Red Sky Energy Accelerates Growth with Angola Block and Yarrow Well Boost

Steady Production and Operational Progress at Innamincka

Red Sky Energy’s December 2024 Quarterly Activities Report highlights robust operational performance at its Innamincka Dome projects in South Australia. The Yarrow 3 well has generated gross production receipts of $3.18 million year-to-date, with approximately 85% of revenue derived from gas sales and the remainder from LPG and condensate. This steady cash flow underpins the company’s near-term financial stability.

Meanwhile, the Yarrow 1 well has undergone a successful pre-fracture workover, with all downhole preparations completed by January 2025. The fracture stimulation, planned for late February, is expected to significantly enhance gas flow rates, potentially increasing production to between 1.6 and 3.6 million standard cubic feet per day. This operational milestone is anticipated to complement Yarrow 3’s revenue stream and boost Red Sky’s cash flow in 2025.

Killanoola Project Advances Amid Offtake Negotiations

At the Killanoola oil field, Red Sky is actively progressing its development plans despite some mechanical setbacks. The company is negotiating with multiple crude buyers and exploring its own storage and offtake solutions to secure reliable market access. The upcoming drilling of the high-impact KN2 well, guided by 3D seismic data, is a key component of the forward plan, alongside workovers and completions of existing wells. These efforts aim to optimise resource recovery and operational efficiency, positioning Killanoola as a significant contributor to future cash flow.

Transformational Entry into Angola’s Offshore Oil Sector

Perhaps the most notable development is Red Sky’s acquisition of a 35% interest in Block 6/24 offshore Angola’s Kwanza Basin. This strategic move marks the company’s first foray into the African oil sector and introduces a highly prospective asset with early production potential. The block encompasses 4,930 square kilometres with extensive seismic coverage and includes the Cegonha oil discovery, which preliminary evaluations suggest could be commercially viable.

The Risk Service Contract signed with Angola’s National Agency for Oil, Gas and Biofuels (ANPG) places Red Sky alongside partners ACREP and Sonangol E&P, the latter acting as operator. The contract outlines a six-year exploration and appraisal period, with significant geological and geophysical studies planned. Several parties have expressed interest in fully financing the project’s development, which could accelerate progress and mitigate capital risk for Red Sky.

Financial Position and Strategic Outlook

Red Sky Energy reported cash reserves of $2.96 million as of December 31, 2024, providing a solid liquidity base to support ongoing operations and exploration activities. The company continues to evaluate further acquisition opportunities to complement its diversified portfolio, which now spans Australian gas and oil assets alongside a promising offshore oil block in Angola.

Looking ahead, the company anticipates sustained cash flows from Yarrow 3 and expects the Yarrow 1 fracture stimulation to materially enhance production and revenue in 2025. The Killanoola project remains on track for development, contingent on securing offtake agreements. Meanwhile, the Block 6/24 project represents a transformative growth avenue, with early production and resource expansion potential that could significantly impact Red Sky’s long-term value proposition.