The Magellan Farmin Agreement provides for Red Sky and Magellan to farmin to the Rainbird Prospect by each paying 49% of the Rainbird 1 well costs to earn a 24.5% interest each in any commercial discovery.
Before it farmed in to PEL 93, Red Sky upgraded prospectivity by conducting an airborne geochemical survey over the central and eastern areas of PEL 93 (the "Red Sky Survey Area"). The Magellan Farmin Agreement also provides the option for additional wells to be drilled within the Red Sky Survey Area under similar earning arrangements. Magellan will be reimbursing Red Sky for part of Red Sky's costs incurred in conducting this survey which has highlighted oil and gas micro-seepage anomalies over the Rainbird structure.
The Rainbird 1 well will be the first test of Red Sky's geochemical method in the Cooper Basin.
On successful completion, the interest holders in a Rainbird commercial discovery will be Stuart Petroleum as operator with 36%; Red Sky with 24.5%; Magellan with 24.5% and Cooper with the remaining 15%.
Red Sky Energy Limited (ASX code ROG) successfully listed on the ASX on May 23, 2007, raising $6 million in the process. Red Sky is an Australian - based oil and gas company, established to acquire, explore, assess and exploit oil and gas deposits in prospective tenements across Australia. Red Sky utilizes a risk-reducing airborne geochemical survey technology to enhance its targeting capabilities. Red Sky has first option and right to use its technology for an 18 month period in Australia, which will focus on the Cooper, Carnarvon and Darling basins. Following receipt of IPO funds, an ongoing drilling program has commenced on the extensive drill ready prospect inventory.
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