Red Sky Energy, through its wholly owned subsidiary Red Sky (Killanoola) Pty Ltd, has entered into a binding Sale and Purchase Agreement (SPA) with Beach Energy subsidiary to acquire that subsidiary’s interest for South Australian Petroleum Retention Licence 13 (PRL-13) which contains the Killanoola oilfield. PRL-13 covers an area of 17.5 sq km and is located in southeastern South Australia close to the Jacaranda Ridge and Haselgrove Gas Fields and Katnook Gas Processing Facility in the Penola Trough of the onshore Otway Basin. 

The Killanoola oilfield was discovered by the Killanoola-1 well in 1998 at a depth of 850 metres. The oil is 34° API with a high viscosity. There is no expectation of commercial quantities of gas at this time. Previous flow tests of the well have recorded rates of up to 300 bopd.

A second well Killanoola Southeast 1 was drilled in 2011 within the PRL-13 area and also discovered oil. This well has not been tested.

Following completion of the acquisition, the Company will initiate “re-start” planning for the Killanoola 1 well immediately with a focus on resuming oil production as soon as possible utilizing existing infrastructure and enhanced oil recovery techniques. In addition, the Company will record a 3D seismic survey, test Killanoola-Southeast1 and complete a field development plan (FDP). The FDP will guide development of the entire field.

The acquisition will afford Red Sky with a significant opportunity to leverage the recovery from the oil price downturn by quickly returning a quality shut-in asset to production at the Killanoola field, as well as delivering options to:

• seek to prove further reserves in the unexploited areas of the field; and
• develop reserves in the remaining highly prospective areas within the PRL.

Following completion of the acquisition, the Company will be responsible for discharging all obligations and liabilities arising in respect of the assets purchased, including all liabilities relating to decommissioning, abandonment, rehabilitation, remediation or restoration of those assets. 

Red Sky’s CEO and Managing Director, Andrew Knox, said,
“The Killanoola oil field provides clear near-term production for Red Sky. It fits well with our strategy of acquiring near term producing assets with upside potential for reserve growth in one of Australia’s well known onshore areas, the Penola trough. Red Sky has been actively reviewing conventional production opportunities and the current round of divestment activity in the Australian oil and gas sector has created this exciting opportunity for us”.

KeyFacts Energy: Beach Energy Australia country profile   l   KeyFacts Energy: Red Sky Energy Australia country profile