Xstate Resources Limited provided its shareholders and the market with an update on the first of 3 planned oil development wells. The Tabers 162817 well has been drilled to intermediate casing point ahead of schedule. The well has intersected the target sandstone reservoir as expected with oil and gas shows.

The next planned operation is to run intermediate casing and then drill a near horizontal lateral through the reservoir section. This is the first of 3 oil development wells that Sacgasco intends to participate in drilling in SGC's Alberta Plains Asset. The drilling program will be funded from the net cashflow resulting from production in Canada.

The planned development wells are: Tabers 162817: Targeting Proved Undeveloped Reserves; Tabers 12817: Targeting Probable Undeveloped Reserves; Killam 16344113: Targeting Probable Undeveloped Reserves. The wells are considered independent of each other. The cost the 3 well development program is estimated at AUD 2.7 million (gross), which will be AUD 560,000 net to Sacgasco.

Company anticipate a gross increase in production of 200 BOPD (gross) which is 40 BOPD net to SGC. 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. The Alberta Plains Working Interests are: Xstate Group: 35%; Sacgasco Group: 20%; Blue Sky Resources: 45%.