Killanoola Drilling Approval Pending: What Risks Lie Ahead for Red Sky Energy?
Red Sky Energy has completed the installation of the surface conductor at its Killanoola Oil Field, marking a significant step forward as it awaits final drilling program approval. The project’s substantial oil reserves and ongoing offtake discussions position it for potential near-term production growth.
- Surface conductor installation approved and completed at Killanoola Oil Field
- Awaiting Department for Energy and Mining approval for drilling program
- Killanoola Oil Project’s best estimate Petroleum Initially In Place increased to 135.5 million barrels
- Conditional offtake agreement with Viva Energy Australia in place
- Discussions ongoing with Santos Limited for alternative processing options
Surface Conductor Installation Marks Operational Progress
Red Sky Energy Ltd (ASX – ROG) has successfully installed the surface conductor at its Killanoola Oil Field in South Australia following approval from the Department for Energy and Mining (DEM) on 21 October 2025. The operation was completed the same evening, with drilling a 17-1/2" hole to 15.4 metres, running a 14" outer diameter conductor, and cementing it securely in place. This milestone is a critical preparatory step ahead of the company’s planned drilling activities.
Awaiting Drilling Program Approval
While the surface conductor installation is complete, Red Sky Energy is still awaiting final approval for its drilling program from DEM, expected imminently. Managing Director Andrew Knox expressed optimism about the progress, highlighting ongoing collaboration with regulators and stakeholders. The approval will unlock the next phase of exploration and development, potentially accelerating the project’s timeline toward production.
Significant Petroleum Initially In Place Estimates
The Killanoola Oil Project, situated within PRL 13 in the Penola Trough, has seen its estimated Petroleum Initially In Place (PIIP) increase substantially following a 3D seismic program completed in 2023. The best estimate now stands at 135.5 million barrels, a 46% uplift from previous assessments. This sizeable resource base underpins the project’s potential to generate meaningful production and revenue once operational.
Offtake Agreements and Processing Discussions
Red Sky Energy has secured a conditional offtake agreement with Viva Energy Australia Limited, providing a pathway for future oil sales. Additionally, the company is in discussions with Santos Limited, operator of the nearby SACB Joint Venture, regarding alternative offtake and processing arrangements at the Port Bonython facility. These commercial negotiations are crucial for optimising the project’s logistics and market access.
Looking Ahead
With infrastructure installation advancing and regulatory approvals pending, the Killanoola project is poised to move into a drilling phase that could unlock significant value. Investors and industry watchers will be keenly observing the timing of drilling program approval and the outcomes of offtake discussions, which together will shape the project’s near-term trajectory.
Bottom Line?
Killanoola’s next steps hinge on drilling approval and commercial deals that could transform its promising resource into production.
Questions in the middle?
- When will the Department for Energy and Mining grant final drilling program approval?
- What terms will emerge from ongoing offtake and processing discussions with Santos Limited?
- How soon could production commence following drilling, and what volumes are realistically expected?
