Red Sky, which floated on the Australian bourse last week, said it had committed $1 million towards the drilling campaign in order to earn its farm-in interests.

Under the deal, the company has agreed to fund 100% of the costs to drill an exploration well in Great Artesian’s PEL 106 area to earn up to 50% interest in any discovery.

It can also elect whether to drill two more wells within the Red Sky Block in PEL 91, by carrying Great Artesian through the drilling to earn a 30% stake.

If all three wells are drilled, Red Sky will earn a 20% interest in this block.

The commitment comes after Red Sky completed an airborne geochemical survey over a large section of PEL 91 and almost half of PEL 106, using its patented technology that detects minute traces of hydrocarbons naturally seeping from underground accumulations into the atmosphere.

Great Artesian managing director Andy Carroll said the farm-in was “further confirmation” of the prospectivity of its licences.

“Together with the interpretation of the recent seismic surveys, this will enable us to firm up our Cooper Basin drilling program, with these and other wells to be drilled in PELs 106 and 91 later this year,” he said, adding that a drilling rig and other equipment are now being arranged.

“This drilling program is particularly exciting, as it will further explore the flank oil province at the western edge of the Cooper Basin, demonstrated by oil fields at Christies and Sellicks, and discoveries at Growler and Wirraway.”