LKO - Lakes Blue Energy

[philly]

Interesting to read the Chairman's letter and see lots of gloss and promise but no set dates in light of my posted back in December. Looks like I might have been right all along!

After contacting the LKO office (Feb) a while back and being told that the BPT team would arrive and start soon (ie. early March), I hope I am forgiven if I don't take other offerings of LKO advice at face value.

That said, I have fished around a little on the proposed timings.

For the Otway drilling, the rig is set to go and LKO are expecting an April drill (weather permitting). As it turns out, this will give shareholders a free hit at this well, knowing that the Wombat project is still to come.
According to BPT (I disregard LKO comments on the Wombat drill), they claim Q2. Nonetheless, if we relied upon BPT comments on this one, Christmas would be delayed until the following August!
I have been burrowing around the Wombat hole, got my nose dirty and managed to chat with some straight-shooters. I suspect we are looking slightly later in Q3.
Either way, an interesting (and likely profitable time ahead for traders).

Holding LKO at .004c

Do LKO/BPT/SNE have any real idea when fraccing will commence at Wombat 4? Seems not. Its been in the pipeline since Q1 2011. At the start of 2012 they announced they had booked in the rig and fraccing crew and expected a start in Q1 2012. Well it seems now that it could be Q2 or even Q3. There may be [good] reasons for this delay but why not tell the market what the reasons are? If you want to promote your company then being open and frank about your plans is essential. I find all this very frustrating
Nonetheless with the Otway well supposedly imminent I will continue to hold.

 

[BESBS Player]

Hi Philly,

Agree with your stance. I'll hold and see the Otway drill as a 'free-hit' before the Womabt activity (I expect in mid-late Q3). If the Otway drill is a duster, i'll top up on any dip. At these prices, the SP leverege into Wombat is great.

 

[Jockie Bear]

Thank you very much BESBS Player for the update (which is more than LKO can do!) and for taking the time out to do the research for us; we appreciate it. Hopefully "uncle Bob" doesn't dump more shares on the market before we can make a modicum of profit, he seems to be famous for that.
As always, good hunting (Shares that is!).
Jockie Bear

 

[BESBS Player]

Thanks JB.

Provided that one holds, given the potential leverege at current prices, I expect that LKO should be quite profitable. After all, the SP hit .015c when Wombat was first drilled.

The delay by BPT has been frustrating. Unfortunately, there was no set time pencilled in for the re-fracc, just the $50m spend. That said, my understanding of the contract with BPT says that they have to have spent the $$ by year's end. DYOR on this but that is my take on it. Although delayed each time, the fact statements keep mentioning drilling this year makes me think the above understanding is correct.
The positive here is that there should be no delays (if a commercial discovery occurs) once drilling is done later this year.

Happy to hold and wait in anticipation.

 

[BESBS Player]

Interesting to see LKO starting to build.

As I see it, LKO offers a crack at Moreys and Holdgate, now with a reputable company like Armour at the helm.

Then we have Wombat to be re-tested by BPT some time soon. To fulfil their $50m commitment, one would think that BPT will be keen to act in the next 6 months.

Added to this the following:

* Three projects all coming up over the next few months. Action aplenty!
* All funded for drill with reputable companies in control
* Any success (ie. Wombat) can be quickly commercialised. Importantly, a Melbourne market is just down the road!
* The SP is historically low for such an upcoming campaign. Wombat alone managed to get to .016c last time. At prices now between .006 and .007c, the leverege is obvious as a BESBS play.
* For medium or longer term holders, consider the following:

- SP leverege if Holdgate strikes oil???
- SP leverege if Wombat flows at commercial levels?

Not surprisingly over the last 2 days, I've now topped up my .004c stock with some .006c and a few .007c. With an average entry of .0048, this is a 'no-brain' winner.

DYOR...

hoding now at .0048c ave

 

[BESBS Player]

Finished buying more into LKO from sales of RIA stock.

