Red Sky signs gas sales pact with Origin Energy

Red Sky Energy has signed a gas sales agreement with fellow Australian energy company Origin Energy, it announced on October 2. The deal coincides with the completion of construction of the pipeline by Santos and successful tie in to the grid to the south of the Yarrow gas field in South Australia’s Cooper basin.

The agreement sets out the framework of terms and conditions under which transactions will be entered into between the parties. The intent is that sales will be for all gas produced until January 1, 2026, with provision for an agreed extension and structured under a take-or-pay arrangement.

Production from Yarrow 3 will translate into first revenues from the project for Red Sky. Company managing director Andrew Knox commented: "Red Sky intends to solely sell its share of gas production to Origin. With this agreement now signed and following the processing phase, the gas and liquids will be ready for delivery to market and first revenues from the project."

The Yarrow field has been estimated to have a 2C contingent resource of up to 18bn ft³. A further potential of 20bn ft³ 2C of associated gas is estimated at the Flax oil field, 8 km to the southeast of Yarrow.

Preliminary analysis of pressure data indicated connected volume from the Yarrow 3 well, the company's first producing well, is more than 1.7bn ft³ with some residual water production.