• Diona-1 well drilled with potential discovery of Basin Centred Gas play
• Prospective Resources updated to 200bcf (100bcf net to Xstate)
• Funding secured for appraisal and production testing
• Disposal of US Assets reducing exposure to abandonment liabilities

Xstate Resources Ltd (ASX:XST) reported a highly productive December 2025 quarter, with the drilling and interpretation of results from the Diona-1 well being a key focus. While the primary Showgrounds formation target was disappointing, the company made a major breakthrough by encountering significant overpressured gas in the deeper Tinowon and Wallabella sandstone formations. Wireline logging confirmed 116m of Gross Pay and 23m of Net Pay in these Permian sandstone formations, with potential for additional upside in the Wallabella Sandstones. An internal review by Xstate's Competent Person identified the potential for hydrocarbons to extend over the northern portion of the Diona block, leading to an updated Mean Prospective Resource estimate of 100 Bscfe net unrisked to Xstate. Planning is underway for the perforation and stimulation of the Diona-1 well, with results from flow testing expected in early April 2026. The company also announced the disposal of its various working interests in California, significantly reducing its exposure to abandonment liabilities in the region. Xstate successfully raised $3.82m to fund the Diona-1 appraisal program and production testing, and ended the quarter with a cash balance of $2.91m.

The company has not provided any high-importance, price-sensitive forward-looking financial metrics in the announcement.

Xstate is solely focused on the completion and appraisal of the Diona-1 well and planning for the next steps in realizing full value for the Diona prospect over the next 12 months.