Funding Secured but Risks Remain as Lakes Blue Energy Eyes ASX Reinstatement
Lakes Blue Energy has raised $6.5 million through a fully underwritten placement to fund the drilling and testing of its Wombat 5 appraisal well in Victoria, positioning itself to address looming gas shortages on Australia’s east coast.
- Placement raises $6.5 million in two tranches
- Funds to fully finance Wombat 5 drilling and working capital through June 2026
- Pro forma cash balance to reach approximately $9.4 million post-placement
- Wombat 5 targets high-quality, low-emission gas in Gippsland Basin
- Placement critical for ASX reinstatement and near-term project advancement
Strategic Capital Raise to Advance Wombat 5
Lakes Blue Energy NL (ASX, LKO) has announced a fully underwritten placement raising nearly $6.5 million to fund the drilling and testing of its Wombat 5 appraisal well, located within Petroleum Retention Lease 2 (PRL 2) in the Gippsland Basin, Victoria. The capital raising, split into two tranches, will also provide sufficient working capital to sustain operations through to June 2026.
The first tranche, raising approximately $6 million, will be issued under the company's existing ASX placement capacity, while the second tranche of $0.5 million is subject to shareholder approval at an upcoming general meeting. Shares will be issued at $0.75 each, representing a 25% discount to the last traded price before the company’s trading suspension in October 2023.
Positioned to Address East Coast Gas Supply Shortfalls
With forecasts indicating significant gas supply shortfalls on Australia’s east coast as early as 2026, Lakes Blue Energy’s Wombat Gas Field offers a timely and cost-effective solution. The field’s onshore location, proximity to existing pipeline infrastructure, and high-quality, low-emission gas position it as a critical domestic supply source amid declining offshore production and rising LNG import reliance.
The Wombat 5 well targets the upper Strzelecki Formation, with an independently verified initial gas flow potential of around 10 terajoules per day. The company is already progressing regulatory approvals, with drilling scheduled for the third quarter of 2025, pending ministerial consent and the posting of a rehabilitation bond.
Financial Strength and Future Prospects
Post-placement, Lakes Blue Energy expects to hold a pro forma cash balance of approximately $9.4 million, providing a solid financial foundation to complete the Wombat 5 drilling and testing program. The capital raise is also a key step towards reinstatement of the company’s shares to official ASX quotation, suspended since October 2023.
Beyond Wombat, Lakes is advancing other projects including the Nangwarry CO2 project in South Australia and exploration in Queensland’s ATP 1183. The company’s portfolio reflects a strategic focus on domestic gas supply and emerging energy markets, with an eye on near-term cash flow generation and long-term growth.
Risks and Market Context
While the placement and project plans mark a positive development, investors should remain mindful of inherent risks. These include the success of drilling operations, regulatory approvals, market volatility in gas prices, and the outcome of shareholder votes on the second tranche of the placement. Additionally, the timing of ASX reinstatement remains contingent on fulfilling regulatory conditions.
Nevertheless, Lakes Blue Energy’s strategic positioning near existing infrastructure and its focus on supplying high-quality gas domestically could prove advantageous as Australia navigates a tightening energy market and increasing demand for reliable gas supply to support renewable energy integration.
Bottom Line?
Lakes Blue Energy’s $6.5 million placement sets the stage for critical drilling at Wombat 5, with the potential to ease Victoria’s gas crunch and restore investor confidence through ASX reinstatement.
Questions in the middle?
- Will the Wombat 5 drilling confirm the projected 10 terajoules per day gas flow?
- How will shareholder approval impact the completion and timing of the second tranche of the placement?
- What is the timeline and likelihood for ASX reinstatement following the placement and regulatory approvals?
