Xstate Resources Limited provided its shareholders and the market with an update on the planned oil development wells. The second well, Tabers 01-03-08-17 spud on 7 April and has been drilled to the intermediate casing point 1.5 metres into the reservoir sand. The sand exhibited porosity of 12-18%, strong oil and gas shows, with free oil in drilling mud system samples.

After setting the intermediate casing a near horizontal lateral will be drilled through the reservoir sands. The drilling program will be funded from the net cashflow resulting from production in Canada. The planned development wells are: Tabers 16-2-8-17: Drilled to Produce Proved Undeveloped Reserves; Tabers 1-2-8-17: Drilling ahead - target Probable Undeveloped Reserves; and Killam 16-34-41-13: Targeting Probable Undeveloped Reserves.

The wells are considered independent of each other. The cost of the 3 well development program is estimated at AUD 2.7 million (gross), which will be circa AUD 945,000 net to Xstate. The operator anticipates a gross increase in production of 200 BOPD, which is 70 BOPD net to Xstate.

Given the current benchmark oil price of around USD 100/bbl, these wells are projected to pay back the capital expenditure in less than 12 months.