Oil and gas company Red Sky Energy, together with the Angolan National Agency for Oil, Gas and Biofuels (ANPG), ACREP Exploração Petrolífera (ACREP) and Sonangol Exploração e Produção (Sonangol E&P), has signed a risk service contract (RSC) for the exploration and development of offshore Block 6/24.
Located 12km offshore Angola in the Kwanza Basin, Block 6/24 spans an area covered by 1,531km² of 2D seismic and 1,465km² of 3D seismic data.
The block is in water depths ranging from 70m to 80m and includes the Cegonha oil discovery.
Red Sky, holding a 35% participating interest, has identified "significant potential" for oil in the region following a thorough review of materials in ANPG's data room.
The RSC, a direct result of negotiations between Red Sky and ANPG, sees Sonangol E&P as the operator with a 50% interest, while ACREP holds the remaining 15%.
ANPG retains ownership of all the hydrocarbons produced.
The contract's immediate next steps include implementing a joint venture (JV) operating agreement, seeking parliamentary ratification within approximately 90 days, and executing geological and geophysical studies over the first three years.
Red Sky managing director Andrew Knox said: "The signing of the RSC Block 6/24 marks our first entry into Angola and is a transformational milestone for Red Sky. Block 6/24 contains a potential commercial oil discovery that the JV partners plan to evaluate for early production and cash flow generation.
"The block also has substantial resource potential based on the existing 2D and 3D seismic data. The JV partners plan to prove up these resources, further improving the economics of the block. Several parties have expressed interest in providing 100% project finance for the development."
The RSC framework allows Red Sky, ACREP and Sonangol E&P to assume exploration, development and production risks in Block 6/24, with cost recovery and profit share from the sale of hydrocarbons.
The contract stipulates a six-year exploration and appraisal period, with a 30-year extension upon a commercial discovery.
Contractors are obligated to undertake specific geological, geophysical and drilling activities, with the option to withdraw without penalty if they choose not to proceed to the fourth year.
Red Sky anticipates multiple benefits from the RSC, including potential cash flow from the Cegonha oil field, resource expansion through additional seismic prospects, an enhanced market position, and long-term growth from increased reserves and production capabilities.
Knox added: "This transaction enhances our asset base with a high prospectivity offshore block and provides substantial diversification benefits, complementing our Innamincka gas and Killanoola oil projects in South Australia. This strategic move positions Red Sky for sustained growth and stability by balancing our investment portfolio across different geographical regions and resource types."