Red Sky to develop Clarence Moreton Basin

THE BOURSE WHISPERER: Australian coal seam gas exploration company Red Sky Energy has announced a major transaction with ERM Gas to develop its highly prospective on-shore gas projects in the Clarence Moreton Basin in north east New South Wales.

 Under the agreement, ERM Gas, a wholly owned subsidiary of ASX-listed ERM Power, will invest up to $2.7 million in Red Sky, and will fund the drilling of up to nine wells at Red Sky’s Clarence Moreton Basin (permits PEL 478, 479 and 457).

Red Sky will issue 150 million ROG shares to ERM, giving ERM an approximate 9.5 percent holding in Red Sky.

“We have spent a lot of money and effort on our Clarence Moreton permits and it is pleasing to see a company of the caliber and standing of ERM Gas place a significant value on them,” said Red Sky managing director Rohan Gillespie.

It has been the company’s strategic objective to add value through the drill bit and bring in major industry players to take its exploration plays through appraisal into production,”

 In addition, ERM Gas has the option to purchase Red Sky’s 20 per cent interest in PEL 479 and 457 for $5 million each over the next three years.

The transaction allows for the ramp-up of exploration and development at Red Sky’s highly prospective acreage, and strengthens its position as an independent Australian gas exploration and development company.

The transaction is subject to Red Sky shareholder approval and Board approval, and further due diligence by ERM.