Galilee Energy Pivots Zydeco Sidetrack to Chase 422,600 Barrels of Shallow Oil
Key Takeaways
- Well data from Zydeco-1 has identified five shallow oil zones — Borsum, Richie, Discorbis gravelli, First Het, and Homeseeker B Sands — carrying combined gross unrisked Prospective Resources of 422.6 kbbl (3U), a result entirely outside the original pre-drill program.
- The planned sidetrack has been reconfigured specifically as a potential oil production well, with the company citing WTI crude at US$107.02/bbl versus Henry Hub gas at US$2.97/MMBtu as the economic rationale for prioritising oil over gas-condensate.
- The entire revised sidetrack and oil testing program is expected to be funded from the recently completed A$3.5 million placement, with no additional capital currently anticipated.
- The deeper Stafford and Tweedel gas-condensate targets — carrying up to 13.7 Bcf of gas and 610,000 barrels of condensate (3U) — remain in the inventory and are expected to be pursued via a dedicated future well, preserving two distinct commercial pathways.
- Galilee holds a 100% working interest and 70% net revenue interest across the 325.3-acre Zydeco project in Acadia Parish, Louisiana, with the sidetrack reusing existing surface casing, wellhead, and permits from the original wellbore.
Five stacked oil targets redefine Zydeco’s commercial potential
Galilee Energy (ASX: GLL) has announced a major strategic shift at its 100%-owned Zydeco Oil & Gas Project in Acadia Parish, Louisiana, with five shallow oil zones now taking clear priority over the original gas-condensate program. Well data from the Zydeco-1 original hole has revealed gross unrisked Prospective Oil Resources of 422.6 kbbl (3U) across five stacked formations, a development that was not part of the pre-drill plan and that materially broadens the project’s commercial potential.
The five zones — Borsum Sand, Richie Sand, Discorbis gravelli Sand, First Het Sand, and Homeseeker B Sand — were identified from logging-while-drilling (LWD) data integrated with seismic and offset-well interpretation. The planned sidetrack is expected to be funded entirely from the recently announced A$3.5 million placement, with no additional capital currently anticipated.
Joseph Graham, Managing Director
“This is an outstanding result for Zydeco and a genuine step-change for Galilee. We went into Zydeco-1 with Tweedel as the primary target, but the original well has delivered something even better in the shallower section. We now have five prospective oil zones with a combined 3U gross Prospective Resource of 422,600 barrels sitting above the deeper gas-condensate targets – and every one of them is reachable from the wellbore we already own. Oil commands materially stronger economics than gas, so our priority is clear: test the oil and, if successful, bring this well on as an oil producer. The Stafford and Tweedel remain important targets in their own right and can be pursued with a dedicated future well. We are fully funded to do it – the recent capital raising covers the Zydeco sidetrack and the revised oil-focused testing program in full. This opportunity was not even part of our original pre-drill case. Zydeco now has two distinct potential commercial pathways – shallow oil now, and gas-condensate to follow – and we intend to pursue both.”
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Q1 FY27 development update — what the Zydeco-1 well data revealed
Five zones, five opportunities — the resource breakdown
The five shallow oil zones carry a combined gross unrisked Prospective Resource of 264.1 kbbl (1U), 317.0 kbbl (2U), 334.6 kbbl (mean), and 422.6 kbbl (3U) before royalties. On a net-after-royalty basis, those figures are 184.9 kbbl (1U), 221.9 kbbl (2U), 234.2 kbbl (mean), and 295.8 kbbl (3U).
| Zone | 1U – Low (kbbl) | 2U – Best (kbbl) | Mean (kbbl) | 3U – High (kbbl) |
|---|---|---|---|---|
| Borsum Sand | 54.1 | 65.0 | 68.6 | 86.6 |
| Richie Sand | 18.0 | 21.6 | 22.8 | 28.8 |
| Discorbis gravelli Sand | 64.0 | 76.8 | 81.1 | 102.4 |
| First Het Sand | 40.0 | 48.0 | 50.7 | 64.0 |
| Homeseeker B Sand | 88.0 | 105.6 | 111.5 | 140.8 |
| Total | 264.1 | 317.0 | 334.6 | 422.6 |
Table 1: Gross Prospective Oil Resources before royalties (kbbl). Resource estimates are unrisked and have not been adjusted for chance of discovery or chance of development, which the company assesses at 65%.
