While I'm not in a position to forecast the outcome of the trial, as I doubt any here are, I do think there are some points in LKO's favor on this:
In early 2017 the Victorian Government introduced the Resources Legislation (Fracking Ban) Bill to Parliament. The Bill passed through both houses of Parliament and become law on 16 March 2017. The key features of the Resources
Legislation (Fracking Ban) Act 2017 (Fracking Ban Act) in relation to Lakes Oils are:
- the Act permanently bans hydraulic stimulation (fracking);
- the Act prohibits any onshore petroleum exploration operations from being carried out during a moratorium period
to 30 June 2020, although the prohibition does not apply to obligations under existing exploration permits and also (incongruously) does not apply to onshore exploration operations that target an offshore petroleum accumulation;
- the Act attempts to retrospectively absolve the Government from any liability for payment of compensation for damages caused by both future or past refusals to allow exploration activity in accordance with valid exploration permits; and
- provision is made for a six month period (until 16 September 2017) during which exploration permit holders may surrender exploration permit(s) in exchange for payment of an amount determined by the Minister for Resources by Order published in the Government Gazette. No Order was published by the Minister.
While the government can (in my relatively uninformed opinion) pass new law into legislation through due process, they are also required to abide by the laws they have passed. In my opinion it's relatively unlikely LKO will be granted permission to resume exploration unless a bigger player takes an interest in onshore exploration in the region, however even the payment due to LKO for the surrender of its exploration permits being awarded at this market cap may cause a significant uplift in share price. If this occured it may well give LKO the funds they require to both pay out their convertible bonds (which still have bids at 88c on the dollar with no supply in sight) and to progress exploration on some of its other assets (though certainly not in California, and perhaps, now, not in SA either).
Just my 0.3c worth,
EE
(20min delay)
