3D Energi (ASX: TDO) reports second OEDP discovery as Charlemont-1 validates seismic model

3D Energi Limited (ASX: TDO) has confirmed a new gas discovery through the Charlemont-1 exploration well located within the VIC/P79 permit offshore Victoria. Announced on January 14, 2026, the discovery was made in the Waarre C sandstone and represents the second hydrocarbon find under the Otway Exploration Drilling Program, following the earlier Essington well. This result was not anticipated prior to drilling and has validated both ends of the Charlemont Trend, a series of gas prospects exhibiting consistent seismic amplitude anomalies. With joint venture operator ConocoPhillips Australia and partner Korea National Oil Company also involved, the outcome improves the geological confidence in the trend. However, further analysis is required before any decision is made on commercial development.

How does the Charlemont-1 result alter geological confidence in the Charlemont Trend and Otway Basin prospects?

The Charlemont-1 well successfully recovered a representative gas sample from the Waarre C sandstone at 2,571.2 metres measured depth. This direct evidence of hydrocarbon presence was confirmed through both modular formation testing and elevated resistivity readings in the wireline logs. Notably, the presence of gas in the Waarre C was not part of the original pre-drill model, and its unexpected confirmation has triggered a re-evaluation of the Charlemont Trend’s prospectivity. According to preliminary rig-based compositional analysis, the gas sample contains approximately 16 mol% carbon dioxide, which is broadly consistent with the gas composition observed at the nearby La Bella field, located just seven kilometres to the east.

By confirming gas charge at the southern end of the trend, Charlemont-1 complements the previously known La Bella discovery at the northern end. The intervening seismic amplitude-supported targets within the trend, particularly the Charlemont C and E prospects, are now more credible exploration candidates. A review of Figure 2 and Figure 4 in the company’s supporting material visually depicts a structurally linked sequence of prospects, where the presence of gas at both endpoints adds significant geological weight to the continuity hypothesis. These amplitude-supported anomalies have long been interpreted as indicative of gas, but until now, lacked direct calibration at the southern boundary.

What are the limitations of the Waarre A target and how do they impact development timelines?

While the Waarre C interval delivered an unanticipated success, the primary drilling objective had been the Waarre A sandstone, intersected over a gross thickness of 70 metres at 2,683 metres measured depth. Preliminary analysis indicates elevated gas readings and resistivity in this zone, suggesting probable hydrocarbon presence. However, no fluid samples were recovered from Waarre A, and pressure data from the MDT tool proved inconclusive. According to 3D Energi Limited, this was due to limited valid pressure points, challenges in identifying a coherent fluid gradient, and the possibility of pressure breaks between sample depths. As a result, the company cannot establish a valid gas gradient in the Waarre A interval.

The implications of this are significant. It indicates that the Waarre A, B, and C formations are not part of a continuous gas column, suggesting compartmentalisation between reservoir layers. This complicates both resource estimation and any future production planning. Reservoir continuity and connectivity are critical for development economics, especially in fields relying on tie-back infrastructure rather than standalone production platforms. The lack of a confirmed gas gradient in the primary target zone adds an element of uncertainty that will likely delay any declaration of commerciality.

Why the Otway infrastructure context makes even small discoveries strategically important

The Charlemont-1 well forms part of the first phase of the Otway Exploration Drilling Program and is now being plugged and abandoned in accordance with environmental regulations. The Transocean Equinox drilling rig is scheduled to leave the area following the completion of these operations. While 3D Energi Limited and its joint venture partners have approvals in place for a second phase of drilling, no commitment has been made at this stage. However, the significance of even modest gas discoveries in this region lies in their proximity to existing offshore and onshore processing infrastructure. This lowers the threshold for commercialisation, particularly in an Australian East Coast gas market that remains supply-constrained.

Executive Chairman Noel Newell of 3D Energi Limited emphasized that Phase 1 of the program has uncovered important new gas volumes near existing infrastructure, which could supply the tightening East Coast domestic market. This fits with the company’s broader infrastructure-led exploration model, which aims to find gas that can be rapidly monetised with minimal capital outlay on new facilities. The fact that both Charlemont-1 and Essington lie within accessible range of processing and pipeline assets significantly enhances their strategic value.

However, while the proximity of infrastructure helps reduce development risk, it does not eliminate the need for robust reservoir analysis. The economic feasibility of tying in smaller or compartmentalised reservoirs depends on flow rates, CO₂ removal costs, and market pricing dynamics at the time of development. Given that the confirmed CO₂ content is above 15 percent, gas processing and emissions compliance will factor into final economic assessments.

