Highlights

Xstate Resources (ASX:XST) is the initial operator and proposed 25% partner in the preferred tenderer joint venture for ATP2087.

The approximately 305-square-kilometre block remains subject to government, Native Title and environmental processes.

September-quarter cash was AUD 0.676mn, while Diona-1 flowback and flow testing remained incomplete.

Xstate Resources (ASX:XST) is an oil and gas explorer focused on Queensland’s Taroom Trough, with a 51% interest in the Diona block within ATP2077. On 2 October 2026, the company announced that its four-party joint venture had been selected as preferred tenderer for Block PLR2026-1-7, subsequently referred to as ATP2087. The proposed acreage adds an eastern Taroom Trough position alongside Diona on the western margin. The September-quarter report, released on 21 October, confirmed that the permit remained subject to grant and that the joint venture expected work to begin in early 2027.

Xstate Resources (ASX:XST): What the Acreage Award Covers

ATP2087 covers approximately 305 square kilometres between Condamine and Miles on Queensland’s Western Downs. The block lies on the eastern flank of the Taroom Trough within the broader Surat over Bowen Basin. The joint venture comprises four participants, each with a proposed 25% working interest, with Xstate Resources (ASX:XST) appointed initial operator.

The 2 October announcement identified stacked Permian reservoir intervals as exploration targets. It described the initial work commitment as seismic processing and early geological and geophysical activities. These activities are intended to assess the acreage before more detailed exploration decisions. The announcement did not establish a resource estimate, production outcome or commercial development timetable for the block.

Xstate Resources (ASX:XST): Approvals and Proposed Work

Preferred tenderer status is a step in the application process. The company’s disclosures state that the grant depends on completing Queensland Government requirements, including initiating a Native Title process and lodging an Environmental Authority. The working interests therefore remain conditional on the permit being granted.

The September-quarter report also identified coal seam gas potential for early assessment under the proposed work programme. It placed expected commencement of work in early 2027. This is the joint venture’s stated expectation, with progress dependent on the remaining application processes. The project’s proximity to existing pipelines provides infrastructure context, but does not establish a gas connection agreement or confirm future sales.

Xstate Resources (ASX:XST): Diona-1 Testing Remains Incomplete

At Diona-1, a Static Gradient Survey during the September quarter measured the fluid level at approximately 2,325 metres true vertical depth. This was more than 1,800 metres below the level recorded during previous flowback operations. The wellbore above that level was gas-filled, and the liquid level was interpreted to be below the top of the Black Alley/Bandanna perforated interval.

Maximum measured downhole pressure was 4,139 psi at 2,411 metres true vertical depth. However, the report said the logistics and timing of resuming flowback and flow testing remained under review. These pressure and fluid-level measurements do not establish a sustained commercial production rate. Further testing remains relevant to assessing Diona-1’s deliverability.

Xstate Resources (ASX:XST): September Cash Position

Cash declined from AUD 1.248mn at 30 June to AUD 0.676mn at 30 September 2026. Quarterly net operating cash outflow was AUD 0.411mn, while exploration and evaluation payments classified as investing activities were AUD 0.285mn. Joint venture contributions of AUD 0.147mn reduced net investing cash outflow to AUD 0.138mn.

The Appendix 5B calculated 0.97 quarters of funding at the historical relevant expenditure rate. Management said forecast activity would be significantly lower, alongside reduced overheads and active expenditure management. The company also expected to realise AUD 0.300mn in receivables during the December quarter and retained the option of raising equity for future approved programmes, subject to market conditions.