Lakes Oil’s (ASX:LKO) Nangwarry gas well in South Australia is not what the company is best known for but that might be about to change.

The company is drilling for gas in the Otway Basin and today Lakes said it thought there could be potential for production before the year was out.

Lakes is drilling in a joint venture with Vintage Energy (ASX:VEN). It picked up this project from its acquisition of Rawson Oil and Gas.

The project’s location in South Australia – in PEL 155 (Pic: Vintage Energy)

Logging confirmed the presence of a minimum 65m gas column. Gas samples were acquired and sent to be analysed.

Lakes said the well will be cased and suspended until testing is complete and equipment is in place.

But it hopes to begin supplying gas to South Australia by this years’ end. The state government gave it a grant of nearly $5m.

According to Lakes’ most recent annual report, the Nangwarry prospect is estimated to contain 28.5 billion cubic feet of gas.

Lakes is Australia’s oldest oil explorer, founded in Victoria in 1946. But it was hit by Victoria’s moratorium on gas exploration and consequently launched a legal fight with the Victorian government.

Australia’s richest woman, Gina Rinehart, is Lakes’ second largest shareholder — she owns nearly 9 per cent according to Bloomberg.

Lakes was suspended last October for failing to lodge its annual report on time. The company last traded at 0.1c.

As for Vintage, shares rose 2.7 per cent this morning and have enjoyed a solid three months gaining nearly 20 per cent.


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In other ASX energy news today:

Alaska-focused 88 Energy (ASX:88E) also provided an operational update. It is awaiting the last major permit to allow it to start drilling the Charlie-1 well in Alaska. The company said it expects to have the permit in hand by the end of the month. Charlie-1, is a step out appraisal of a well drilled by BP back in 1991. It has a prospective resource of about 1.6 million barrels of oil.