Red Sky Energy Limited has provided clarification regarding Central Petroleum joint venture.

Key Points: • As previously advised, Red Sky has chosen not to contribute to cash calls in relation to a number of permits outside of the Pedirka Basin in central Australia; • As per today's announcement by Central Petroleum, default notices have been issued to Red Sky in relation to those permits; • As per the Farm Out Agreements, this is the contractual mechanism by which Red Sky relinquishes its right to earn an interest in those permits.

Red Sky Energy Limited seeks to clarify today's announcement by Central Petroleum in relation to joint venture developments. Red Sky's interpretation of the Farm Out Agreements is that for permits in which it does not wish to earn an interest, Red Sky declines to pay cash calls. The default provisions of the Farm Out Agreement then apply and Red Sky relinquishes its right to earn an interest in permits. The announcement today by Central Petroleum reflects this contractual procedure. This obviates the requirement to pay the $3.8m cash call amounts mentioned in the announcement.

As previously advised on 12th March 2010, Red Sky has chosen not to pay cash calls for a number of permits outside of the Pedirka Basin. Red Sky is focusing on coal seam gas and has met cash calls for the Pedirka Basin permits EP 93 and 107 where the recent five well program was conducted.

Tags: Central Petroleum Limited, Red Sky Energy Limited