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 which spud on 7 April has been drilled and the Bonanza 3 rig is moving to the third oil development well. After setting the Intermediate Casing two laterals were drilled through the Sunburst Sand reservoir to Total Depths of 1835 and 1837 metres respectively.

Good oil and gas shows were observed. The well has been drilled in a very efficient manner and under budget. The planned development wells are: 1. Tabers 16-2-8-17: Drilled to Produce Proved Undeveloped Reserves; 2. Tabers 1-2-8-17: Drilling a dual lateral to Probable Undeveloped Reserves; 3. 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 $100/bbl, these wells are projected to pay back the capital expenditure in less than 12 months. The Alberta Plains Working Interests are: Xstate Group: 35%; Sacgasco Group: 20%; Blue Sky Resources: 45%.