Lakes Blue Energy (ASX: LKO) has announced encouraging initial natural gas shows at its Wombat-5 well, side-track-2 (ST-2), in the Gippsland Basin, Victoria. Lakes Blue Energy is an Australian energy company focused on the exploration and development of natural gas projects. The drilling update, released on September 5, 2025, indicates the Strzelecki Formation was intersected at a measured depth of 1,410 metres, slightly higher than initially projected. The well is currently drilling ahead at 1,470 metres.
According to the announcement, the drilling rate has significantly improved upon entering the Strzelecki Formation. Overnight, natural gas shows, including methane, ethane, and propane, were identified with progressively increasing quantities, reaching up to 12 units (2,400 parts per million) in the drilling mud. This is a marked increase from the background level of less than 1 unit observed in the overlying Latrobe Group. The company plans to continue drilling to approximately 1,540 metres to facilitate a 1.5 km lateral hole through the target gas reservoir.
The company anticipates that the intensity of gas shows will increase as drilling progresses to the target true vertical depth of 1,392 metres, aligning with observations from previous wells such as Wombat-2 and Wombat-3. These earlier wells demonstrated flow rates of up to 3 million cubic feet per day from a 50-metre vertical intersection at Wombat-3. Lakes Blue Energy Chairman Roland Sleeman stated the company is “highly encouraged by the gas shows” and is “increasingly confident” that the gas production prognosis for the Wombat-5 well will be realised.
The horizontal program is designed to drill past the most significant gas intervals observed in the Wombat-2 and Wombat-3 wells, allowing access to a 1,500-metre horizontal production zone within the gas reservoir. The announcement was authorised by the Board of Lakes Blue Energy.
