Perth-based Red Sky Energy is raising $4 million to purchase Beach Energy’s stake in the Killanoola oilfield, in South Australia’s Otway Basin.
Beach's interest in Killanoola, situated near its Haselgrove gas field, covers an area of 17.5 square kilometres.
The asset was discovered in 1998 at a depth of 850 metres, after which more oil was discovered at a second well (Killanoola Southeast 1) in 2011.
Red Sky plans to return the “quality shut-in asset” to production and capitalise on the recovered oil price.
Managing director Andrew Knox said the acquisition provided near-term production for the business.
“It fits well with our strategy of acquiring near term producing assets with upside potential for reserve growth in one of Australia’s well known onshore areas, the Penola trough,” he said.
“Red Sky has been actively reviewing conventional production opportunities and the current round of divestment activity in the Australian oil and gas sector has created this exciting opportunity for us”.
Red Sky will conduct a $4 million capital raising, comprised of a one-for-one rights issue priced at 2 cents, to complete the Killanoola purchase.
The funds raised will also go towards development works and 3D seismic testing at Killanoola, and works associated with Red Sky’s Gold Nugget gas project in Wyoming.
Red Sky remains in a trading halt, requested on November 2.