Red Sky Energy and Santos have agreed to a new two-well development program as the companies look to increase gas production in South Australia.
Red Sky has signed a binding Authority for Expenditure (AFE) with joint venture partner Santos for two Yarrow wells located within the prolific Innamincka Dome of the Cooper Basin.
Red Sky will maintain its 20 per cent working interest in the Yarrow gas field.
Drilling for the first of the two development wells is expected to commence imminently, marking a rapid expansion of the project following the successful tie-in of the Yarrow 1 well in late 2025.
Red Sky Managing Director Andrew Knox described the move as a key step for the company, highlighting the advantage of operating within a proven gas system.
“These wells sit within existing infrastructure and provide a direct pathway to near-term production and cash flow,” Knox said.
The Innamincka Dome benefits from established gas gathering and processing facilities operated by Santos, allowing Red Sky to pursue a short-cycle development strategy.
This approach minimises the time between drilling and generating revenue, as the new wells can be quickly connected to the existing grid.
To cover its share of the development costs, estimated at approximately AU$2 million, Red Sky has launched a multi-pronged capital raising strategy.
The company has already received firm commitments for a AU$1 million placement and plans to fund the remaining balance through an underwritten rights issue to existing shareholders.
The expansion is backed by technical data from a recently completed 3D seismic survey across the region, which has helped the joint venture partners pinpoint the most promising targets for the 2026 program.
