How Will Red Sky’s KN2 Well Unlock Killanoola’s Hidden Potential?
Red Sky Energy has secured regulatory approval to build the KN2 well site at its Killanoola Oil Project, setting the stage for drilling a promising new target that could boost production and revenues.
- South Australian DEM approves KN2 pad construction
- KN2 drilling funded under Farmin Agreement with 45% interest partners
- 3D seismic survey increased Killanoola’s Best Estimate PIIP by 46%
- Pad construction to complete within two weeks, drilling to follow
- Discussions underway with Santos for processing and sales options
Regulatory Green Light for KN2 Well Site
Red Sky Energy Ltd (ASX – ROG) has received final approval from the South Australian Department for Energy and Mining (DEM) to construct the KN2 well site at the Killanoola Oil Project in South Australia’s Penola Trough. This approval marks a critical milestone, enabling the company to commence site preparation imminently with an expected completion timeline of two weeks.
Strategic Partnership and Funding
The KN2 drilling program is financially underpinned by a Farmin Agreement executed in May 2025 with Condor Energy Services, Chawla Group, and VB Energy. These partners will fund 75% of the drilling and completion costs, earning a combined 45% working interest in the well. Red Sky retains a 55% stake in KN2 and full ownership and operatorship of the broader PRL-13 permit area, maintaining control over project development.
Targeting a High-Value Undrilled Structure
The KN2 well targets a previously undrilled structural high identified through Red Sky’s proprietary 3D seismic survey completed in 2023. This survey significantly increased the Best Estimate Petroleum Initially In Place (PIIP) at Killanoola by 46%, now estimated at 135.5 million barrels. The well is designed to tap into this enhanced resource base, potentially driving near-term production growth and improving cash flow.
Operational Efficiency and Cost Management
Red Sky plans to mobilise the same rig for the KN2 drilling and a workover on the existing DW1 well, which involves replacing the pump. This approach is expected to reduce mobilisation costs and operational risks, reflecting prudent project management as the company advances its development schedule.
Offtake and Market Positioning
Killanoola currently holds a conditional offtake agreement with Viva Energy Australia Limited and is actively negotiating alternative processing and sales arrangements with Santos Limited, operator of the SACB Joint Venture. These discussions aim to secure optimal pathways for production handling and market access, critical for realising the project’s commercial potential.
Looking Ahead
With pad construction imminent and drilling plans advancing, Red Sky Energy is positioning Killanoola for a significant operational step forward. The success of KN2 could materially enhance production volumes and revenue streams, reinforcing the project’s strategic value within the company’s portfolio.
Bottom Line?
As Red Sky moves swiftly from approval to drilling, all eyes will be on KN2’s results to validate the promising seismic data and unlock Killanoola’s potential.
Questions in the middle?
- Will KN2 drilling confirm the projected increase in recoverable oil volumes?
- How will ongoing offtake negotiations with Santos influence commercial outcomes?
- What are the timelines and risks associated with integrating KN2 production into existing infrastructure?
