The Melbourne-based company said drilling reached a total depth of 998m, after which the well was cored at numerous intervals before being plugged and abandoned.

According to Lakes, the primary target Strzelecki Group was intersected about 285m beneath Tertiary coals, gravels and sands that contained heavily biodegraded oil sands and weathered volcanics.

"The Strzelecki Group consisted of a thick potential reservoir and source sequence consisting mainly of alternating sandstones and carbonaceous siltstones," the company said.

"The potential reservoirs were mainly tight fractured sandstones that contained elevated background gas below 490 metres."

Initial log evaluation by US consultants indicates hydrocarbon saturation below 700m, similar to results Lakes said it had encountered elsewhere in the basin

"These results show the possibility that the Alberton area may be another Strzelecki tight gas region," Lakes said.

"In addition, these results also have the potential to upgrade the Napier High area."

Lakes said it would continue examining all well data to fully evaluate the significance and nature of the black sands and the reservoir potential of the Strzelecki Group encountered.

Elsewhere in the basin, Lakes has finished shooting the Wombat field 3D seismic survey in PRL 2 and the raw data is being processed in Brisbane. Final processing is due for completion in about four to five weeks.

"This survey is the first 3D survey conducted in the onshore Gippsland Basin and we believe the results will significantly improve structural mapping of the Wombat Field and provide better imaging of deeper events in the area," the company said.