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Coal Seam Gas Operations Update Highlights


Coal Seam Gas Operations Update Highlights

Coal Seam Gas drilling program targeting 300PJ potential in South Island of NZ commencing Seismic program to delineate further CSG targets

L&M Petroleum Limited is pleased to announce that the seismic acquisition program and the drilling program in the Company’s exploration program targeting the potential 300PJ CSG resource contained within its permits in the onshore Western Southland Basin of New Zealand will commence shortly.

The first phase of the CSG exploration program consists of the acquisition of approximately 15 kms of 2D seismic within petroleum exploration permit (PEP) 38226 (Waiau) and the drilling of up to four CSG test wells. This is to be followed by the acquisition of a further 30 km of seismic in the Company’s permits to the north and the drilling of up to four additional CSG test wells (contingent on the outcome of the seismic interpretation).

The Company has applied for the necessary land access and resource permits for the first two wells to be drilled, the Meadow Creek-1 well in 38226 (Waiau) and the Wairaki-1 well in the adjacent PEP 38238 (Blackmount) (see attached map) and is currently finalising the contracts for the drilling rig and service suppliers.

Site construction for the first two wells to be drilled will commence once the access permits have been approved and the rig contract has been finalised. It is currently expected that drilling of the first well, Meadow Creek-1, well will be able to commence within the next 3 – 4 weeks. The Wairaki-1 well will be drilled immediately thereafter.

The 15km seismic program will be run in parallel to the drilling operations so that the locations of subsequent CSG wells to be drilled can be confirmed. The necessary drill site access permits will then be obtained and site construction undertaken so as to be able to allow drilling operations to progress continuously onwards from the conclusion of the drilling of the Wairaki-1 well. The seismic acquisition program is schedule to start mid-July.

L&M’s CEO, John Bay, said “Following shareholder enquiries regarding the expected commencement of drilling, we’re confirming that a majority of technical and logistical background work that is required to undertake a campaign of this magnitude has been completed, leading up to the spudding of our first CSG drill hole very soon. Our geoscientists have been integrating the existing seismic data and conducting a detailed technical analysis of the area to ensure that the wells are sited correctly and that the engineers are able to prepare drilling plans to ensure that the wells can be drilled safely and cost effectively.”

The CSG exploration program is designed to test the coal seam gas potential within the Company’s onshore Western Southland Basin permit areas, which initial geological analysis indicates may contain up to 300 PJ of mean potential coal seam gas resources.

About L&M Petroleum Limited L&M Petroleum Limited is incorporated in New Zealand and dual listed on the ASX and NZX on 11 January 2007 after raising AUD$20 million in a fully underwritten Initial Public Offering. The Company is currently carrying out an aggressive exploration programme focused on discovering major oil and gas resources in the South Island of New Zealand. The Company is also embarking on a multi-well drilling campaign to confirm the coal seam gas resources in its onshore permits in the Western Southland Basin.

ENDS

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