EXR finds gas in Diona-1 well

Published 08-OCT-2025 14:47 P.M.

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Our domestic energy Investment Elixir Energy (ASX:EXR) just put out an update on one of the wells being drilled on its QLD gas blocks.

EXR is the single biggest acreage holder of acreage in the Taroom Trough in QLD.

Today’s news came from one of its blocks just outside of that region - which EXR had recently signed a farm-out agreement with Xstate Resources in April.

EXR is free carried on 49% of the Diona-1 well initial drilling having signed a farm-out deal on the block in April with Xstate, so EXR won’t be putting up any capital during this round of drilling.

Here is our key takeaway from today’s announcement:

Drilling had today reached a depth of 2,479m - right in the middle of the target zones for the well between (2,300m and targeted total depth of 2,600m).
The well hit ~181m hydrocarbon-prone Permian-to-Basement sequence.
While the primary target in the Showgrounds Sandstone was shown to be non-hydrocarbon bearing, there was overpressurised gas in this zone (which we can see being flared in the photo below)

(Source)

So far so good, but we will need to see the final results from the well after wireline logging is completed…

Given the well is so close to the targeted total depth, we could see that news come out over the coming weeks.

More on the Diona-1 well:

Across the three reservoirs on the Diona-1 well the target was ~12.5 billion cubic feet equivalent gas unrisked prospective resource:

(Source)

While the block on its own isn't very big in terms of prospective resource - the big advantage is how close the project is to existing infrastructure.

The block sits right next to the Waggamba to Silver Springs gas pipeline (with a tie-in point ~1 km away).

So any commercial discovery could be brought to market a lot quicker than a discovery that needs a lot of infrastructure investment to bring online.

(Source)

Another kicker for the well was that IF successful it would have de-risked other targets inside the block:

What's next for EXR?

The following slide from EXR’s most recent presentation lays out what we can expect to see over the coming months.

(Source)

Here are the catalyst we will be tracking:

1. Drilling of the Diona-1 well

EXR is free carried on this well under a farm-out agreement with ASX listed Xstate Resources.

With drilling nearing completion and a discovery requiring further data to be declared, we await further updates and the more detailed results as the drilling program is completed and results are sent to the lab for analysis.

2. The conclusion of a “capital process”

This relates mostly to the rest of EXR’s ground in the Taroom Trough.

We assume this means some sort of partnership discussion around financing for the rest of EXR’s work programs.

EXR has talked about being in active discussions regarding this several times now.

It is already partnered with Santos on some of its acreage and earlier in the year we saw supermajor ConocoPhillips was also looking at assets in the region (Source).

We covered all of this in a previous note here: EXR outlines in new strategy for QLD gas project

We also saw $2.7BN Beach Energy come into the Taroom Trough recently, so there is definitely interest in the region from the majors for ground in this part of Australia.