🕐19.10.09 - 03:16 Uhr

RED SKY ENERGY SECURES PROSPECTIVE PERMITS TO COMPLEMENT EXISTING NSW ACREAGE POSITION



Red Sky Energy Limited ASX/Media Announcement 19 October 2009 RED SKY ENERGY SECURES PROSPECTIVE PERMITS TO COMPLEMENT EXISTING NSW ACREAGE POSITION Key Points: - Red Sky Energy Ltd to acquire (subject to shareholder approval) a 100% interest in three prospective Coal Seam Gas permits through acquisition of Surat Resources Pty Limited (SRL); - The three permit areas cover approximately 23,000km2 in the prospective Surat Basin across northern NSW; - The permits are adjacent to the easterly permits acquired (subject to shareholder approval) in the acquisition of Norwest Hydrocarbons announced earlier this month; - Assessment of water bores shows a significant intensity of gassy water bores and water bores intersecting coal across the permits; - Previous drilling within the permits intersected up to 5 metres of coal; - There is potential to host combined in place gas resources of 26 Trillion Cubic Feet (TCF) of Coal Seam Gas (CSG); - Work commitments are currently being negotiated and are expected to be modest in the next two years and be funded from existing cash reserves; and - The acquisition fits Red Sky Energy Ltds strategy of securing major acreage positions across a number of prospective petroleum basins. Australian company Red Sky Energy Limited (ASX: ROG) ("Red Sky" or "the Company") has continued its strategy of securing major acreage positions across a number of prospective Australian basins.

The Company confirmed it has agreed to acquire SRL, via a Share Sale Agreement (SSA), with a 100% interest in three prospective Coal Seam Gas (CSG) permits in the Surat Basin across northern NSW. Under the terms of the SSA, Red Sky will acquire SRL and its 100% interest in the permits .

The permits comprise: - Permits application ‐ PELA 123 (formerly PSPA 28).

The work commitments for a four year term are currently being negotiated with the NSW Department of Primary Industries. - Petroleum Special Prospecting Authority -- PSPA 29.

ECP has met all commitments and is in the process of applying for conversion to two PELs. Under the terms of the transaction, consideration will be eighty (80) million Red Sky shares, subject to Red Sky shareholder approval. The SSA was executed today, and is conditional upon the aforementioned shareholder approval and confirmatory due diligence.

Red Sky will shortly issue a notice of meeting, for a general meeting of shareholders. The permits are a potentially significant CSG resource: - The permits total approximately 23,000km2; - As with the Norwest Hydrocarbons permits acquired earlier this month, substantial data acquisition and analysis has identified a significant numbers of gassy water bores and water bores intersecting coal across all of the permits; - The gas is thought to be biogenic in origin, with wide distribution across most of the permits. - In addition to the nearby Kurrabooma 1 core hole which recently discovered four (4) metres of net coal, previous water bores (QW017686, GW040919, GW801049) intersected up to 5 metres of coal within PEL 123 and PSPA 29.

(Refer Fig 2); - Applying this over the area of the permits, with a reasonable gas content of 5m3/t, yields 26tcf gas‐in‐place; and - This in addition to the Norwest Hydrocarbon permits, represents a potential to host combined in place gas resources of 60 Trillion Cubic Feet (TCF) of Coal Seam Gas (CSG).* On discovery of a significant CSG resource Red Sky will have numerous development/exit options available to it given the infrastructure in close proximity.

The permits are within a reasonable distance to the proposed route for the Wallumbilla to Newcastle pipeline. Given the size of the acreage position, Red Sky will initially focus a modest work program on PEL 123 once granted.

The objective will be to confirm the CSG properties of the coals, their lateral extent and the geological/hydrogeological model of the basin.

The work commitments will be funded from existing cash reserves. Commenting on the agreement, Managing Director Mr Rohan Gillespie said, "This acquisition complements the Norwest Hydrocarbons acquisition very well.

It gives Red Sky a contiguous area in excess of 53,000km2; one of the largest held by any petroleum company in NSW and equivalent to half the area of Tasmania." To view a full copy of the ASX announcement please click here: http://esp.gewru.com/em/message/email/view.php?id=570667&u=15636 Ends For further information: Shareholders/Investors Mr David Ballantyne (Company Secretary) Telephone: +61 (0)8 9486 1122 Facsimile: +61 (0)8 9486 1011 David Tasker, Professional Public Relations, Ph: 08 9388 0944/0433 112 936 Em:
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