Diona Block’s Prospective Resources Jump to 100 Bscfe Net to Xstate

A New Chapter for Diona

Xstate Resources Limited (ASX – XST) has announced a substantial upgrade to the Prospective Resource estimates for its Diona Block within ATP2077, located in Queensland’s Surat-Bowen Basin. This revision pivots the project’s potential from a conventional hydrocarbon target to a much larger unconventional Basin Centred Gas (BCG) play, opening new horizons for the company and its shareholders.

The Diona-1 well, drilled to a depth of 2,479 metres, initially targeted the shallow Showgrounds Formation but instead intersected an extensive 181-metre interval of hydrocarbon shows in the Permian section. Wireline logging confirmed 116 metres of gross pay, with 23 metres of net pay, indicating a thick, over-pressured gas-bearing zone that lacks a water leg, hallmarks of a BCG system.

Reinterpreting the Basin Centred Gas Potential

Following an internal review led by Xstate’s Competent Person, Greg Channon, the company has recalculated the Prospective Resources to reflect this unconventional play. The mean estimate stands at 100 billion standard cubic feet equivalent (Bscfe) net to Xstate, a figure that dwarfs previous conventional targets by multiple folds. The chance of discovery is estimated at 38%, with a high chance of development at 85%, underscoring the commercial promise of the resource.

Importantly, this reinterpretation aligns the Diona Block with the broader Taroom Trough BCG play, a prolific gas system that has attracted major players such as Santos, Shell, Omega, and Elixir Energy in the region. Xstate’s Managing Director, Andrew Bald, highlighted the significance of this upgrade, noting the potential for a very large project and the strategic advantage of being adjacent to existing infrastructure, including the nearby Waggamba gas pipeline.

Next Steps and Market Implications

Preparations are now underway for flow testing of the Permian section, targeted before the end of 2025. This critical step will provide vital data to validate the unconventional gas potential and inform future development decisions. While further drilling may be necessary to fully delineate the resource, the proximity to infrastructure could enable a rapid path to market, enhancing the project’s attractiveness.

Though the Prospective Resource estimates remain internally generated and await ratification by the Diona Joint Venture, the announcement marks a pivotal moment for Xstate. It signals a shift in strategy and resource potential that could elevate the company’s profile within the competitive Surat-Bowen Basin gas sector.