Lakes Blue Energy clears path for Wombat-5 gas test

Wombat-5 moves towards its next gas test

Lakes Blue Energy NL (ASX:LKO) has cleared the regulatory hurdle for the next and potentially more revealing stage of testing at its Wombat-5 appraisal well in Victoria’s Gippsland Basin. The company says perforation, stimulation and flow-testing approvals are now in place, with site work expected to start in mid-November 2026.

“Schematic cross-section showing the Wombat-5 well path and significant gas shows to be evaluated during the production testing operations.”

The program follows pressure build-up work completed during the September quarter and earlier production testing conducted from January to May. Lakes says gas shows were observed from all three principal gas sand packages during drilling, while gas also reached the flare stack during nitrogen-assisted clean-up operations. Those observations support the presence of gas across the zones, but the filing does not yet establish commercial deliverability.

The next intervention is designed to improve the connection between the reservoir and the wellbore through a propellant-enhanced perforation program, alongside workover, stimulation and flow testing. That is the practical test now facing the project: whether the gas-bearing intervals can produce at useful rates after the well has been remediated and stimulated. Earlier coverage noted that Wombat-5 had identified gas-bearing zones without proving commercial flow, making the forthcoming field program a material operational catalyst. The company’s prior Wombat-5 testing update described the well as requiring further remediation, flow testing and capital.

Capital supports the program but leaves limited headroom

Lakes ended September with $4.164 million in cash, after $1.300 million of net operating cash outflow and $1.178 million spent on exploration and evaluation. The latter category largely covered deposits and preparatory costs for the Wombat-5 remediation and testing program.

On the ASX cash-flow measure, those combined outflows of $2.478 million represented about 1.68 quarters of funding. Lakes says spending in the December quarter should be broadly similar while the remediation program is completed, before falling materially to corporate, staff and tenement-holding costs. Further exploration spending, it says, will be discretionary and undertaken only when funded.

The company raised approximately $6.7 million before costs during the quarter through a $4 million placement and a partially underwritten entitlement offer. About $2 million of entitlement-offer shortfall remains available for placement, while Lakes says it will continue to assess funding options including equity raisings and farm-out arrangements. Directors also said they could accept equity in lieu of some cash remuneration if required. The arithmetic is therefore straightforward but unforgiving: the next Wombat-5 program is funded on the company’s stated basis, while work beyond it may require another financing decision.

Portland and Nangwarry remain secondary portfolio bets

Outside Gippsland, Lakes has narrowed its Portland Energy Project focus to PEP 175, where it aims to mature two prospects for a drilling program targeted at the first half of 2027. That timing remains conditional on regulatory approvals, technical considerations, portfolio priorities and rig availability, so it is a plan rather than a committed drilling date.

“Location of Portland Energy Project, Otway Basin.”

“Location map of Nangwarry CO₂ Field”

Caption and image © Lakes Blue Energy NL. From “Quarterly Activities/Appendix 5B Cash Flow Report”, 30 Oct 2026.

The company also continued evaluating the Nangwarry CO₂ Project in South Australia. An updated feasibility study for a 100-tonne-per-day plant is intended to reduce capital and operating costs and improve commerciality. Lakes says initial results and discussions with the South Australian Government were sufficiently encouraging to justify continued evaluation, but it has not disclosed a final investment decision or project economics in this report.