What decisions face ConocoPhillips, Korea National Oil Company, and 3D Energi Limited in the next phase?

With Charlemont-1 concluded, the immediate decision now rests with the joint venture partners on whether to move forward with additional appraisal or to initiate development planning. ConocoPhillips Australia holds the largest stake at 51 percent and serves as operator, while Korea National Oil Company and 3D Energi Limited hold 29 percent and 20 percent respectively. The timing and direction of Phase 2 activities will depend on the final results from laboratory-based compositional analysis, petrophysical interpretation of the Waarre A zone, and a broader assessment of whether current gas prices support the capital expenditure required for tie-back development.

3D Energi Limited, which does not operate any production assets, has the most to gain from near-term commercialisation. Its financial performance is more directly tied to exploration success, and confirmation of gas-bearing reservoirs in the Charlemont Trend enhances the company’s asset base and forward narrative. However, without a clear path to cash flow or a credible farm-in partner to take the lead on development funding, this remains a technically encouraging but financially deferred milestone.

ConocoPhillips, as the operator and a fully integrated upstream company, has more optionality in deciding when and how to advance the project. It may seek to batch multiple discoveries under a hub model to justify capital deployment. Korea National Oil Company, as a national oil company, may approach the asset with a longer strategic lens, particularly if it aligns with national energy security objectives.

Could this unlock a new development front in a maturing basin?

The Otway Basin has been a steady contributor to Australia’s domestic gas supply, but much of its infrastructure is now mature and dependent on backfill opportunities to extend operating life. Discoveries like Charlemont-1, while not transformative on their own, play a critical role in maintaining throughput levels at existing gas plants. The fact that both La Bella and Charlemont-1 sit along the same interpreted trend introduces the possibility of a combined development or staggered tie-ins that can smooth production curves and improve facility utilisation.

The regional strategy of infrastructure-led exploration now has another data point in its favour. If confirmed by further appraisal, Charlemont-1 strengthens the rationale for continued investment in high-probability, low-footprint gas prospects in proximity to underutilised capacity. This is particularly relevant given the increasing scrutiny on greenfield hydrocarbon projects and emissions compliance. By focusing on projects with existing infrastructure leverage, operators may be able to avoid some of the permitting and regulatory resistance faced by newer fields.

However, a critical variable will be how emissions intensity is addressed. The 16 mol% CO₂ content, while comparable to nearby fields, will still require conditioning and treatment before entering the pipeline system. Whether these costs can be offset through scale, shared infrastructure, or market pricing flexibility remains to be seen.

What the Charlemont-1 discovery means for Otway gas strategy and exploration outcomes

The Charlemont-1 gas discovery represents a technically significant outcome for 3D Energi Limited and its Otway Basin partners. The presence of gas in the Waarre C sandstone de-risks a structurally defined trend of exploration targets. Preliminary compositional analysis suggests manageable CO₂ levels, and the overall result strengthens confidence in amplitude-supported prospects across the Charlemont Cluster. However, ambiguity remains around the primary Waarre A target, and the absence of continuous pressure gradients implies that reservoirs may be isolated.

For the joint venture, the discovery provides optionality but does not yet compel development. The decision to proceed with further appraisal or tie-back engineering will hinge on technical validation, regulatory alignment, and commercial feasibility. For 3D Energi Limited, the result enhances the strategic value of its VIC/P79 interest but leaves near-term monetisation uncertain. Investors and stakeholders will be watching closely for any shift toward Phase 2 drilling or a signal that commercialisation is moving forward.

What this means for 3D Energi Limited, ConocoPhillips, and Otway gas stakeholders

• The Charlemont-1 well confirmed an unanticipated gas discovery in the Waarre C, validating seismic amplitude anomalies along the Charlemont Trend.
• The gas sample has a preliminary carbon dioxide content of 16 mol%, in line with the La Bella gas field, improving confidence in development suitability.
• The primary target, Waarre A, showed probable gas presence but lacked definitive fluid sampling and pressure gradient clarity.
• No gas column continuity was established between the Waarre A, B, and C zones, suggesting possible reservoir compartmentalisation.
• The well has been plugged and abandoned per regulatory protocol, with future drilling under Phase 2 pending technical and commercial evaluation.
• The discovery supports 3D Energi Limited’s infrastructure-led exploration strategy and provides strategic upside, but immediate commercialisation is unlikely.
• For ConocoPhillips and Korea National Oil Company, the result enhances optionality for future development but does not yet warrant capital commitment.
• The Otway Basin continues to offer potential as a low-barrier exploration and development frontier due to proximity to processing infrastructure and regional gas demand.