A$5.17 million cash supports Red Sky’s next phase of Yarrow gas testing

Yarrow wells reach testing stage

Red Sky Energy (ASX:ROG) now has two more wells in the Innamincka Dome gas program ready for the test that matters: whether the preliminary gas indications can translate into commercial flow. Yarrow 4 and Yarrow 5 both reached total depth from a single pad in South Australia’s PRL 17, intersected gas pay in the Tirrawarra Sandstone and Patchawarra Formation, and have been cased and suspended for future stimulation and completion.

“Innamincka Dome Projects location map with Yarrow and Willowie highlighted.”

“Yarrow field structure map and seismic section showing the 2026 Yarrow development well locations as presented prior to drilling (A–A′ cross-section).”

Caption and image © Red Sky Energy Limited. From “Quarterly Activities and Cashflow Report”, 29 Oct 2026.

Operator Santos’ preliminary logging interpretation identified 5.4 metres of low-deliverability gas pay at Yarrow 4 and 8.4 metres at Yarrow 5. The stronger interval at Yarrow 5 included 3.7 metres in the VC90 sand within the Patchawarra Formation. Those figures are derived from logging while drilling, however, and are not production results. No flow testing has been carried out, so deliverability and commercial rates remain unknown.

The wells are the centrepiece of the company’s current development spend, following the Yarrow 5 drilling that was reported earlier in September. Fracture stimulation and completion are expected to begin in November, subject to Santos’ scheduling, weather, access and equipment availability. Red Sky holds a 20% working interest in the Santos-operated project.

Yarrow North moves towards a late-November frac

“Location of Yarrow North 1 (YN1), Yarrow 1 (Y1) and Yarrow 3 (Y3) in the Yarrow Gas Field, which is located on the Packsaddle Nose in the northern end of the Pondrinie Napowie…”

A third Yarrow opportunity has also advanced. Workover activities at Yarrow North 1, a suspended exploration well drilled in 2008 that has never produced gas, were completed after the joint venture approved the supplementary budget and AFE. The well has been perforated across the planned frac intervals, with production tubing and the stimulation string installed.

Hydraulic stimulation is planned for approximately 24-25 November and is expected to take at least a week, with initial results anticipated in early December. First gas is targeted for early 2027, subject to the operational schedule and weather. Red Sky’s share of the estimated gross A$2.98 million project cost is about A$0.6 million, including the proposed tie-in to the existing Yarrow 1 facilities.

That schedule gives Red Sky a near-term operational catalyst, but not yet a production forecast. The company says the early ramp-up performance from Yarrow 1, which reached approximately 2.4 MMscf/d after its re-entry, should not be treated as an indication of what Yarrow North 1, Yarrow 4 or Yarrow 5 will deliver.

Willowie appraisal produces no conventional pay

“Willowie field structure map and seismic section highlighting the proposed 2026 Willowie 2 well and other possible locations (X–X′ cross-section).”

The Innamincka campaign has also supplied a clear negative result. Willowie 2 reached 2,687 metres measured depth, but preliminary wireline logs and pressure data indicated only thin, tight intervals of low-deliverability gas in the Toolachee and Patchawarra formations, with no conventional pay. No flow test or stimulation was undertaken, and no hydrocarbons were recovered to surface.

Santos recommended plugging and abandoning the well, and Red Sky endorsed that decision. The company will incur the drilling component of its estimated A$1.75 million share of the Willowie AFE, but the planned stimulation, completion and connection costs will not be incurred. Red Sky said the result has no bearing on the Yarrow field.

Existing production supports the cash position

Yarrow 1 and Yarrow 3 continued producing into the Santos-operated gathering network during the quarter, generating A$0.79 million in gross production receipts. Natural gas accounted for A$0.686 million of the total, with condensate contributing A$0.102 million. Receipts were below the A$1.045 million recorded in the June quarter, which included LPG sales.

Red Sky finished September with A$5.17 million in cash. Net operating cash flow was A$0.133 million for the quarter, while investing outflows totalled A$1.128 million, including A$0.937 million of development spending. The company says it is funded for its current Innamincka commitments, with the abandonment of Willowie 2 reducing the remaining spend on that well. A small-shareholding sale facility also cut the register from 5,453 holders to 1,819 without changing the 10.57 billion shares on issue.