced from Shutterstock

Xstate Resources Limited (ASX:XST, FRA:XW7) has upgraded its view of reservoir quality at the Diona gas project in Queensland’s Surat–Bowen Basin, ahead of a staged stimulation and testing program at the Xstate-operated joint venture with Elixir Energy Ltd (ASX:EXR, OTC:ELXPF).

The reassessment follows post-drilling analysis of cuttings from the Diona-1 well, which was cased and suspended in late 2025. Since then, the joint venture has focused on technical studies and operational preparation aimed at de-risking the upcoming testing campaign.

Diona sits within ATP 2077, where Xstate holds a 51% interest and operates the block, with Elixir Energy retaining a 100% beneficial ownership in Blocks A and B.

Location Map of Diona-1

Specialised rock typing undertaken on drill cuttings from key reservoir intervals identified good visual porosity and indications of permeability across a number of zones proposed for testing. Xstate said the results support moving ahead with a comprehensive stimulation and formation testing program across multiple Permian targets.

Cuttings showing porosity from the Bandanna Formation.

As part of the preparation work, a Cement Bond Log has now been run in the well to assess the quality of the cement bond between the casing and the wellbore.

Xstate said the log confirmed a good cement bond over all targeted zones, meaning the joint venture can proceed to test each interval as planned. The result reduces execution risk ahead of perforation and stimulation and provides greater confidence in the integrity of the well during testing operations.

The joint venture is set to begin perforation operations this week in the lowermost Wallabella Wash interval. These operations are considered critical for planning a potential extended leak-off test, or XLOT.

The XLOT is designed to deliver key information on in-situ stress and permeability within the basal zone, with the resulting diagnostics expected to inform final design of the broader stimulation and testing program.

Once completed, the program will cover Permian targets ranging from the Bandanna Formation through to the Wallabella Wash, providing a more complete understanding of the reservoir system encountered in Diona-1.

Xstate said competitive tenders have now been received from major contractors for the upcoming stimulation and testing campaign, with contract awards expected within the next week.

The stimulation program is currently scheduled to begin in late March, although Xstate noted timing could shift into early April depending on the availability of specialist service providers and equipment.

Managing director Andrew Bald said recent technical results and planning work had placed the project in a strong position heading into the next phase.

“The fact that we have confirmed a good cement bond puts us in an excellent position for the next phase of testing,” Bald said. “Detailed planning by the operator is fully under way, and includes modelling and analysis that increases both our confidence that this well will flow and the chance that this flow test will be seamless.”

Bald added that, following a successful flow test, Xstate and Elixir Energy would look to rapidly tie into the nearby Waggamba–Silver Springs pipeline and move towards early gas sales.

For Elixir Energy, progress at Diona represents another step in advancing its Taroom Trough strategy, with the joint venture well positioned to test the commercial potential of the prospect in the coming months.