Red Sky Energy (ASX:ROG) has confirmed the strong upside potential in its Clarence Moreton Basin coal seam gas noting its share of contingent resources in PEL 457 stands at 188.7 petajoules.
At least part of this resource could be converted to reserves status once the company receives approval to drill the Talma pilot production well, which targets the highly prospective Kangaroo Creek, and carry out a long-term production test.
This will also add to the company's existing proved, probable and possible reserves of 114 petajoules, which currently ranks as the fifth largest amongst the non-major companies.
Red Sky ranks above Dart Energy's (ASX: DTE) 102 petajoules and below Senex Energy's (ASX: SXY) 249 petajoules reserves position.
Additional reserves will serve to further strengthen Red Sky's position amongst Australia's diminishing ranks of coal seam gas players.
Recent acquisitions of Eastern Star Gas Eastern Star Gas (ASX: ESG) by Santos (ASX: STO) and Bow Energy (ASX: BOW) by Arrow Energy have continued the trend of bigger CSG players gobbling up smaller companies as they seek to boost their reserves for their liquefied natural gas projects.
The New South Wales Department of Trade and Investment, Resources and Energy is currently assessing Red Sky's application to carry out the Talma pilot well after requesting additional information early this year and is expected to make a decision soon.
The Talma pilot well will drill out the existing fragmented Talma-1 core hole and expose the Kangaroo Creek formation over a 90 metre interval, from 480 metres to 570 metres deep.
Once drilling is completed, a wellhead and flare will be installed and the well put into production.