Yesterday morning the well had reached a depth of 1821m, at which point Lakes said it was changing the bit in preparation for drilling ahead to the primary objective Rintouls Creek Sandstone/Tyers Conglomerate.

Lakes said its affiliate Greenearth Energy, which holds the geothermal rights to the permit, has agreed to pay some of these additional drilling costs.

Lakes chairman Robert Annells said he has “long been aware” of geothermal activity in the region through petroleum-related activity in the onshore Gippsland Basin.

“When Lakes Oil drilled the Trifon-2 well in 2004, hot saline water was encountered at 2200m, which flowed to surface at about 90C,” he said.

Lakes is earning an additional 25% in PEP 166 by funding the drilling of two wells, Hazelwood-1 and Boola Boola-2.

Upon completion, Lakes will hold a 75% stake and AusAm Resources 25%.