Red Sky Energy Ltd (ASX: ROG) has announced the safe completion of drilling activities at its Killanoola‑2 (KN2) oil appraisal well, located within Petroleum Retention Licence 13 (PRL‑13) in South Australia’s onshore Otway Basin.
The company confirmed that the well has been cased and suspended with production tubing installed, preserving it as a potential future producer.
Following the acquisition of neutron‑density logs overnight, Red Sky’s petrophysicist conducted a detailed petrophysical interpretation of the newly obtained data.
The analysis confirmed the presence of hydrocarbon‑bearing zones within the Upper Sawpit Sandstone, although with limited production potential in its current unstimulated state.
According to the company, the reservoir exhibits similar characteristics to earlier wells in the field — Killanoola‑1 (K1), Killanoola‑1DW (K1DW), and Killanoola‑1SW1 (K1SW1).
These wells display low matrix permeability, high water saturations, and significant shale interbedding, which collectively reduce reservoir connectivity and production potential.
In line with these findings, Red Sky has opted not to proceed with the contingent Drill Stem Tests (DSTs).
A wiper trip was undertaken, after which the well was cased and suspended for potential future production once further development plans are finalised.
Managing Director Andrew Knox said the successful completion of KN2 drilling represents another step forward in Red Sky’s phased approach to developing the Killanoola Oil Project.
“We have advanced KN2 safely and efficiently, and now have two suspended wells that correlate closely to the 3D seismic model,” Knox stated.
“Our next priority is testing the production potential through a fit‑for‑purpose completion and possible stimulation plan.
“We remain optimistic about unlocking value at Killanoola through targeted, regulatory‑compliant artificial lift and stimulation.”
The KN2 well reached a total measured depth of 1,044 metres, targeting the Upper Sawpit Sandstone formation.
Modest oil shows were observed during petrophysical interpretation, confirming hydrocarbons in place but within a reservoir of poor quality marked by low permeability, high water saturation, and shaley intervals.
Wireline logging operations included Gamma Ray, Sonic, Resistivity, Density, and Neutron logs.
Due to anticipated low permeability, Drill Stem Testing was not conducted.
Red Sky Energy’s next steps include completing both the KN2 and nearby DW1 wells using a workover rig, followed by evaluating the potential for targeted reservoir stimulation — pending regulatory approval.
The company aims to determine whether artificial lift techniques could enhance flow and commercial viability across the Killanoola structure.
The company continues to report Total Petroleum Initially In‑Place (PIIP) estimates consistent with the SPE‑PRMS classification framework under ASX Listing Rule 5.25.3.
The PIIP data are derived from Red Sky’s April 21, 2023 announcement, which contains an independent Competent Person’s Report.
These figures represent un‑risked, best‑estimate prospective resources determined through a deterministic methodology.
Aggregated values are arithmetic sums of individual reservoir estimates and do not incorporate statistical aggregation.
No adjustments have been made for the probability of commercial development or discovery, leaving the resources subject to substantial technical and commercial risk.
Red Sky will continue to refine its understanding of the Killanoola field through upcoming completion activities and stimulation assessments, aiming to enable commercial oil production from the Otway Basin’s challenging but resource‑bearing formations.