Holding LKO at 0.0048c ave

 

[BESBS Player]

Interesting times ahead with Morey-1, Holdgate-1 and then the re-fracc in the Wombat hole all likely before end of 2012.

Contacting LKO, the word is that the Armour IPO has been seriously oversubscribed. While Armour have a finger in several pies, the LKO acreage is a significant part for them. Armour, given their option to buy 25% of PRL-2 involves near half of the IPO funds, seem serious about LKO and its future.

As a side yet important point, Armour are led by the very well-known Nick Mather and William Stubbs. These guys started and directed the hugely successful Arrow Energy and Bow Energy, both companies selling out to the bigger boys for big dollars. To have them on board LKO and buying in is a very positive sign.

With Armour oversubscribed and given its interest in LKO, I'd be hoping for a little over-spill from the oversubscription into LKO. If this happens, then LKO will see extra stimulus to its SP.

At .007c, the potential leverege here is great

DYOR...

Holding LKO at .0048c

 

[philly]

LKO announced today that the Morey well to spud on 18 April 2012.

 

[BESBS Player]

Hi Philly,

Good news indeed...the start of an exciting 6 months for LKO.
From today's announecment:

"LAKES OIL AND NEW PARTNER ARMOUR ENERGY
TO DRILL IN OTWAY’S “HYDROCARBON FAIRWAY”
APPROVALS IN PLACE – RIG ON SITE
EXPECTED SPUD DATE 18TH APRIL 2012
"Directors of Lakes Oil N.L. (LKO) and its new partner Armour Energy Ltd advise that they intend to drill Moreys 1 (potential gas well) located in PEP 169, onshore Otway
Basin, Victoria, commencing 18th April 2012...Total depth is programmed to 2000 metres. Estimated depth to primary target
(Waarre ‘C’) is approximately 1740 metres.
The conventionally drilled well is expected to reach target depth in approximately 10 days. A commercial gas discovery in Moreys 1 could result in early cash flow to Lakes Oil and its partner Armour Energy Ltd, subject to suitable gas sales agreements..Known gas fields in the close vicinity, such as McIntee, Fenton Creek and Mylor fields operated by Origin Energy have similar AVO and amplitude anomalies to Moreys prospect."

 

[val1239]

LKO will be above 1c on news of Moreys-1 spud and will push to 2c in the very near term.

 

[Joe Blow]

LKO will be above 1c on news of Moreys-1 spud and will push to 2c in the very near term.

Val, LKO hasn't been at $0.02 in five years. You're going to have to come up with some kind of explanation to justify that price target, otherwise it's just a baseless ramp.

 

[BESBS Player]

LKO announced today that the Morey well to spud on 18 April 2012.

Hi Philly,

My 'grape-vine' mail is that late tomorrow (19th). I'd suggest an announcement later tomorrow or maybe the 20th?
Anyway, we shall know for sure very soon.

Looking forward to the drill bit turning at Morey...

Then on to Holdgate-1. Imagine the market response if a discovery was made that implied that oil might have migrated from the offshore Gippsland Basin into the LKO onshore tenement???!!!

Then on to Wombat re-fracc. We know that gas is present; the issue is can we get it and is it in commercial quantities? Beach are throwing $50m and Armour are in the wings...Imagine a commercial discovery next to existing infrastructure that feeds into the Melbourne market!

Morey seems a bit of a free-hit before the main action.

Happily holding and watching...

 

[philly]

Hi Philly,

My 'grape-vine' mail is that late tomorrow (19th). I'd suggest an announcement later tomorrow or maybe the 20th?
Anyway, we shall know for sure very soon.

Looking forward to the drill bit turning at Morey...

Then on to Holdgate-1. Imagine the market response if a discovery was made that implied that oil might have migrated from the offshore Gippsland Basin into the LKO onshore tenement???!!!

