On Friday, the Melbourne-based operator said drilling of the Boola Boola-2 well, in PEP 166, was about halfway towards a total depth of 1500 metres.

Lakes said the results of this well, which is targeting tight gas in the Lower Strzelecki Sandstone Formation and oil in the Rintouls Formation, would have “important ramifications” for the entire permit.

“Lakes Oil believes this to be a most important well as it is designed to encounter the thick organic rich shale unit observed in the recently drilled Hazelwood-1 well,” chairman Robert Annells said.

“At Hazelwood, the shale had been subjected to high heat flow during maturation and was therefore over mature to produce hydrocarbons. However by moving closer to the edge of the basin it is hoped that the shale will be better positioned to generate hydrocarbons.”

Lakes Oil is currently earning an additional 25% in the permit by funding the two wells, Hazelwood-1 and Boola Boola-2. Once finished, the interests will be Lakes Oil 75% and AusAm Resources 25%.

To fund the program, the company also announced on Friday it had placed over 323 million new shares at 1.2c each to raise $3.878 million.