Promising Gas Zone in Queensland’s Surat-Bowen Basin
Xstate Resources (ASX: XST) has confirmed the presence of a 181-metre hydrocarbon-prone sequence in its Diona-1 well, including an overpressured gas column, within the Surat-Bowen Basin of Queensland.
As of 8 October 2025, Diona-1 had reached a measured depth of 2,479 metres, successfully drilling through both the primary and secondary targets. The Jurassic Showgrounds Sandstone was found to be well developed but non-hydrocarbon bearing. Upon entering the deeper Permian section, Logging While Drilling (LWD) data indicated multiple gas-bearing sandstones with elevated pressures and visible gas influx.
Drilling operations are continuing toward a final depth of approximately 2,530 metres. A wireline logging campaign will follow immediately to collect additional formation data before interpreting the full results.
Strong Early Signs from the Permian Section
The company said the well encountered a significant overpressured gas column within a 181-metre Permian-to-basement interval. The discovery required several adjustments to drilling mud weight and gas circulation management.
Managing Director Andrew Bald said: “The Diona-1 well has proven the presence of moveable hydrocarbons across an unanticipated 180-metre-plus gross column of the Permian section. We cannot rule out that Diona-1 has intersected the up-dip edge of the Taroom Basin-Centred Gas play, which, if present, could offer us the opportunity to prove up a significantly larger unconventional resource.”
He added that the company’s “multi-stacked play strategy has paid dividends” and commended the geoscience team for identifying the opportunity.
Proximity to Infrastructure
The Diona Project is located between the Silver Springs Gas Processing Facility and the Waggamba Gas Field in Queensland. The site lies adjacent to the Waggamba-to-Silver Springs gas pipeline, less than 100 metres from the well pad, with a valve tie-in point about one kilometre away. This proximity positions Diona-1 for a potentially rapid route to market if commercial volumes are confirmed.
The well targets three proven hydrocarbon reservoirs — the Showgrounds, Tinowon, and Wallabella Sandstones — with early indications suggesting the lower two formations host gas-charged zones.
Project Ownership and Next Steps
Xstate Resources holds a 51% equity interest in the ATP 2077 Diona Sub-Block, with the remaining 49% held by Elixir Energy (ASX: EXR). Diona-1, spudded on 27 September 2025, is the first exploration well drilled by Xstate under this structure.
The prospect lies on a four-way dip-closed anticlinal feature with stratigraphic potential in the Tinowon and Wallabella sandstones. Positioned above a Permian source kitchen, it offers favourable conditions for both gas and potential liquid hydrocarbons.
