Lakes Oil has stuck gas at its Moreys-1 well in the Otway Basin in Victoria, Australia.
The company said that drilling of Moreys-1 has now been completed, and the rig will soon move to PEP166 in the onshore Gippsland Basin to commence drilling of Holdgate-1 for a targeted depth of 2,500m.
The drill Stem Test 2, conducted over the interval 1985.5m - 1995.5m throughout the Eumeralla Formation, flowed gas to surface before fading out.
Condensate was recovered upon reverse circulation and is currently being sent for analysis.
Lakes Oil said the flow is similar to tight gas intersected in similar aged reservoirs encountered in the Strzelecki Group in the Gippsland Basin.
The company expects that the discovery will open up the possibility of tight gas across a broader zone of the onshore Otway Basin.
Armour Energy has supplied $2.5m to fund the exploration work in order to earn a 51% interest in PEP169.
Lakes Oil will now re- evaluate this permit in a bid to determine its potential for tight gas in the Eumeralla Formation and the Waarre Sandstone.
The company will mainly target Moreys-1 well for the Waarre C sands, which were identified to the southern vicinity of the Moreys Prospect.