Red Sky Energy Limited : Major Milestone - Talma Pilot receives approval

Level 17, 500 Collins Street, abn: 94 099 116 275

Melbourne Victoria 3000 tel: [phone] fax: [phone] redskyenergy.com.au

ASX ANNOUNCEMENT MAJOR MILESTONE - TALMA PILOT WELL RECEIVES APPROVAL Key Points:

· Approval has been granted to drill the Talma pilot well at the Company's highly prospective

Kangaroo Creek Sandstone gas resource in Clarence Moreton Basin, north east NSW;

· Company announced a significant new discovery in the Kangaroo Creek Sandstone in 2011;
· Approval is a major milestone for the Company - plan is to drill a pilot well in this gassy formation;
· Next step is to contract a drilling rig and commence drilling the Talma pilot well.
The directors of Red Sky Energy Limited ("Red Sky" or "the Company") are pleased to announce that it has received regulatory approval to drill the proposed Talma pilot well at the Company's highly prospective Kangaroo Creek Sandstone gas resource in the Clarence Moreton Basin in north east New South Wales.
Red Sky's application for regulatory approval for the Talma pilot well, in the form of a comprehensive Review of Environmental Factors (REF) document, was submitted in November 2011 (ASX announcement, 3 November, 2011). The REF included extensive stakeholder consultation and a rigorous assessment of impacts. It concluded that any impacts could be adequately managed.
The Company now advises that the REF has been approved, and it will now proceed to contract a drilling rig and commence drilling of the Talma pilot well.
Red Sky announced a significant new discovery (within PEL 457) in the Kangaroo Creek Sandstone in
2011. Its intention is to drill the Talma pilot production well within the discovery area and perform a long term production test to determine the magnitude of the resource.
The Company conducted a Resource Study on its Kangaroo Creek sandstone gas discovery resource in August (ASX announcement, 11 August 2011) which concluded that the discovery is a highly prospective lead. Red Sky plans to drill out the pilot well to expose the Kangaroo Creek formation over a 90 metre interval, from 480 metres to 570 metres depth.
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Upon completion of drilling, a wellhead and flare will be installed and the well will be put on production. Site works are expected to take no more than 15 days.
The Company will provide further details on the time frame for the drilling program in due course. ENDS

For further information contact:

Shareholders/ Investors:

Mr Rohan Gillespie Mr James Moses
Managing Director Media and Investor Relations
Red Sky Energy Limited Mandate Corporate
Tel: [phone] Tel: [phone]
Email: [e-mail] Email: [e-mail]

Red Sky Energy is an Australian exploration company focused on coal seam gas. It has extensive acreage in Queensland and New South Wales which could supply into the emerging LNG industry in eastern Australia. The Company has booked reserves in the prospective Clarence Moreton Basin, and has a drilling program underway to earn a 70% interest in four permits. The board of directors and management team have over 100 years of energy industry experience and have been involved in the coal seam gas industry since inception in Australia. Directors of the Company are Gerrit de Nys (Non Executive Chairman), Rohan Gillespie (Managing Director), Guy le Page (Non Executive Director) and Murray Durham (Non Executive Director).

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