Armour Energy Ltd (AJQ) wishes to provide an update in relation to the Holdgate-1 well in PEP166, located onshore in the Gippsland Basin, Victoria.

Lakes Oil NL (LKO), as operator, advises that Holdgate-1 is at a depth of 160 metres. Current operation is drilling ahead.

The objective of this well is to search for oil and gas plays on the massive Baragwanath Anticline in PEP166 (part of a large surface anticline stretching 60km long across PEP166 and PRL 2).

Holdgate-1 has two targets; the primary objective is the Strzelecki Group, in which Lakes Oil encountered 'tight gas' in wells drilled so far in the onshore Gippsland Basin, and the secondary objective is the Rintouls Creek Sandstone/Tyers Conglomerate, which Lakes Oil believes lies beneath the Strzelecki.

The Rintouls Creek Sandstone/Tyers Conglomerate was encountered when Lakes Oil drilled Yallourn North-1A 12 months ago. This well was the first well ever drilled through a condensed section to basement in the Gippsland Basin. Oil shows were encountered in cores cut in this well. This oil bearing section may thicken to the south and may also be present in Holdgate-1. Holdgate-1 is approximately 28km south east of Yallourn North-1A.

At Holdgate-1, Lakes Oil and Armour Energy have the added advantage of drilling a large surface anticline which could provide a potential trap for liquid hydrocarbons.

Armour Energy is funding this well as part of its program to earn a 51% interest in Lakes Oil's PEP166.