In 1863 the pair met William Landsborough and decided to lead a party to acquire land in south west Queensland.

The Costellos along with Durack formed a depot at Warroo Springs in outback New South Wales then later moved north to Mobel Creek.

Earning £3000 on the sale, Costello returned and acquired the lease to Mobel Springs, a holding of 160 square kilometres (40,000 acres).

In 1869 both drought and depression were taking their toll on the state but Costello continued to acquire lands around the Channel Country and lightly stock them.

While drought was taking its toll on his coastal properties Costello acquired another 5,200 square kilometres (2,000 sq mi) in the Northern Territory.