Xstate Resources Limited informed its shareholders and the market of the commencement of commercial oil production at Anshof-3, within the Anshof Disocvery Area of ADX-AT-II license in Upper Austria, in which Xstate has a 20% working interest. The Operator, ADX Energy Limited, has advised that Anshof-3 is currently producing 100 barrels per day of oil (BOPD), 20 BOPD net to Xstate. The well productivity is at the upper end of the Operator's expectation, but production is currently limited by on site storage capacity and truck frequency transportation limitations.

The production performance from the well will be observed to determine the production capacity and continuity of the Eocene reservoirs. Interim production of up to 37,000 barrels (gross) is allowed under Austrian legislation prior to finalising a production licence for the entire discovery area which is mapped to extend over an area of approximately 25 km². The Anshof well is being produced via a leased Early Production Unit (EPU) and the oil is processed, transported and sold under agreement (OSA) with RAG Exploration and Production GmbH ("RAG E&P").

The agreements enable the commercial, long term, test production of Anshof. The EPU will provide oil and gas separation, power generation, well site storage, offloading and telemetry control systems at the Anshof-3 location, which will allow oil to be efficiently produced from the well with minimal operator intervention. The OSA provides the commercial framework for the processing, transportation, delivery of Anshof crude to RAG E&P for sale in conjunction with its own crude delivered by train to the OMV refinery near Vienna.

The sales price for Anshof crude will be at Brent less a small quality differential. Current pricing for Brent was last noted as circa AUD 146/bbl. The Joint Venture has achieved attractive terms for the processing, storage and transportation of Anshof crude through these arrangements.