Then on to Wombat re-fracc. We know that gas is present; the issue is can we get it and is it in commercial quantities? Beach are throwing $50m and Armour are in the wings...Imagine a commercial discovery next to existing infrastructure that feeds into the Melbourne market!

Morey seems a bit of a free-hit before the main action.

Happily holding and watching...

I'm with you all the way BESBS Player.
I first brought LKO about 2 years ago and topped up recently when BPT & Armour got involved. I'm no oil or gas expert so when another company ploughs $50m into LKO I take notice. Sure there are no guarantees but yougotta have a go. I like all 3 projects and any success will reward my patience with this one.
Like you happily holding and watching.
Good luck to all holders

 

[mr. jeff]

Haven't looked before but it has my attention. May move for 1c shortly and very nice action of late with interest coming in. Traders will be all over it.

 

[Joules MM1]

7 billion issue.....that's 7 billion shares......7!! .......if you gamble and get spanked it's only cos you felt the urge not from a numeric logic, some other logic.....

otoh, the prospectus for Armour looks ok.....

 

[BESBS Player]

Hi Philly,

My 'grape-vine' mail is that late tomorrow (19th). I'd suggest an announcement later tomorrow or maybe the 20th?
Anyway, we shall know for sure very soon.

Nice to see everything as predicted.

I'll be watching this one for around a week, hoping for an early indication of hydrocarbons/early gas shows. If not, I'll sell out my recent .006c and .007c stock (see post 4.4.12) and lock in profit. Might be tempted to leave the .004c stock as LKO will recover into Holdgate and Wombat. In many ways, Morey is an entree to the main course.
When the Victorian media get a sniff of Holdgate (a positive result, although I believe unlikely, would suggest a migration of oil from off-shore Gippsland Basin) and then Wombat, a gas source near the energy hungry Melbourne market, then we will see real SP action IMHO.

DYOR...
Holding LKO at .0048c ave.

 

[philly]

Interesting to see LKO starting to build.

As I see it, LKO offers a crack at Moreys and Holdgate, now with a reputable company like Armour at the helm.

Then we have Wombat to be re-tested by BPT some time soon. To fulfil their $50m commitment, one would think that BPT will be keen to act in the next 6 months.

Added to this the following:

* Three projects all coming up over the next few months. Action aplenty!
* All funded for drill with reputable companies in control
* Any success (ie. Wombat) can be quickly commercialised. Importantly, a Melbourne market is just down the road!
* The SP is historically low for such an upcoming campaign. Wombat alone managed to get to .016c last time. At prices now between .006 and .007c, the leverege is obvious as a BESBS play.
* For medium or longer term holders, consider the following:

- SP leverege if Holdgate strikes oil???
- SP leverege if Wombat flows at commercial levels?

Not surprisingly over the last 2 days, I've now topped up my .004c stock with some .006c and a few .007c. With an average entry of .0048, this is a 'no-brain' winner.

DYOR...

hoding now at .0048c ave

Nice to see everything as predicted.

I'll be watching this one for around a week, hoping for an early indication of hydrocarbons/early gas shows. If not, I'll sell out my recent .006c and .007c stock (see post 4.4.12) and lock in profit. Might be tempted to leave the .004c stock as LKO will recover into Holdgate and Wombat. In many ways, Morey is an entree to the main course.
When the Victorian media get a sniff of Holdgate (a positive result, although I believe unlikely, would suggest a migration of oil from off-shore Gippsland Basin) and then Wombat, a gas source near the energy hungry Melbourne market, then we will see real SP action IMHO.

DYOR...
Holding LKO at .0048c ave.

Hi BESBS Player,
having read your posts I think I'm getting to understand your strategy. I was hoping that you can assist me. You post that if no early gas shows you will sell the stock you purchased at 0.006 - 0.007 and lock in profits. So here would you sell and lock in a profit when we know that there is more action coming. Or is it part of your strategy to buy, sell and buy back? I find that brokerage and capital gains restrict my trading and I tend to hold stock longer and take profits later. With LKO I will hold until the fraccing works are completed mainly because that was why I purchased in the first place. I guess its an individual approach and what works for the individual.
Good luck to all holders

 

[Chasero]

7 billion issue.....that's 7 billion shares......7!! .......if you gamble and get spanked it's only cos you felt the urge not from a numeric logic, some other logic.....

otoh, the prospectus for Armour looks ok.....

