Red Sky Energy Limited’s (ASX:ROG) shares are trading 67% higher intra-day at 0.5 cents after entering into a binding agreement to acquire the Innamincka Dome Project in the Cooper Basin, South Australia.
The Innamincka Dome Project comprises a portfolio of six highly prospective petroleum tenements (PRLs) near the township of Innamincka in northeast South Australia.
Red Sky’s subsidiary is acquiring a 100% interest in five PRLs and a 75% interest in another PRL from a subsidiary of Beach Energy (ASX:BPT).
Aerial view of Innamincka township
The purchase of Beach’s interest in the Innamincka Dome Project is inclusive of all existing production infrastructure, storage tanks, yards and camp facilities.
This infrastructure is modern and in excellent operating condition, with the project closed in 2015 due to the downturn in oil and gas markets.
The acquisition will afford Red Sky with a significant opportunity to leverage the recovery from the oil price downturn by quickly returning quality shut-in assets to production at the Flax field.
$2.2 million capital raising
The company is raising up to $2.2 million via a capital raising to fund the acquisition, comprising a $1.6 million share placement and a $600,000 non-renounceable rights issue, both at 0.4 cents per share.
Red Sky will initiate re-start planning for the Innamincka Dome Project immediately with a focus on resuming oil and gas production at Flax as soon as possible following completion of the acquisition.
Near-term upside potential
Red Sky chief executive officer and managing director Andrew Knox said: “The Innamincka Dome project provides clear near-term upside for Red Sky.
“It fits our strategy of acquiring near-term producing assets with proven prospectivity and delivers a strong position with clear optionality in the heart of Australia’s well renowned onshore Cooper Basin.
“Red Sky has been actively reviewing conventional production opportunities and the current round of M&A activity in the Australian oil and gas sector has created this splendid opportunity for us”.