CUE Energy Resources Readies Palm Valley Well for First Gas by October
Key Takeaways
- PV-14 is due to deliver first gas before the end of October 2026, only weeks after reaching total depth of 2,942mMD on 14 September.
- An open hole flow test measured about 3mmscf/d (100% JV) with no water or oil, and tied-in rates are estimated at 3-4TJ/d.
- Echelon holds just 35% of Palm Valley, so the headline rates overstate its own share of production.
- PV-15 is the next catalyst, with success expected to lift field output to near the 14 TJ/d plant capacity and deliver at least 10 PJ (100% JV).
- No reserves upgrade or guidance change has been disclosed, and that review only comes after PV-15 is drilled.
PV-14 appraisal well completed as gas producer, first gas due by end of October 2026
Echelon Resources (ASX: ECH) is completing the Palm Valley 14 (PV-14) appraisal well as a gas producer, with the well to be tied into the Palm Valley Production Station. The company said in its 8 October 2026 announcement that first gas is expected before the end of October 2026.
Current estimates for a tied-in rate from the well are 3-4TJ/d. An open hole flow test measured approximately 3mmscf/d (100% JV), with no water or oil recorded during the test.
For investors, the appeal is speed. A well drilled in September and expected to flow gas by late October offers a short path from drilling to cash flow in the Northern Territory.
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Drilling and flow test results
Well details
The announcement sets out the key facts on the well:
- Total depth (TD) of 2,942mMD, reached on 14 September 2026
- Deviated at up to 75 degrees toward the northern flank of the Palm Valley Gas Field, located in Northern Territory Operating Lease 3
- Targeted gas bearing intervals and fractures within the Pacoota P1 Formation
- Gas flows intersected over approximately 837m measured along the deviated wellbore
- Drilled with the Ensign 974 drilling rig
Flow test and water shutoff
Drilling was extended to isolate formation water ingress in the toe of the well using open hole packers. After some initial running issues, two open hole packers were run and set successfully, with flow testing indicating shutoff.
The open hole flow test then produced the following results:
| Metric | Result |
|---|---|
| Test interval | **2,102.5mMD to 2,729mMD** (**1,904m to 2,041m TVD**) |
| Choke | **¾-inch** |
| Duration | **90 minutes** |
| Gas rate | Approximately **3mmscf/d** (100% JV) |
| Flowing tubing head pressure | **210psi** |
The gas rate had not stabilised and was still increasing slowly at the end of the test period. That means the ~3mmscf/d figure is a snapshot, not a settled rate.
Trace water was detected subsequently during completion operations. The company inferred this is clean up of water produced during underbalanced shutoff operations, rather than water from behind the isolation packers.
Management comment
Andrew Jefferies, Echelon CEO
“Palm Valley has delivered again… PV-14 means local gas for the Territory, quickly hooked up, keeping the lights on, businesses running and barramundi broiled.”
What an appraisal well tie-in means for investors
An appraisal well is drilled to test and define a known gas field, rather than to find a new one. “Tying in” means connecting the well by pipeline to an existing processing plant, here the Palm Valley Production Station, so its gas can be treated and sold.
Flow rates are reported in two ways. Million standard cubic feet per day (mmscf/d) measures gas volume, while terajoules per day (TJ/d) measures energy content and is the unit commonly used for sales. Initial test rates can differ from tied-in rates because a short test is not the same as continuous production through plant equipment.
The 100% JV basis means figures cover the whole joint venture, not Echelon’s share. Echelon holds 35%, so its portion of any rate is smaller than the headline number.
Participants in the Palm Valley permit OL3 are:
- Central Petroleum (Operator): 50%
- Echelon Palm Valley Pty Ltd: 35%
- Cue Palm Valley Pty Ltd: 15%
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Gas sales and next steps: PV-15 and the reserves review
Gas from PV-14 will be sold into the Northern Territory gas market under a gas supply agreement negotiated with the Northern Territory Government in April 2026.
The announcement points to the following next steps:
- First gas from PV-14 is expected before the end of October 2026. Once production is underway and clean up continues, updated flow data will be determined.
- The Ensign 974 rig is preparing to complete PV-14 before moving to drill the next well in the programme, Palm Valley 15 (PV-15).
- Additional success at the soon to be drilled PV-15 is expected to return field production to near processing facility capacity of approximately 14 TJ/d (100% JV) and deliver at least 10 PJ of gas (100% JV).
- A review of the impact of the campaign on reserves and production guidance will be conducted at the end of the campaign, once PV-15 has been drilled.
No reserves upgrade or guidance change has been disclosed. That review comes only after PV-15.
The near-term catalysts are therefore clear: first gas from PV-14 before the end of October 2026, and the result from PV-15. Echelon describes itself as a nimble Australasia-focused energy commodity exploration and production company, headquartered in Wellington, New Zealand.
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