Lakes Blue Energy - Quarterly Activities Report for June 2024
LAKES BLUE ENERGY NL (LKO) Share Update July 2024 Wednesday 31st
Lakes Blue Energy Announces Key Developments and Financial Updates
Lakes Blue Energy NL has released its quarterly activities report for the period ending 30 June 2024, detailing significant corporate activities, financial updates, and exploration operations.
Instant Summary:
- Expenditure of $231k on operating activities, including $86k on exploration.
- Closing cash balance of $203k.
- Sale agreement for 49% interest in PEP 169 to ADZ Energy Pty Ltd for $6.5m.
- Ongoing negotiations regarding rehabilitation bond requirements with DEECA.
- Active exploration operations in Victoria and Papua New Guinea.
Financial Summary
During the quarter, Lakes Blue Energy expended $231k on operating activities, including $86k on exploration. The company reported a closing cash balance of $203k. Notably, no payments were made to Directors during this period.
Corporate Activities
Lakes Blue Energy has continued to advance funds to Rawson Oil & Gas Limited for activities in South Australia and Papua New Guinea. The company is also progressing work toward securing approvals for drilling the conventional Wombat-5 well onshore in the Gippsland Basin.
On 27 June 2024, Lakes Blue Energy announced an arrangement for the sale of its 49% interest in Petroleum Exploration Permit 169 (PEP 169) to ADZ Energy Pty Ltd for $6.5m, along with an ongoing royalty over ADZ's existing 51% interest in PEP 169. Documentation to implement the sale transaction is currently being negotiated.
Victorian Rehabilitation Bonds
The company has been involved in ongoing negotiations with the Victorian Department of Energy, Environment, and Climate Action (DEECA) regarding rehabilitation bond requirements. Initially estimated at $26.9m, the rehabilitation costs were later reduced to $14.6m following detailed submissions by Petro Tech Pty Ltd, a wholly-owned subsidiary of Lakes Blue Energy.
Despite further expert advice and quotations from service providers, DEECA issued a final determination requiring bonds totaling $7.956m. The company plans to undertake a rehabilitation project to demonstrate the real costs, which it estimates to be significantly lower than DEECA's figures.
Exploration Operations
Lakes Blue Energy is managing a diverse portfolio of active exploration activities. In Victoria, the company is working on securing approval for drilling the Wombat-5 well in the Gippsland Basin, with an estimated gas production potential of around 10 TJ/d. The company also holds interests in several other permits in the Otway and Gippsland Basins.
In Papua New Guinea, Lakes Blue Energy controls highly prospective exploration acreage, including Petroleum Prospecting Licence (PPL) 560, which contains the multi-trillion cubic feet Buna prospect. The company is investigating options for progressing exploration activity at Buna.
Corporate and Funding
The company has 58,637,575 fully paid Ordinary Shares on issue. Trading of the company's shares remains in suspension at the direction of the Australian Stock Exchange (ASX), with ongoing discussions to resolve the matter. Proceeds from the sale of the company's interest in PEP 169 will be utilized to meet ongoing corporate costs and fund the drilling of the Wombat-5 well.
The sale of the 49% interest in PEP 169 for $6.5m will provide significant financial relief and enable the company to fund its ongoing and future exploration activities. The ongoing negotiations with DEECA regarding rehabilitation bonds could impact the company's financial stability, depending on the final outcome.
Investor Reaction:
Analysts are likely to view the sale of the interest in PEP 169 positively, as it provides necessary funding for the company's operations. However, the unresolved rehabilitation bond issue may cause some concern among investors.
Conclusion:
Investors should keep an eye on the finalization of the sale agreement with ADZ Energy and the outcome of the rehabilitation bond negotiations with DEECA. These developments will be crucial in determining the company's financial health and future exploration activities.