Lakes Oil NL (ASX:LKO)
Lakes Oil is the oldest oil company in Australia and was formed in 1946 in Lakes Entrance, Victoria. Lakes has been exploring across Victoria for “tight” gas and shale oil and gas. It has spent over $80m on exploration activities within Victoria.
Recently, one of the Directors, Barney I Berold acquired 614,593 Fully Paid Ordinary Shares at a consideration of $0.003 (0.3 cent) per share. Further, the unsecured converting notes (ASX Code: LKOGB) of Lakes Oil NL (the ‘Company’) were suspended from official quotation on Friday, 25 May 2018 and were converted with effect from 31 May 2018 and the Company completed the issue of fully paid ordinary shares following the automatic conversion on maturity of the notes.
Estimated cash outflow for June Quarter (Source: Company Reports)
Company’s legal proceedings on refusal of grant approvals for exploration and performance by Lakes Oil against the Victorian Government were heard by Justice Macaulay in the Victorian Supreme Court and Justice Macaulay has reserved his decision and the Company amended its statement of claim to take into account the Fracking Ban Act which, of course, was not in place when the legal proceedings were initiated and then when the Company entered into an agreement with Victorian Government, the Order got ratified on 13 July 2017. The Victorian Government withdrew its application to have the Company’s legal proceeding summarily dismissed and agreed to file its Defence. The proceedings against the Victorian Government were slated for March 2018, wherein the Company contented that the variations made by the Minister’s delegate to the Company’s authorities in December 2017 were illegal; and that the Victorian Petroleum Act, (as amended in 2017), provides that exploration commitments under existing petroleum tenements are excluded from the Government’s exploration suspension decision. As at April 2018, the Victorian Government stands alone with its ban on onshore petroleum exploration activity.
ROE for June 2017 was (27.1 per cent) and (8.9 per cent) in December 2017. The stock price was rising since one year and was up by 100 per cent as on 17 July 2018 but started falling in the last three months. The stock was trading at $0.002 as on 18 July 2018, and can be avoided given the risks involved while LKO’s crude oil profile might be decent and comparable to big players, but this is subject to regulatory conditions and exploration success.
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