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Progress on Kaitangata Multi-Well Coal Seam Gas Programme

12th December, 2011

Progress Report on Kaitangata Multi-Well Coal Seam Gas Programme

• Appraisal well, Lockington2 drilling has reached a total depth of 315m after intersecting 8.6m of coal across 4 seams
• A multi well programme of up to 6 production testing and stratigraphic wells are to be drilled during Q4 2011 and Q1 2012 at the Kaitangata coal field 60 kilometres south of Dunedin

L&M Energy is pleased to provide the following update regarding its Kaitangata CSG appraisal programme within PEP 38219, located 60km south of Dunedin.

Lockington2 has reached a total depth of 315m after intersecting approximately 8.6m of cumulative coal across four coal seams (estimated from core samples). Geophysical logs have been run in order to confirm coal thickness with results pending. A total of thirteen cored coal samples have been taken for further analysis, including measurement of gas content and saturation levels. It is expected that these results will be available early in the New Year.

Due to the oncoming Christmas period the drilling rig has been demobilised until recommencement of the programme early Q1 2012.

ENDS

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