THEY build some little companies tough and determined and Lakes...

THEY build some little companies tough and determined and Lakes Oil is certainly one of those.

It has been a long haul for the Gippsland onshore explorer, which has been drilling away at "tight" gas plays for years.

It has succeeded in identifying plenty of gas in its Wombat field between Seaspray and ExxonMobil's Longford oil and gas treatment plant.

Now comes the hard part of proving that commercial quantities can be liberated from Wombat by artificially prodding the field into production.

In an effort to boost short term cash flow against medium and longer term development, chairman Rob Annells yesterday announced a proposed merger with unlisted offshore gas producer Cape Energy.

Lakes Oil is also a beneficiary of the coal seam gas plays in Queensland, as a 10.4 per cent shareholder in Roma Petroleum, itself a juicy takeover target.

Lakes Oil shares sat steady at 0.7.