At a depth of 423m this morning, the Loy Yang-2 well is designed to test gas and oil indications observed in the original Loy Yang-1 well, which was drilled in 1994 but not tested.
The well, which is inside the perimeter of the Loy Yang A power station, is a follow-up to last November’s Boundary Creek-2 well, 70km away on the eastern side of the Baragwanath Anticline, the company said.
Loy Yang-2 is sited on the Loy Yang Dome at the western end of the anticline. Success at this well would significantly upgrade the potential for further discoveries along this structure, Lakes said.
Lakes will fund 100% of the drilling and post-drilling hydraulic fracturing costs, after electing to drill Loy Yang-2 as a sole-risk well.
As a result, Lakes will hold a 75% interest in the defined Loy Yang Block, with AusAm Resources holding the remaining 25% stake.
Lakes Oil and AusAm Resources will each continue to hold a 50% stake in the rest of the permit.
