Red Sky Energy (ASX: ROG) expects its farm in agreement with ERM Gas (ASX: EPW) to reach financial close late this week, accelerating exploration and development of its Clarence Moreton Basin acreage.
Under the agreement, ERM Gas will pay Red Sky up to A$2.7 million upon achievement of certain milestones and will fund the drilling of at least six and up to nine wells in the New South Wales coal seam gas acreage.
ERM Gas will earn a 80% stake in PEL 478 and 60% in PEL 479 and PEL 457.
Red Sky will also place 150 million shares to ERM Gas at a share price equal to the Volume Weighted Average Price for the five days preceding the execution date of the agreement, giving ERM Gas a 9.5% stake in Red Sky.
Red Sky Energy also advised that non-executive director Murray Durham has resigned with effect from 31 August 2012.
“Murray has made a significant contribution to Red Sky over the last three years. His strong commercial and technical skills have been invaluable, and I thank him and wish him every success for the future,” managing director Rohan Gillespie said.
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