Lakes Oil (ASX:LKO) should trade firmer after signing a conditional letter of intent to supply Victorian gas to Simplot Australia.
This letter of intent relates to one of two foundation agreements that LKO is signing with Victorian industry and will be for periods of ten years.
Simplot Australia is a leading Australian food manufacturer, producing such brands as Leggo’s, Edgell, Birds Eye, John West and Chiko.
The company goals are to reduce energy used by 25% per tonne of production over a ten year period and associated carbon reduction per tonne.
Simplot has chosen LKO's gas because of its Victorian locations, commercial benefits and the very low Co2 of less than 1%, compared with other sources of gas in Australia which can contain up to 25% Co2.
The supply is subject to the execution of a formal supply agreement, final commercialisation of the Wombat field together with the lifting of the State’s moratorium on drilling for gas onshore Victoria.
LKO believes that when community consultation has been carried out across the State, it will be realised that the company's developments are in no way linked to issues associated with coal bed methane.
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