Red Sky Energy Limited has entered into a Term Sheet with Resolve Geo Pty Limited to acquire an interest in ATP 946. The permit is large (approx 7650km2) and potentially contains a significant resource of Cretaceous age coal of the Winton Formation. These coals were discovered by previous petroleum wells within the permit, as well as to the east in EPC 1149 by East Energy Resources and abutting the south west corner of ATP 946 by Bow Energy in ATP 794.

Assuming an average coal thickness across the permit of 8 metres, there is a potential 95 billion tonnes present. Given the low rank of the coal, the primary play is biogenic gas. If the coals are found to be fully gas saturated, gas contents would be approximately 3m3/tonne of coal.

Summary of the term sheet: • Initial two core holes (approx cost $1.5m) to earn 10% • Option to spend further $5m to earn further 80% • Resolve Geo to retain 10% interest (or 1% royalty, in which case Red Sky earns 100%) • Conditional upon grant of ATP 946, confirmatory due diligence and shareholder and regulatory approvals • Grant of the permit is subject to the resolution of two small Native Title claims. • 40 million Red Sky shares to be issued to Resolve Geo upon grant of the permit, with a further 40 million Red Sky shares issued to Resolve Geo upon Red Sky exercising the option to spend further $5m.

Commenting on the agreement, Managing Director Rohan Gillespie said, 'This farm-in fits well within the Red Sky portfolio of exploration acreage which is being positioned to be a supply option for LNG.'

Tags: Red Sky Energy Limited