- Red Sky Energy (ROG) has spiked on the ASX this morning after finding 37 metres of potential extra net pay at its core Killanoola – 1DW-1 well in South Australia
- The oil and gas explorer said an independent petrophysical analysis of the well highlighted the 37-metre zone
- This newly-found zone potentially represents a major upgrade to the current five metres of proven pay at the DW-1 well
- Net pay refers to a portion of a well or reservoir that contains economically recoverable oil or gas
- Red Sky said it will now revise a work program at the Kilanoola project so as to test the new pay zones
- Shares in Red Sky Energy have spiked 33.33 per cent in early action today to trade at 1.2 cents per share
Oil and gas explorer Red Sky Energy (ROG) has spiked on the ASX this morning after finding 37 metres of potential extra net pay at its core Killanoola – 1DW-1 well in South Australia.
The well is part of the wider Killanoola Oil Project, in SA’s Penola Trough, within a petroleum retention licence recently bought by Red Sky.
According to Red Sky, an independent petrophysical analysis of the 1-DW1 well highlighted the 37-metre zone of potential net pay, which is a major upgrade to the current confirmed five metres of proven pay.
What is net pay?
Essentially, net pay refers to a portion of a well or reservoir that contains economically recoverable oil or gas.
Calculating net pay takes a variety of factors into consideration, like how much it would cost to extract the resource from underground and how much of the reservoir actually contains resources worth producing.
In Red Sky’s case, the petrophysical study found the 37-metre zone of potential net pay within a 149-metre thick Sawpit Sandstone.
It is not guaranteed that the full 37-metre zone will convert to proven pay for the well, but Red Sky said it will revise a work program at the Kilanoola project so as to test the new pay zones.
Red Sky Managing Director Andrew Knox said the results of the Killanoola – 1DW-1 well are “extremely encouraging”.
“Our focus remains on recommencing production at the Killanoola-1DW-1 well as soon as possible and to create cash flow,” Andrew said.
“In addition, Red Sky will now include testing of these newly identified pay zones into our work program. We seek to extract full value from the resources at Killanoola,” he continued.
The company said if its testing program is successful, it will be able to book reserves associated with both the DW-1 well and the nearby Killanoola SE-1 well.
Shares in Red Sky Energy have spiked 33.33 per cent in early action today, trading at 1.2 cents each at 10:08 am AEST. The company has a $37.5 million market cap.