Regulatory Delays and ASX Suspension Shadow Lakes Blue Energy’s Drilling Ambitions
Lakes Blue Energy is progressing regulatory approvals and has locked in a drilling rig for its Wombat-5 gas well, while reporting a $1.48 million operating cash outflow and maintaining $3.55 million in cash at quarter-end.
- Operating cash outflow of $1.48 million primarily on exploration and evaluation
- Closing cash balance of $3.55 million
- Wombat-5 drilling rig contract secured for July 2025
- Ongoing regulatory engagement for drilling approval with Victorian DEECA
- Active exploration across Victoria, Papua New Guinea, South Australia, and Queensland
Financial Overview and Operational Spend
Lakes Blue Energy NL reported a net operating cash outflow of $1.48 million for the March 2025 quarter, predominantly driven by $1.05 million spent on exploration and evaluation activities. Despite this expenditure, the company closed the quarter with a healthy cash balance of $3.55 million, providing a buffer to support ongoing operations and upcoming projects.
Payments to directors during the quarter amounted to $138,000, reflecting continued governance and leadership costs amid active project development.
Advancing Wombat-5 Drilling Plans
A key highlight for the quarter is Lakes Blue Energy's progress toward drilling the Wombat-5 well in the Gippsland Basin, Victoria. The company has been in continuous dialogue with the Department of Energy, Environment and Climate Action (DEECA) and is optimistic about securing drilling approval by mid to late May 2025.
In preparation for drilling, Lakes secured the Condor Energy Services Rig#1 after initial negotiations with Savannah Energy Services fell through due to rig availability. A $350,000 deposit has been paid to lock in the rig for the original July 2025 timeframe, underscoring the company's commitment to advancing this conventional gas well targeting the highly permeable Strzelecki Formation.
Resource Potential and Development Strategy
The Wombat-5 well is independently estimated to have a gas production potential of approximately 10 terajoules per day. Lakes holds 100% interest in the Wombat and Trifon-Gangell gas fields, with certified contingent recoverable gas resources of 329 PJ and 390 PJ respectively. The company envisions an integrated development approach, initially focusing on the Wombat field to leverage existing infrastructure and high-quality gas, followed by Trifon-Gangell to sustain steady gas sales over two decades.
Rehabilitation and Regulatory Compliance
Lakes is also advancing rehabilitation efforts, particularly for the Lou Yang-2 well within PEP 166. A draft Operations Plan was submitted to DEECA, with ongoing revisions based on regulator feedback. These efforts aim to establish realistic rehabilitation bond costs that fairly protect both the company and the state’s interests.
Broader Exploration Portfolio and Partnerships
Beyond Victoria, Lakes maintains a diverse exploration portfolio including the Papua New Guinea PPL 560 containing the multi-Tcf Buna prospect. Although TotalEnergies withdrew from a technical cooperation agreement due to budget constraints, Lakes is actively seeking new partners to progress drilling plans.
In South Australia, the company is exploring carbon dioxide production at the Nangwarry project, responding to recent CO2 shortages in eastern Australia. Meanwhile, Queensland’s ATP 1183 project offers multiple oil and gas targets near established infrastructure, enhancing the company’s strategic positioning.
Despite these developments, trading of Lakes Blue Energy shares remains suspended on the ASX, pending reinstatement. The company’s ability to secure regulatory approvals, partnerships, and funding will be critical to unlocking value from its substantial resource base.
Bottom Line?
With drilling rig secured and approvals pending, Lakes Blue Energy stands at a pivotal juncture to translate exploration into production.
Questions in the middle?
- When will the Victorian Minister grant final approval for the Wombat-5 drilling operations?
- What progress will Lakes make in securing partners for the Papua New Guinea Buna prospect?
- How will the company navigate the ASX trading suspension and what is the timeline for reinstatement?
