• Red Sky Energy subsidiary Red Sky Energy (NT) Pty Ltd has...

• Red Sky Energy subsidiary Red Sky Energy (NT) Pty Ltd has entered into a Farmout Agreement with Santos Ltd (ASX: STO) subsidiary Santos QNT Pty Ltd in relation to Red Sky’s Cooper Basin licences PRLs 14, 17, 18, 180, 181 and 182 to inject A$9m in capital into Red Sky’s Innamincka Dome projects
• This transaction accelerates the development strategy for Flax and Yarrow projects with a well-capitalised partner
• The terms of the Agreement provide for Santos to earn an 80% interest (and operatorship) in Red Sky’s Cooper Basin licences (collectively known as the Innamincka Dome), along with the following considerations:
o Fund 100% of 50km2 of 3D seismic over the Yarrow gas field in PRL17, up to a maximum gross cost of A$1.0 million
o Fund 100% of an appraisal well in the Yarrow gas field up to a maximum gross cost of A$3.0 million o Fund 100% of an appraisal well in the Flax oil and gas field in PRL14, up to a maximum gross cost
of A$5.0million
o Subject to satisfactory appraisal outcomes, initially fund 100% of any approved development of the fields, with Santos to be repaid for Red Sky’s share of such development expenditure out of Red Sky’s share in production
o The Farm Out Agreement, and the transfer of the 80% interest in the licenses, is conditional on a number of standard approvals including ministerial approval and licence registration
Australian Oil and Gas explorer and developer, Red Sky Energy (ROG: ASX) (“Red Sky” or “the Company” is pleased to announce that its subsidiary Red Sky Energy (NT) Pty Ltd has executed a Farm Out Agreement and will enter into a Joint Operating Agreement (“JOA” with Santos Ltd (ASX: STO) subsidiary of Santos QNT Pty Ltd in respect to its Cooper Basin licences PRLs 14, 17, 18, 180, 181 and 182.


Financing
The Company explored various options over the past year with respect to financing the remediation bond and capex attaching to the Company’s Projects. The joint venture partnership entered into with Santos was chosen for the following key benefits to Red Sky shareholders:
• Relieves Red Sky of the Bond provision obligations with the SA Government of A$5.0 million
• Santos is a well-capitalised partner with significant Cooper Basin technical and operational experience
• The Farm Out Agreement secures funding for a targeted work programme accelerating development in the projects
• Timing will take advantage of historically high AUD oil and gas pricing Farm Out Agreement terms
The Farm Out Agreement provides for Santos to earn an 80% interest (and operatorship) in Red Sky’s Cooper Basin licences collectively known as the Innamincka Dome. The terms provide for Santos to:
• Fund 100% of 50km2 of 3D seismic over the Yarrow gas field in PRL17, up to a maximum gross cost of A$1.0 million
• Fund 100% of an appraisal well in the Yarrow gas field up to a maximum gross cost of A$3.0 million
• Fund 100% of an appraisal well in the Flax oil and gas field in PRL14, up to a maximum gross cost of
A$5.0million
• Subject to satisfactory appraisal outcomes initially fund 100% of any approved development of the fields,
with Santos to be repaid for Red Sky’s share of such development expenditure out of Red Sky’s share of production