AusAm told Lakes the letter of commitment is for a minimum of $10 million and a maximum of $12.5 million. An initial amount of $5 million is scheduled to be drawn down in February.

Last September, Lakes and AusAm established a joint venture to explore for "tight gas" within permits PEP 156, PEP 157 and PEP 158, onshore Gippsland Basin in south-east Victoria. Under the farm-in agreement, AusAm committed to spend $10 million on exploration within the area covered by Lakes's exploration permits in exchange for a 50% interest.

AusAm exploits known "tight" gas resources by using under-balance drilling and advanced completion and stimulation methods developed in US and Canada.