Red Sky Energy (ASX:ROG) has reached an operational milestone by executing a binding authority for expenditure with joint venture partner Santos (ASX:STO).
The agreement formalises the 2026 development program for two new wells within the Yarrow gas field, situated in the Innaminka Dome of South Australia's Cooper Basin.
The announcement signals a shift into a new phase of production for the company, with drilling for the first of the two development wells expected to commence imminently.
To finance its 20% working interest in the program, Red Sky has secured placement commitments to raise $1 million.
Furthermore, the company plans to launch an underwritten Rights Issue to cover the remaining capital requirements.
The Yarrow field is a proven producer, benefiting from a tie-in and commissioning of Yarrow 1 in November 2025.
By leveraging the existing gas gathering systems and processing facilities operated by Santos, Red Sky aims to fast-track near-term production and bolster cash flow.
Managing Director Andrew Knox described the move as a "key step," noting that the project provides a direct pathway to revenue by utilising established infrastructure.
At the time of reporting, Red Sky Energy's share price was $0.0020.