Why oil takes priority over gas-condensate
The original Zydeco-1 program was designed around gas-condensate targets. The shallow oil zones were an unexpected product of well data analysis, and they now represent a commercially superior near-term opportunity.
The pricing context makes the rationale plain. Benchmark spot prices as at 18 September 2026 show WTI crude at US$107.02/bbl versus Henry Hub natural gas at US$2.97/MMBtu — a stark differential between the two commodity types. Oil produced from the Zydeco project would be sold into established US Gulf Coast markets, with Louisiana Light Sweet (LLS) and WTI as the primary pricing benchmarks. These are benchmark spot prices and are not project realised prices.
The key reasons oil is the sequencing priority:
- Superior economics: Prevailing oil prices deliver materially stronger returns per unit of production than natural gas at current benchmarks
- Faster pathway to cash flow: A successful oil test could fast-track the well into production without the additional steps required for gas commercialisation
- Well already designed for oil: The sidetrack has been specifically reconfigured as a potential oil production well
- No additional capital needed: The entire oil-focused program is expected to be funded from the A$3.5 million placement already completed
Understanding prospective oil resources — what these numbers mean for investors
A Prospective Resource, in petroleum industry terms, refers to quantities of petroleum that may potentially be recovered from undiscovered accumulations. The key distinction from a Reserve or Contingent Resource is that two risks apply simultaneously: the risk that hydrocarbons are actually discovered (chance of discovery), and the risk that any discovery can be successfully developed (chance of development). Galilee assesses the chance of discovery or development at 65% for the Zydeco shallow oil zones.
The 1U, 2U, and 3U labels represent a probability range across possible outcomes. The 1U (low) figure of 264.1 kbbl represents the conservative case, the 2U (best estimate) of 317.0 kbbl reflects the central case, and the 3U (high) figure of 422.6 kbbl is the high case — not a guaranteed or expected outcome. Think of it as a range of scenarios, not a single prediction.
The term “unrisked” means these figures have not been adjusted downward to reflect the 65% chance of discovery. Drilling the sidetrack is what determines whether movable hydrocarbons are actually present in commercially meaningful quantities. Until the well is drilled and tested, the resource estimate remains a probabilistic assessment, not a confirmed volume.
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Two pathways to value — oil now, gas-condensate to follow
Sidetrack designed as an oil production well
Oil and gas cannot be tested and produced from the same wellbore configuration. The shallow oil zones and the deeper Stafford and Tweedel gas-condensate targets require different casing, perforations, and production equipment. Configuring the sidetrack to evaluate the gas-condensate targets would complicate and potentially compromise the ability to optimise the five shallower oil zones.
The company has therefore elected to preserve the sidetrack as a potential oil production well, stopping above the Stafford and Tweedel objectives. This is explicitly a sequencing decision. The sidetrack reuses the existing surface casing, wellhead, drilling location, and permits from the original Zydeco-1 wellbore, making it the most capital-efficient available path to test the shallow oil zones.
Stafford and Tweedel remain in the inventory
The deeper gas-condensate targets remain a material part of the Zydeco inventory and have not been downgraded. Upper and Lower Tweedel retain gross unrisked Prospective Resources of up to 13.7 Bcf of gas and 610,000 barrels of condensate (3U), as previously disclosed.
Stafford, which was not part of the original target inventory, recorded gas readings across the full interval that exceeded the 5,000-unit upper detection limit of the rig gas detector. No Prospective Resource is currently attributed to Stafford. Both deeper targets are expected to be pursued via a dedicated future gas-condensate well, keeping two distinct commercial pathways open for the project.
Fully funded next steps
The company’s four immediate priorities, as stated in the announcement, are:
- Finalise the oil-focused sidetrack trajectory, casing, and completion design to preserve the well as a production candidate in the event of success
- Finalise the formation evaluation and testing programme across the five shallow oil zones, including logging, pressure, and fluid data acquisition
- Complete contractor arrangements and mobilisation planning for the sidetrack and oil testing programme
- Commence the sidetrack subject to final engineering approval, contractor availability, regulatory requirements, and normal operating conditions
The company expects the entire revised sidetrack and oil testing programme to be funded from the proceeds of the recently announced A$3.5 million placement, with no additional funding currently anticipated. The Zydeco Oil & Gas Project covers 325.3 acres in Acadia Parish, Louisiana, with Galilee holding a 100% working interest and a 70% net revenue interest. The project is covered by 3D seismic and is located close to established Gulf Coast oil and gas infrastructure.
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