Galilee Energy (ASX:GLL) has reshaped the Zydeco story after identifying five shallow oil targets above the original gas-condensate objectives.
Those zones now carry gross Prospective Oil Resources of up to 422.6kbbl on a 3U basis and have become the clear priority for the planned sidetrack.
The reason is straightforward, oil currently offers better economics than gas, and the targets can be reached from the existing wellbore.
Oil jumps to the front
The five targets, Borsum, Richie, Discorbis gravelli, First Het and Homeseeker B, were identified from the original well data and seismic interpretation.
Together, they hold gross Prospective Resources of 264.1kbbl at 1U, 317.0kbbl at 2U and 422.6kbbl at 3U.
That opportunity was not part of the original pre-drill case.
It has effectively added a second commercial leg to Zydeco.
Table 1: Gross Prospective Oil Resources before royalties (kbbl).*
Gulf Coast price backdrop does Galilee a favour
The timing of Galilee’s oil pivot is also being helped by a much stronger crude market.
WTI is sitting around US$100 a barrel, after trading above US$105 last week, while Brent has also remained above US$100 amid ongoing Middle East supply disruption.
That matters for Zydeco because Louisiana crude is sold into the US Gulf Coast market, where local grades are typically benchmarked against WTI and Louisiana Light Sweet.
With Gulf Coast crude markets currently benefiting from tight supply and strong pricing, any successful oil production from Zydeco would be entering a far more favourable pricing environment than the gas market Galilee originally set out to target.
Figure 1: WTI crude and Henry Hub natural gas daily spot prices to 15 September 2026. Source: EIA.
Sidetrack now designed to produce
Galilee is redesigning the sidetrack around the shallow oil zones rather than pushing deeper into Stafford and Tweedel.
If testing confirms movable hydrocarbons and commercial deliverability, the sidetrack could be preserved as an oil production well.
That gives Galilee a more direct pathway from test success to potential cash flow.
Figure 2: Integrated original-hole and proposed-sidetrack schematic showing the five shallow oil intervals. Trajectory is indicative and subject to final engineering approval.
Gas is not going away
The deeper gas-condensate story is still alive.
Upper and Lower Tweedel retain gross unrisked Prospective Resources of up to 13.7Bcf of gas and 610,000 barrels of condensate on a 3U basis, while Stafford also showed strong gas indications in the original well.
Galilee’s decision is about sequencing.
Oil first, a dedicated gas-condensate well later.
Fully funded for the next move
The revised sidetrack and testing program is expected to be funded from Galilee’s recent A$3.5M placement, with no additional capital currently anticipated for the program.
That means the near-term focus now shifts to finalising the sidetrack design, locking in contractors and moving toward testing.
What comes next
The next big question is whether the shallow zones actually flow.
If they do, Galilee could have a faster route to production than originally planned.
If the deeper gas targets are later tested successfully, Zydeco would be carrying two separate commercial pathways instead of one.
The project did not lose the gas story, it found an oil story on top of it.
