Red Sky Energy (ASX: ROG) is preparing to drill a pilot well in the newly discovered Kangaroo Creek Sandstsone, with the aim of performing a long-term production test to determine the magnitude of the project.
Kangaroo Creek is a highly prospective gas target located in the Clarence Moreton Basin in northeast New South Wales.
A Resource Study conducted in August 2011 found that the Kangaroo Creek sandstone is a highly prospective lead.
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.
Part of this resource could be converted to reserves status once the company receives approval to drill the pilot production well 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.
Once drilling is completed, a wellhead and flare will be installed and the well put on production.
Red Sky now needs to undertake further study work in order to provide additional information to the state's Department of Trade and Investment, Resources and Energy as part of the company's application for the pilot well.
The revised application is expected to be submitted in March, although a determination by the department is not expected until April.