Lakes Oil (ASX: LKO) has received a show of confidence with a subsidiary of Gina Rinehart’s Hancock Prospecting taking $4.25 million of a $6.3 million convertible notes issue.
This will give Hancock a 18.6% interest in the onshore Victoria focused oil and gas explorer if the notes are converted.
Hancock has nominated noted climate change sceptic and Rinehart ally Professor Ian Plimer as a director of Lakes and will appoint a further nominee at a later stage.
Lakes existing partner Armour Energy (ASX: AJQ) has also invested $1.75 million to give it a matching 18.6% stake.
The company owns a package of onshore Otway and Gippsland Basin tight gas assets.
While these have considerable potential for gas production, exploration and development has been hampered by a moratorium on fracture stimulation placed by the Victorian state government.
The Baillieu government has called for submissions on the current ban.
Regardless, the $6.3 million in funding from the notes issue will allow Lakes to proceed with its oil and gas activities.
This includes the Otway-1 well that its plans to drill in the current quarter that will test two “bright spots”or amplitude anomalies visible in the seismic data that could possibly be oil or gas.
Otway-1 is close to the Iona gas field in the Otway Basin.
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