But oil specs rise 99% of the time prior to drilling.

It's a case of buy the rumour. Obviously some will turn out to be dusters. Hence you sell before the announcement.

Not really rocket science. A lot of traders will be exiting (imo) from the 1-1.1c range depending on how risky they are taking it. 9 days to go till results??

Have a look at the 4 year chart to see the selling levels. >1.1c screams a sell.

 

[BESBS Player]

7 billion issue.....that's 7 billion shares......7!! .......if you gamble and get spanked it's only cos you felt the urge not from a numeric logic, some other logic.....

otoh, the prospectus for Armour looks ok.....

Hi Joules,

You make a relevant point that needs to be considered when playing with small speccies. In theory and at a basic level, the more shares on offer, the more can leak as 'sells' and keep the SP run from accelerating.
However, remember the following key points (following on from Chasero's relevant comments):

1. In Lakes Oil's case, many of the shares are in the hands of long term holders (it is the oldest explorere still going on the ASX). These guys buy in SPPs and add to their holdings. Some of the directors and 'old guard' still hold many while Armour hold quite a chunk.
This is seen in the SP rise. Despite 7b shares on offer, the SP has risen from .004c to .009c since January. A rise of 125% in 4 months is still good SP action.

2. When Wombat-4 drilled last time, the SP rose from .004c to .016c. While I am not saying this will happen again (although it could do so and much more if Morey and/or Holdgate are successful), it shows that the shares on offer are not a huge issue.

3. If Wombat or Holdgate came off as winners, I would think that LKO's market capital would be very cheap at current prices.

With this in mind, it is no wonder that LKO has risen.

Cheers,
BESBS

 

[BESBS Player]

Hi BESBS Player,
having read your posts I think I'm getting to understand your strategy. I was hoping that you can assist me. You post that if no early gas shows you will sell the stock you purchased at 0.006 - 0.007 and lock in profits. So here would you sell and lock in a profit when we know that there is more action coming. Or is it part of your strategy to buy, sell and buy back? I find that brokerage and capital gains restrict my trading and I tend to hold stock longer and take profits later. With LKO I will hold until the fraccing works are completed mainly because that was why I purchased in the first place. I guess its an individual approach and what works for the individual.
Good luck to all holders

Hi Philly,

You are right.
Wombat-4 is a big lure and has a history of a SP reaching .016c last time. One way or the other, LKO will have an even better platform to run into Wombat (if Morey and/or Holdgate are successful) or a lesser platform if coming off 2 dusters.
Given I have some stock at .004c, I'll hang on and let these ride. At this stage I'm happy to let these ride as I still feel that LKO can reach .01c at Wombat IF both Morey and Holdgate are duds. This would still give me 150% profit.

In the case of stock purchased at .006 and .007c, 2 duds at Morey and Holdgate might see me only get 50% profit if this occurred. So, if LKO steadied at .009c or maybe .01c this week, then I could lock in the same profit and stand aside.
If Morey is successful, I jump back in quickly and top up my .004c stock. Sure I miss a small rise getting back in but given the positive sentiment, the SP into Holdgate might rise more than expected and I make up better profits here.
If Morey is a duster, I play LKO as a Buy On Bad News (BOBN). This is when you buy in quickly on the emotion of a duster, knowing the SP will rise quickly as the next drill follows. This is especially effective when the next drill is even bigger than the first and is funded. This is the case with LKO.

At this stage, I'll watch and see if the SP gets close to .01c as the weekend nears.

All the best with your investments.

Cheers,
BESBS