An independent petrophysical evaluation of Red Sky Energy’s (ASX: ROG) Killanoola-1DW-1 well in South Australia’s onshore Otway Basin has identified an additional 37m of potential net pay.
The zones were discovered in a well-developed hydrocarbon column within the 149m thick Sawpit Sandstone and add significantly to the well’s existing 5m of proven pay.
The well is part of the greater Killanoola oil project within shut-in petroleum retention licence 13 (PRL-13) which Red Sky acquired in February from Beach Energy (ASX: BPT).
News of Killanoola-1DW-1 follows the recent “exceptional result” of 16m net pay for the Killanoola SE-1 well, which was first drilled in 2011 into the same structural feature.
Red Sky said the zones at that well were in “stark contrast” to previous net pay estimates of 1.5m and would require a revision of geological and geophysical interpretations to re-determine the volume of oil in place.
The company is also revising its work program to include testing of the new zones.
Successful tests will allow it to book reserves associated with oil-bearing zones at Killanoola-1DW-1 and Killanoola SE-1.
Red Sky managing director Andrew Knox said the independent report was “extremely encouraging”.
“Our focus remains on re-commencing production at the Killanoola-1DW-1 well as soon as possible and to create cash flow,” he said.
“We plan to commence testing of the new pay zones as we seek to extract full value from the resources at Killanoola.”
Onshore Penola Trough
The PRL-13 licence covers 17.5 square kilometres of the onshore Penola Trough, in proximity to the Jacaranda Ridge and Haselgrove gas fields as well as Beach’s Katnook processing facility which produces gas from nearby wells for supply to local homes and businesses.
Red Sky has initiated re-start planning for Killanoola-1DW-1 and hopes to resume oil production using existing infrastructure and enhanced oil recovery (EOR) techniques including solar which is already being used to improve the recovery of similar waxy crudes in the US.
“The acquisition of PRL-13 will afford [us] a significant opportunity to leverage recovery from the oil price downturn by quickly returning a quality shut-in asset to production,” the company said.
“It will also deliver options to prove further reserves in unexploited areas of the field and develop [new] reserves in the remaining highly-prospective areas within the licence.”