Key Highlights

  • A four-way joint venture led by Xstate was named preferred tenderer for the 305 square kilometre ATP2087 block on the Taroom Trough.
  • Diona-1 found an overpressured Permian gas and condensate system, but no stabilised flow rate has been reported.
  • Cash was $676,000 at 30 September, with about 0.97 quarters of funding at the latest rate of spending.
  • The company says $300,000 of receivables is expected to be collected in the December quarter.

Xstate Resources (ASX:XST) is a small oil and gas explorer focused on the Taroom Trough in Queensland's Surat-Bowen Basin. Its first well, Diona-1 in ATP2077, flowed gas earlier this year, but testing is still incomplete. Meanwhile, the company has moved to expand its acreage. On 2 October 2026 it announced that a four-way joint venture it leads had been named preferred tenderer for a new block, now called ATP2087.

The two developments come against a small cash balance. Xstate's September quarter Appendix 5B, released on 21 October 2026, showed $676,000 at 30 September and about 0.97 quarters of funding at the latest rate of spending. That makes funding the central question for the next phase.

Diona-1: pressure, but no flow rate yet

Xstate holds 51% of the Diona block, and Elixir Energy holds the remaining 49%. On 18 May the company said the joint venture considered the well had met its exploration objectives. It reported an overpressured Permian gas and condensate system, with gas flow constrained by a long column of completion fluid left in the well. Testing was later paused, and in June the joint venture engaged a consultant to assess Options for removing that fluid.

A static gradient survey, reported on 16 September, found that the fluid level had fallen more than 1,800m to about 2,325m vertical depth. The wellbore above it was gas-filled, and wellhead pressure was about 3,235psi. Xstate interprets this as consistent with an overpressured reservoir. However, no stabilised flow rate, contingent resource or reserve has been reported. According to the quarterly report, the logistics and timing of resuming flowback remain under review.

New acreage in ATP2087

The ATP2087 block covers about 305 square kilometres on the eastern flank of the Taroom Trough, between Condamine and Miles. Xstate, Amplitude Energy, Beetaloo Energy and Eastern States Energy would each hold 25%, and Xstate would be the initial operator. Preferred-tenderer status is not a grant: the permit still has to be issued. The initial work commitment covers seismic processing and early geological work, and the joint venture expects activity to begin in early 2027.

Xstate points to nearby discoveries by other companies as regional context. It also acknowledges that those results do not necessarily indicate what ATP2087 contains. The block adjoins the Condabri coal seam gas field, and the joint venture plans to assess coal seam gas potential early in the programme.

Cash and funding

During the quarter, Xstate spent $285,000 on exploration at Diona-1 and recorded net operating outflows of $411,000. These were partly offset by $147,000 in joint venture partner contributions. There was no Equity raising in the quarter and the company has no Debt facilities. The Quarterly Report says $300,000 of receivables is expected to be collected in the December quarter. Even so, with under one quarter of funding on the 5B measure, completing Diona-1 testing and meeting ATP2087 commitments suggests a Capital raising or other funding is likely, which could dilute shareholders. Since the 2025 prospectus, Diona-1 spending has reached $7.3 million against a budget of $2.65 million.

Risks and milestones

The Taroom Trough is attracting more industry activity, but tight gas wells can be costly and slow to test. Xstate's key risks are its funding position, uncertainty over whether Diona-1 can sustain commercial flow, and the timing of the ATP2087 grant. The next milestones the company has flagged are a decision on resuming flowback at Diona-1 and formal grant of ATP2087, with work expected to start in early 2027.