Red Sky Energy has successfully brought the Yarrow 1 well online ahead of schedule, boosting production and cash flow at its Innamincka Dome projects while advancing drilling and evaluation at Killanoola and offshore Angola.
- Yarrow 1 well online with early production exceeding forecasts
- Steady revenue from Yarrow 3 gas sales and associated liquids
- Killanoola-2 well drilled, hydrocarbons confirmed, stimulation options under review
- Preparations continue for drilling and development in 2026
- Cash reserves stand at $1.7 million amid plans for further acquisitions
Innamincka Dome, Early Success at Yarrow 1
Red Sky Energy has marked a significant milestone with the successful completion and commissioning of the Yarrow 1 well at the Innamincka Dome in South Australia. Brought online in mid-November 2025, the well’s initial production rates of approximately 2.4 million standard cubic feet per day notably exceeded pre-development expectations of 1.6 MMscf/d. While these figures reflect early controlled flow conditions rather than long-term output, they provide a promising indication of the well’s potential to enhance the company’s near-term cash flow.
Complementing this, the Yarrow 3 well continues to deliver steady production, generating $0.63 million in cash receipts during the December quarter. Since commencing production in August 2023, Yarrow 3 has contributed $5.5 million in gross receipts, predominantly from natural gas sales supplemented by LPG and condensate. This stable revenue stream underpins Red Sky’s operational cash flow and supports ongoing development efforts.
Killanoola Oil Project, Drilling Advances and Future Potential
At the Killanoola Oil Project, Red Sky completed drilling the Killanoola-2 (KN2) appraisal well to a depth of 1,044 metres, confirming the presence of hydrocarbons in the Upper Sawpit Sandstone. Although the reservoir exhibits low permeability in its current unstimulated state, the well has been cased and suspended, preserving it as a potential future producer. The company is actively evaluating stimulation and completion strategies and planning workover operations to test both KN2 and the nearby DW1 well, aiming to unlock production potential while maintaining capital discipline.
Offshore Angola, Block 6/24 Preparations Continue
Red Sky’s interests extend offshore to Block 6/24 in Angola’s Kwanza Basin, where the Cegonha oil field holds a net 2C contingent resource of 5.1 million barrels. Alongside three additional prospects, the block offers a combined net prospective resource of 11 million barrels. The joint venture, led by operator Sonangol, is progressing preparatory technical and commercial workstreams, including joint venture documentation and plans for further geological and geophysical studies. While still in early stages, these efforts aim to mature the asset’s potential over the coming years.
Financial Position and Strategic Outlook
As of 31 December 2025, Red Sky Energy reported cash reserves of $1.7 million. The company’s quarterly cash flow report reflects positive operating cash flow supported by production activities, balanced against ongoing investment in exploration and development. Looking ahead, Red Sky anticipates increased production from Innamincka following Yarrow 1’s ramp-up and plans further drilling activities in 2026, subject to joint venture approvals. At Killanoola, evaluation of stimulation options and workover plans remain a focus, while offshore Angola’s Block 6/24 continues through preparatory phases.
Red Sky is also preparing for further acquisitions, signaling an intent to expand its portfolio and strengthen its position in the energy sector. The company’s strategic approach balances near-term production growth with longer-term exploration and development opportunities across its Australian and international assets.
Bottom Line?
With Yarrow 1 exceeding early expectations and multiple projects advancing, Red Sky Energy is poised for a pivotal 2026, but execution risks remain on stimulation and exploration fronts.
Questions in the middle?
- Will Yarrow 1 sustain its early production rates once stabilised?
- What are the timelines and capital requirements for Killanoola well stimulation and workovers?
- How will Red Sky fund its planned acquisitions and exploration activities given current cash reserves?