Red Sky Energy : Quarterly Activities and Cashflow Report

ASX ANNOUNCEMENT

18 January 2022

		DECEMBER 2021 QUARTERLY ACTIVITIES REPORT
	HIGHLIGHTS
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• Preliminary Production Testing at Killanoola-1DW-1 Completed after Activity Approval from
SA Government DEM was received
o	Linear Rod Pump at Killanoola-1DW-1 functioning properly
	o Representative reservoir fluid samples collected for assay
use	o Main objectives achieved and no incidents reported
o	Oil flowing
	• 3D seismic acquisition works commencing
	• PRL13 five year renewal granted
	• Innamincka drilling commencement rescheduled to late January
personal	• The Company has cash reserves as at 31 December 2021 of $6.996m

Australian Oil and Gas explorer and developer, Red Sky Energy (ASX: ROG) (Red Sky or the Company) is pleased to provide its December 2021 Quarterly Activities Report.

Killanoola Project

In late December, the Company successfully completed a preliminary production test at Killanoola-1DW-1 with no incidents. (ASX Announcement 22 December 2021)The test achieved the two main objectives: (1) Confirm that the Linear Rod Pump is functioning properly; (2) Collect surface samples of reservoir fluid for assay studies. Prior to this, Red Sky was able to successfully flow oil to surface from the existing 5 metres of pay at DW1. (ASX Announcement 13 December 2021)There is a further circa 40 metres of potential pay to perforate in this well . The approval to commence a LRP Production Test at Killanoola-1DW-1 was received from the Government of South Australian (SA Government) Department for Energy and Mining (DEM) in early December. (ASX Announcement 6 December 2021)

ForThe Killanoola oilfield was discovered by the Killanoola-1 well in 1998 at a depth of 850 metres. The oil is a 34° API waxy crude.

DW-1

Production

Activity Approval was received to commence testing of the existing 5 metres of pay at DW-1. Contracts for the testing were awarded, equipment was successfully mobilised to site and testing commenced as planned on 10 December 2021. On 13 December 2021 the test was successfully completed with no incidents. Equipment was demobilised from the site commencing 14 December 2021.

Red Sky Energy	Level 2	Contact
ACN 099 116 275	480 Collins Street	T: [phone]		www.redskyenergy.com.au
ASX: ROG	Melbourne Victoria 3000	[e-mail]

ASX ANNOUNCEMENT

18 January 2022

onlyProduction Test Results

After an initial clean up period, the well produced oil with no water at an average rate of 40 bopd. Surface fluid sampling was then carried out for future assay studies. An extended production test will take place once additional potential zones are perforated.

personal use
For	Figure 1 - DW-1 Surface Layout	Figure 2 - Killanoola Crude Oil Sample

Red Sky Energy	Level 2	Contact
ACN 099 116 275	480 Collins Street	T: [phone]		www.redskyenergy.com.au
ASX: ROG	Melbourne Victoria 3000	[e-mail]

Figure 3: Killanoola Oil Field (PRL-13)location map

(Adelaide Energy Pty Ltd is a subsidiary of Beach Energy Ltd (ASX:BPT))

ASX ANNOUNCEMENT

18 January 2022

onlyuse

personalSE-1

The DEM requires production tubing be installed in the well at SE-1 before wireline perforation testing can commence to better facilitate production testing. This requires a rig to be brought in to run the production tubing. Red Sky, to minimise costs, does not intend to undertake the wireline perforation of the zones of interest until ready to do the same at DW-1.

ForPRL13 renewal

The DEM has granted a third renewal of the license for a period of five years commencing 31 January 2022.

The renewal work programme requirements are that during the term of the licence the Company shall carry out or cause to be carried out the extended production testing of the Killanoola SE1 well.

Red Sky Energy	Level 2	Contact
ACN 099 116 275	480 Collins Street	T: [phone]		www.redskyenergy.com.au
ASX: ROG	Melbourne Victoria 3000	[e-mail]

ASX ANNOUNCEMENT

18 January 2022

Innamincka Dome Projects

onlyOn 5 November 2021, the Company announced that Santos Limited (ASX:STO) had advised it expected to commence drilling the Yarrow well in the last week of December 2021. It was further announced that the Yarrow 3 Gas Well drilling was to start in the last week of 2021. (ASX Announcement 16 December 2021)

Santos have recently updated and advised Red Sky that due to an extended work programme at the preceding well, the current forecast does not indicate the rig moving to Yarrow as originally scheduled. The rig is now expected to be at the preceding well until the fourth week of January. The rig move once underway is expected to take approximately two days so the Yarrow well will not likely commence drilling until late January.

useRed Sky is free carried through the drilling of this well.

Yarrow has previously been estimated to have a 2C contingent resource of 18BCF. A further 20BCF 2C of associated gas is estimated at the Flax oil field 8km to the southeast of Yarrow.

A pipeline of approximately 20km would potentially be built to tie into the grid at Napowie to the south of the
Yarrow gas field. The pipeline is expected to have a gross capacity of 20mmcfpd (4mmcfpd net to Red Sky).
For personal
	Figure 4: Innamincka Dome Projects location map
Red Sky Energy	Level 2	Contact
ACN 099 116 275	480 Collins Street	T: [phone]		www.redskyenergy.com.au
ASX: ROG	Melbourne Victoria 3000	[e-mail]

ASX ANNOUNCEMENT

18 January 2022

Santos Farm Out Terms

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Santos to earn an 80% interest and operatorship (ROG: 20%) in Red Sky's onshore Cooper Basin retention
licences PRL 14, 17, 18, 180, 181 and 182, collectively known as the Innamincka Dome Projects. The terms
provide for Santos to:
	• Fund 100% of 50km2 of 3D seismic over the existing Yarrow gas field in PRL 17, up to a maximum cost of
	A$1.0 million.
	• Fund 100% of an appraisal well in the Yarrow gas field in PRL 17 up to a maximum gross cost of A$3.0
use	million.
• Fund 100% of a horizontal appraisal well in the Flax oil and gas field in PRL 14, up to a maximum gross
	cost of A$5 million.
	• 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.
Outlook
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Red Sky has achieved the objectives it set out for the preliminary production testing at Killanoola-1DW-1. The Company is now in possession of a representative fluid sample and has carried out fluid assay studies. Results from these studies will facilitate commercial negotiations with potential Killanoola crude oil buyers.

The Company has been discussing seismic acquisition with affected landowners and is pleased to advise that all discussions were most satisfactory (ASX Announcement 5 November 2021)and landowner agreements have nearly all been concluded. The Company wishes to thank those landowners for their understanding and assistance. An additional associated activity license has been granted surrounding the PRL13 licence, AAL295, to allow the seismic acquisition to exceed the licence limits by approximately 5km2, to better facilitate and improve the imaging. Acquisition activities are expected to commence during the current quarter.

The Yarrow gas well drilling is expected to commence in late January 2022. The well total depth is approximately 2,700m and is expected to take two weeks to drill.

Corporate

Cash

ForThe company has cash reserves as at 31 December 2021 of $6.996m.

Related party disclosure

In line with its obligations under ASX Listing Rule 5.3.5, Red Sky Energy Limited notes that the only payments to related parties of the Company, as advised in the Appendix 5B for the period ended 31 December 2021, pertain to payments to directors for fees, salary and superannuation.

-ENDS-

Released with the authority of the board.

Red Sky Energy	Level 2	Contact
ACN 099 116 275	480 Collins Street	T: [phone]		www.redskyenergy.com.au
ASX: ROG	Melbourne Victoria 3000	[e-mail]