Elixir Energy (ASX:EXR): Diona-1 Well confirms 23 metres of net gas pay

Elixir Energy’s (ASX:EXR) latest drilling results from the Diona-1 exploration well in Queensland’s Surat-Bowen Basin have delivered a promising outcome, with wireline logging confirming 23 metres of net gas pay across multiple Permian formations.

The results reinforce the basin’s potential as a key contributor to eastern Australia’s tightening gas market.

Highlights

• Three zones of net gas pay identified within the Bandanna, Black Alley, Tinowon and Wallabella formations.

• Average porosity of 10% across 23 metres of cumulative pay.

• Potential upside in the lower Wallabella Sandstone to be confirmed through flow testing.

• Joint venture partners Elixir Energy (49%) and Xstate Resources (51%) to proceed with completion and testing.

• Diona-1 located between the Silver Springs Gas Plant and the Waggamba field, with existing pipeline infrastructure less than 100 metres away.

Located in ATP2077’s Diona sub-block, the Diona-1 well reached total depth at 2,479 metres after extended well control operations, with subsequent wireline and Logging While Drilling (LWD) results confirming the presence of gas-charged Permian reservoirs and identifying key intervals across three distinct formations.

The data show that pay zones are confined within well-defined sections, which may support a streamlined stimulation and completion process.

Porosities of up to 14% were recorded in the Bandanna and Black Alley formations, while the Wallabella Sandstone also demonstrated favourable reservoir characteristics.

Importantly, petrophysical cutoffs applied were consistent with those used in Elixir’s nearby contingent resource calculations, ensuring comparability with existing data.

While wireline tools could not reach the full extent of the well due to fill at the base of the hole, LWD results indicated additional potential pay in the lower Wallabella Sandstone.

Confirmation of this upside will depend on the results of flow testing and possible cased-hole logging.

With seven-inch casing now installed and cemented to total depth, the joint venture partners will agree on a completion and testing strategy that is likely to involve perforation, stimulation and production testing of each interval before a co-mingled test is performed.

The approach is designed to collect key data on reservoir pressure, fluid composition and permeability, supporting both resource appraisal and future development planning.

Elixir Energy’s Managing Director and Chief Executive Officer Stuart Nicholls said the results mark a major step forward in the company’s Queensland portfolio:

“The initial results at Diona-1 are incredibly encouraging and indicate a new gas discovery, which may be confirmed via production testing. Should the follow-on testing go well, Diona-1 presents as a candidate to take Elixir into gas production and cashflow generation via the nearby tie-in point, placing Elixir in a unique position.”

Diona-1 benefits from immediate proximity to existing infrastructure, with the Waggamba to Silver Springs gas pipeline passing within 100 metres of the well pad and providing a low-cost pathway to the Wallumbilla Gas Hub, a critical pricing and distribution point for east coast gas.

Elixir, the largest acreage holder in the Taroom Trough, controls 2.6 trillion cubic feet (2C) of independently certified contingent gas resources.

The region sits adjacent to Shell’s main area of investment across the Basin Centred Gas Play, underscoring its strategic location within Queensland’s well-serviced gas industry.

Looking ahead, the results from Diona-1 strengthen Elixir’s credentials as a developer of conventional gas within a resource-constrained domestic market.

If flow testing confirms commercial rates, the company could transition from explorer to producer in relatively short order, supported by established infrastructure and growing regional demand.

In a market characterised by tightening supply, particularly on the east coast, Elixir’s progress at Diona-1 will be closely watched as both a technical and commercial milestone for the Taroom Trough gas province.

Please note the following valuable information before using this website. 

Independent Research 

Market Open Australia is intended to be used only for educational and informative purposes, and any information on this website should not be taken as investment advice or guidance. It is important to conduct your own research before making any investment decisions, which should be based on your own investment needs and personal circumstances. Any investment decisions based on information contained on this website should be taken in line with independent financial advice from a qualified professional or should be independently researched and verified.