Red Sky Energy continues to move forward Clarence Moreton Basin gas discovery

Red Sky Energy (ASX: ROG) has updated the market on the progress which has been made at the Talma pilot well at the Kangaroo Creek Sandstone gas discovery, located is in the Clarence Moreton Basin of New South Wales.

Highlighting how quickly Red Sky is moving the shallow gas discovery (within PEL 457) forward, an application for regulatory approval of the pilot well has been submitted, which included extensive stakeholder consultation.

What this provides is the company is now forecasting an approval to drill the well within weeks.

The next step for Red Sky is the intention to drill the pilot within the discovery area, and drill a pilot production well at Talma to perform a long term production test to determine the magnitude of the resource.


Drill plans

Red Sky intends to drill out the existing cemented core hole and expose the Kangaroo Creek formation over a 90 metre interval from 480 metres to 570 metres depth.

Upon completion of drilling, a wellhead and flare will be installed and the well put on production. Site works are expected to take no more than 15 days.

Upon securing regulatory approval, the Red Sky will seek a suitable drilling rig to undertake the pilot.

Providing another boost the prospectivity of the project, a recent Resource Study concluded the Kangaroo Creek sandstone gas discovery to be a highly prospective lead.


Coal Seam Gas in Clarence Moreton Basin

Red Sky has a right to earn 100%, earned 30% so far. Reserves independently certified by MHA Petroleum Consultants (100% basis) are as follows:

- Probable Reserves 2P 17PJ
- Possible Reserves 3P 380PJ
- Contingent Resources 2C 629PJ

Red Sky's 30% interest in the permits PEL 479 and 457 are valued at around $57 million based on the Santos (ASX: STO) acquisition of Eastern Star Gas metric multiple.  The total of 1 TCF of recoverable gas would have a revenue value of around $4 billion at today's gas prices.

The shallow gas discovery is a shallow non conventional gas play, hence a potentially low cost development for Red Sky.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/21536/red-sky-energy-continues-to-move-forward-clarence-moreton-basin-gas-discovery-21536.html