Highlights

  • Wireline logs from the Zydeco-1 sidetrack indicated net oil pay in two zones, though neither has been flow tested.
  • An independent evaluation produced maiden contingent resources: 48,000 barrels best case at Borsum Sand and 40,000 at Homeseeker B.
  • The board expects to decide shortly on funding a flow test of Homeseeker B from the existing cased wellbore.
  • The company raised A$3.5 million at A$0.0045 per share and completed the Galilee Resources sale, keeping a royalty.

The first hole got stuck at 9,393 feet. The sidetrack found oil. Gulf Stream Energy Limited (ASX:GSE), formerly Galilee Energy, said in its quarterly report to 30 September 2026 that wireline logs from the Zydeco-1 sidetrack in Louisiana indicated net oil pay in two zones, and that an independent evaluation has produced maiden contingent resources for both. The company was clear on one point: neither zone has been flow tested, and no fluids have been recovered.

Drilling the sidetrack

The company holds a 100 per cent working interest, with a 70 per cent net revenue interest, in about 325.3 acres of leases in Acadia Parish. Zydeco-1 was spudded on 2 July 2026. After the original hole stuck, the company drilled a sidetrack, redesigning that program in September to prioritise oil. It reached 9,180 feet measured depth, and SLB ran wireline logs on 8 October 2026.

Two discoveries were announced on 15 October on log evidence. Homeseeker B showed five feet of net oil pay between 8,935 and 8,978 feet true vertical depth, with porosity of 24 per cent and water saturation of 49 per cent. The shallower Borsum Sand showed 12 feet of net pay between 3,364 and 3,472 feet, with porosity of 32 per cent and water saturation of 43 per cent.

Maiden contingent resources

Estimates released on 27 October 2026 carry an effective date of 19 October. Borsum Sand gross volumes are 36,000, 48,000 and 60,000 barrels in the low, best and high cases, or 25,200, 33,600 and 42,000 barrels net to the company. Homeseeker B gross volumes are 30,000, 40,000 and 50,000 barrels, or 21,000, 28,000 and 35,000 barrels net.

These are contingent resources, not reserves. They are deterministic, follow the SPE-PRMS 2018 framework and are not risked for the chance of development. The draft classification is Development Unclarified. The key contingencies are the lack of flow testing or fluid samples and the absence of an approved development plan or completion decision.

Next steps

Priority one is to complete and flow test Homeseeker B. A completion authority for expenditure is prepared, and the board expects to decide shortly. Borsum Sand could be completed later as a second, shallow zone.

The deeper Upper Tweedle gas-condensate target is undrilled, with no hydrocarbons found there. A proposal to deepen by roughly 620 feet awaits engineering review, regulatory approval and board approval.

Corporate and funding

The sale of Galilee Resources Pty Ltd, which held the Glenaras tenement ATP 2019, to Novus Energy Production Company completed in the quarter under a binding agreement signed on 3 August 2026. Gulf Stream keeps a 2 per cent net overriding royalty, and the buyer is to receive about A$1.34 million of security deposit reimbursements and A$500,000 of deferred consideration on a financing milestone.

The company also raised A$3.5 million before costs at A$0.0045 per share, with one free option per share exercisable at A$0.011 by 20 February 2029. About A$2.56 million of the raise needed shareholder approval, obtained on 29 September 2026. Exploration spending was A$2.675 million, mainly on Zydeco-1. The ASX code changed from GLL to GSE, and 2,019,057,169 ordinary shares are on issue.