Red Sky Energy has entered into a term sheet with Resolve Geo to acquire an interest in the coal seam gas rights in ATP 946, located in central Queensland.

Under the terms of the agreement, Red Sky will earn a 10 per cent interest upon the drilling of two coreholes within the permit, with an option to spend a further $5 million to acquire an additional 80 per cent interest.

Red Sky will issue 40 million shares to Resolve Geo upon grant of the permit and, should the $5 million option be exercised, Red Sky will issue Resolve Geo with a further 40 million shares.

Red Sky Managing Director Rohan Gillespie said “This farmin fits well within the Red Sky portfolio of exploration acreage, which is being positioned to be a supply option for LNG.”

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The agreement is subject to the resolution of two native title claims, confirmatory due diligence and shareholder and regulatory approvals.

Meanwhile Origin Energy has increased its interest in the Otway Gas Project to 67 per cent following completion of the acquisition of an additional 36 per cent interest from Woodside Energy.

The acquisition, undertaken through Origin subsidiary Origin Energy Resources Limited, was initially announced in November 2009, backdated from 1 July 2010.

Origin Managing Director Grant King said “The acquisition includes production licences which contain the Thylacine and Geographe fields and associated offshore production facilities, pipelines and onshore gas processing plant, together with adjacent exploration permits.

Woodside has now completed the sale of its 51.55 per cent interest in the Otway Gas Project, with joint venture partner Benaris International acquiring the remaining portion of Woodside’s interests.