Australia’s Beach Energy has sold its interest in the Killanoola oilfield in South Australia’s Otway basin to compatriot Red Sky Energy.

Red Sky confirmed Friday it was buying Beach’s 100% interest in PRL 13, which contains the Killanoola field, for a nominal consideration of A$1 (US$0.73), however it will also take on all obligations related to the asset, including all liabilities relating to the decommissioning, abandonment, rehabilitation, remediation or restoration.

The Killanoola oilfield was discovered in 1998, with the Killanoola-1 well flowing at rates of up to 300 barrels per day.

Another well, Killanoola Southeast-1 was drilled in 2011 and also hit oil, however it was never flow tested.

Red Sky said Friday it intended to restart planning for the Killanoola-1 well with a focus on resuming oil production as soon as possible, while it also intends to flow test Killanoola Southeast-1 and complete a field development plan.

“The Killanoola oilfield provides clear near-term production for Red Sky. It fits well with our strategy of acquiring near term producing assets with upside potential for reserve growth in one of Australia’s well known onshore areas, the Penola trough,” Red Sky chief executive Andrew Knox said.

“Red Sky has been actively reviewing conventional production opportunities and the current round of divestment activity in the Australian oil and gas sector has created this exciting opportunity for us.”

Red Sky also revealed Friday it was planning to raise A$4 million via a capital raising, which will see existing shareholders offered one new share for every existing share at an issue price of A$0.02.

The money raised will be put towards the re-development of Killanoola, 3D seismic, as well as Red Sky’s existing Gold Nugget gas project and general working capital.

Field Development

Selling up: Beach offloads South Australian oilfield to Red Sky Energy