L & M Energy to drill in two Taranaki permits

L & M Energy to drill in Taranaki permits over next two years

by Pattrick Smellie

July 26 (BusinessDesk) - L&M Energy Ltd says it plans to drill exploration wells in two Taranaki prospects in 2011 and 2012, as well as pushing ahead on coal seam gas opportunities that underpin a share purchase scheme, which opened today.

In a letter to shareholders describing terms of the offer to retail Australian and New Zealand shareholders of L & M Energy, chairman Geoff Loudon reveals that a 1200 metre shallow exploration well is planned for early 2011 in onshore PEP51151, known as Alton, in which L&M has a 50% share, adjacent to the producing Manutahi permit area.

Last October, the permit boundary was extended to include the previously relinquished Mangamingi Block, which includes the Mangamingi-1 well, which encountered several oil shows. Some 50 km of new 2D seismic to identify Manutahi shallow oil structures within the permit area has since been undertaken.

L&M also holds a 15% interest in the well-defined Kaheru Prospect, south of the Rimu/Kauri producing oil fields. "If a well is drilled this would likely be in 2012," says Loudon.

Meanwhile, the company's most highly visible activity is in pursuing Southland coal seam gas, where a possible gas reserve (3P) of 173 Petajoules has been identified, with work now under way to upgrade to "probable" (2P) reserves, and an extension of the Ohai coal-field investigation to new areas.

Loudon points to "a fast-growing industrial market in Southland", including: a large aluminium smelter; the world’s largest dairy export complex and other rural and resource-based industries, while gas is a potential feedstock for electricity generation and as a diesel substitute and discussions with energy and road transport fuel providers are occurring.

Some 1900 small shareholders are being offered participation in the Share Purchase plan on the same terms and conditions as a recent A$7.1 million institutional share placement. Shareholders can subscribe up to A$12,000 or NZ$15,000 each at A9 cents NZ11 cents per share, with a minimum subscription of $1,000 in either currency.

Documents and application forms will be distributed to shareholders on July 30, with the SPP opening on Aug. 3 and applications closing on Aug. 26.

(BusinessDesk) 18:10:13

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