THE Gina Rinehart-backed gas exploration company Lakes Oil is one step closer to the region with a potential acquisition of South East newcomer Rawson Oil and Gas.
The publicly listed company, part-owned by the mining billionaire, has made a conditional offer to Rawson valued at $3.75m.
The respective ownership composition post-merger would be 94.4pc Lakes Oil shareholders and 5.6pc Rawson shareholders.
The merger would be a win for the Victorian-based Lakes Oil, which has been unable to drill in its home state due to legislated bans on both conventional and unconventional gas exploration.
Lakes Oil’s western Victorian exploration wells target the same formations as those to be drilled in the near-term by Rawson at Nangwarry.
However, Lakes Oil has been locked in a legal battle with the Victorian Government for two years after the state imposed a moratorium on all onshore gas exploration.
In addition to suspending all conventional extraction until 2020, the government permanently banned unconventional exploration – including fracking – in Victoria.
The oil and gas company had seven onshore and two offshore permits in the state, including in the Otway Basin.
Rawson holds two onshore licences targeting conventional gas prospects in the Otway Basin with multiple gas sale options available in a discovery case.
In a joint announcement, Lakes Oil chair Chris Tonkin and Rawson chair Allister Richardson said the integration would see greater cooperation across the Otway Basin, with Rawson’s Nangwarry-1 well “being a valuable precursor” to the longer-term development of Lake Oil’s Portland Energy Project.
The statement said the Portland project was based on an area to the north of Port Fairy, independently estimated at 8.3 TcF of gas recoverable from the Eumeralla Formation.
Deeper formations are estimated to hold 3.2 TcF.
Agricultural advocate Anne Daw said the acquisition was “particularly daunting” given mining mogul Rinehart’s stake in Lakes Oil.
“I believe Rinehart, along with Lakes Oil NL, may try to exacerbate the situation of more wells going down in the South East of South Australia, albeit under conventional gas as a starter,” she said.
“How much pressure they will put on the South Australian Liberal Government for fracking as a follow-up, once conventional gas has dwindled, remains to be seen.
“Once again, I reiterate the message of supporting a fracking-only bill in the South East is a complete waste of time when we can see what may be on the horizon in the first instance under conventional gas.”
Limestone Coast Protection Alliance member Sophie Henke said while a permanent legislated ban on all gas exploration was the group’s preferred measure, all that was on offer from the State Government was a 10-year ban.
Ms Henke said residents of the region should be very concerned about the potential merger and urged individuals not to be complacent about gas drilling in the South East.
“Lakes Oil has experience with design and operation of exploration drilling activities of this nature and will utilise that experience in management of the Nangwarry-1 well,” she said.
“Further, a successful outcome from the Nangwarry-1 well will reinforce the potential of Lakes Oil’s Victorian acreage, where exploration activity is presently stalled as a consequence of unprecedented exploration bans imposed by the Victorian Government.
“No doubt the petroleum industry would like nothing more than for the people of the South East to cease resisting this industry.
“It is extremely important the people of the South East to voice their objection to expansion of the gas industry.”
