basin centred play, page-12

I gather the STO well was drilled for exploratory purposes, and happliy produced substantial gas. Since tying it back to Moomba was cheap, they did so and are selling the gas produced. The exploratory drill costs were sunk costs, so the gas sales only have to cover the tie-back incremental cost to be worth doing.
The revenue booked from the gas sales will cover the tie-in costs, and presumably some drilling expenses, but unless the gas flows in volumes to allow production costs substantially under spot prices, the well is not profitable.
So yes, the well is making commercial sales, but it is still a contingent (upon higher gas prices or lower production costs) resource, rather than a reserve.

The good news for me, however, is:
- resource volumes further proved up
- more data on flows
- demonstrated prolonged production will illuminate decline rates

All these things will mean an appreciation in gas prices (expected from 2014 as LNG comes on-stream) and further refinement in production techniques to lower costs will eventually move BPT shale resources from contingent to economic reserves.
When that happens, the vast, vast, vast resource will become a very valuable reserve.

So no, the STO production in itself isn't proving a viable business, but it is another step toward proving the value of Cooper shale.

If you believe gas prices will rise, then BPT is a great place to be.