ERM Power Limited’s (ASX:EPW) subsidiary ERM Gas has partnered with Red Sky Energy Limited (ASX:ROG) to develop on-shore gas projects in the Clarence Moreton Basin in north east of New South Wales.
Under the terms of the agreement, ERM Gas will fund and implement up to nine wells that will cost about $2.7 million.
Red Sky will issue 150 million of its shares to ERM, providing the electricity provider a 9.5 per cent holding of the company.
The transaction is pending Red Sky board and shareholder approval.
In the first half of the 2012 financial year, ERM power generated a net profit of $52.8 million.
