Legal Disputes Shadow Lakes Blue Energy’s Wombat-5 Drilling Success and ASX Reinstatement

ASX Reinstatement and Capital Strengthening

Lakes Blue Energy NL has emerged from a transformative quarter, highlighted by its reinstatement to official quotation on the Australian Securities Exchange (ASX) on 4 July 2025. This milestone followed the completion of critical compliance and governance initiatives, restoring investor confidence and market access. Complementing this, the company successfully raised $5.8 million through a two-tranche placement, attracting both institutional and strategic investors, including participation from a director-associated entity. This capital injection bolsters Lakes’ cash reserves to $9.57 million, providing a solid financial foundation for upcoming operational activities.

Wombat-5 Well Completion and Gas Potential

The quarter saw the completion of the Wombat-5 appraisal well at the wholly-owned Wombat Gas Field in Victoria’s Gippsland Basin. Drilled to a total depth of 3,052 metres, the well intersected 1.5 kilometres of horizontal production hole through the gas-saturated Strzelecki Formation. Notably, gas concentrations peaked at 67.5% methane and associated hydrocarbons, confirming the presence of multiple high-quality sandstone reservoirs. The installation of a 4½-inch swellable packer completion with sliding sleeves prepares the well for production testing, scheduled to commence in mid-November 2025. This testing is critical to validating gas deliverability and supporting the reclassification of contingent resources to reserves, a key step toward commercialisation.

Strategic Positioning Amid East Coast Gas Tightening

Lakes is positioning itself as a near-term domestic gas supplier amid tightening supply conditions in Victoria and the broader east coast market. The Wombat and adjacent Trifon-Gangell fields hold a combined contingent resource estimated at 719 billion cubic feet (BCF), with potential to supply approximately 20 petajoules per annum over two decades. This scale could translate into annual revenues exceeding $200 million, underscoring the project’s commercial significance. The proximity to existing infrastructure, including the Longford gas hub and pipeline network, offers a cost-effective route to market, enhancing the project’s attractiveness to prospective gas customers.

Diversification Through Nangwarry CO₂ Project Partnership

Beyond conventional gas, Lakes has advanced its footprint in the industrial gas and carbon management sectors through a partnership with Maison Group Pty Ltd on the Nangwarry CO₂ Project in South Australia’s Otway Basin. Maison will fund and manage technical and market studies to explore commercial extraction and sale of high-purity CO₂, targeting industrial, food-grade, and beverage markets. This collaboration allows Lakes to maintain a 50% ownership stake while leveraging Maison’s downstream expertise, aligning with Australia’s energy transition goals and diversifying Lakes’ portfolio toward low-carbon opportunities.

Operational Challenges and Legal Disputes

The drilling campaign for Wombat-5 experienced delays and incidents, leading to formal legal disputes with two unrelated suppliers over costs related to lost equipment and services. The total disputed amount is under $3.5 million. While these disputes introduce some uncertainty, they have not impeded the company’s immediate operational plans, including the upcoming production testing phase. Investors will be watching closely for resolutions that could impact financials and project timelines.

Broader Portfolio and Future Outlook

Lakes continues to progress other projects, including the Portland Energy Project in Victoria’s Otway Basin, with planned drilling in 2026, and exploration interests in Queensland’s Surat Basin and Papua New Guinea’s Buna Prospect. The company also holds royalty interests in South Australian and Otway Basin permits, providing non-dilutive exposure to future discoveries. These diversified assets complement the core Wombat development and position Lakes to capitalize on multiple energy market segments.