Xstate Transfers 14.63mcf/day Production, Forgives US$95K Debt in Asset Swap
Xstate Resources has exited its Californian gas interests, transferring production and liabilities to Australian Oil and Gas Co, as it pivots to concentrate on its promising Diona project in Queensland.
- Xstate disposes Californian projects via assignment to Australian Oil and Gas Co
- Production of approximately 14.63 million cubic feet per day transferred
- US$95,103 in accrued cash call liabilities forgiven by AOK
- Disposal removes negative cash flows and ongoing operational costs
- Strategic refocus on Diona gas project in Surat-Bowen Basin, Queensland
Strategic Exit from California
Xstate Resources Limited (ASX, XST) has announced a decisive move to exit its Californian gas projects by assigning its working interests and obligations to Australian Oil and Gas Co Limited (ASX, AOK). This transaction effectively transfers production capacity of around 14.63 million cubic feet per day to AOK, alongside the forgiveness of accrued cash call liabilities totaling US$95,103. The deal clears Xstate’s balance sheet of these liabilities and removes the burden of ongoing operational costs associated with the Californian assets.
Financial and Operational Implications
The disposal is structured through a debt forgiveness agreement between the US subsidiaries of both companies, with no immediate cash changing hands. While Xstate relinquishes a portion of its production, the move eliminates negative operational cash flows and the capital demands required to revive the Californian projects. This financial relief allows Xstate to redirect its resources and management attention toward more promising ventures.
Focus on the Diona Gas Project
Central to Xstate’s renewed strategy is the Diona gas project located in Queensland’s Surat-Bowen Basin. The Diona-1 well has reached a total depth of 2,479 meters, penetrating formations that suggest significant potential. Its proximity to existing infrastructure, including the nearby Waggamba to Silver Springs gas pipeline, positions the project for a potentially rapid path to market. Managing Director Andrew Bald emphasized that exiting California allows Xstate to concentrate fully on unlocking value from Diona for shareholders.
Outlook and Market Positioning
By shedding non-operating minority interests and associated liabilities, Xstate is streamlining its portfolio to focus on assets where it can exert greater control and operational influence. The Diona project, with its strategic location and infrastructure access, represents a compelling opportunity for near-term development and production growth. Meanwhile, Australian Oil and Gas Co inherits the Californian assets with a vision to rejuvenate the project, signaling a new chapter for those interests.
Bottom Line?
Xstate’s Californian exit marks a clear pivot to concentrate on Diona, setting the stage for its next growth phase.
Questions in the middle?
- What are the detailed development and production timelines for the Diona gas project?
- How will the disposal impact Xstate’s near-term financial performance and cash flow?
- What plans does Australian Oil and Gas Co have to revive and expand the Californian projects?
