L&M Petroleum To Commence Eastern Bush #1 Well

L&M Petroleum To Commence Eastern Bush #1 Well

L&M Petroleum Limited is pleased to announce that, within the next 48 hours, it intends to commence drilling its first well in the Eastern Bush Prospect within Petroleum Exploration Permit (PEP) 38226 in the Waiau Basin, Western Southland district, New Zealand.

The Eastern Bush #1 well is programmed to be drilled to a total depth of 2,520 m to test a seismic geophysical anomaly indicating a fault-controlled anticline containing the Eocene aged Beaumont Sandstone. The top of the Beaumont Sandstone, considered to be analogous to the Maui and Mangahewa petroleum reservoirs of the Taranaki Basin in the North Island of New Zealand, is expected to be encountered at a depth of 1,250 m.

As described in its Prospectus dated 24 November 2006, the Company hopes to test the Beaumont Sandstone in the Eastern Bush #1 well for potential oil resources of 253 million barrels (mmbls) on a best estimate basis of original oil in place (OOIP).

L&M Petroleum has entered into a drilling contract with New Zealand company, Bonus Drilling (NZ) Ltd., to use the Bonus Drilling Rig #2 and crew to drill the two to three deep wells in its 2007 drilling programme beginning with Eastern Bush #1. The Eastern Bush #1 well is expected to take approximately 21 days to drill to the total programmed depth for the well, after which the rig will be moved to drill the second well in the programme on the Company's Dean Prospect, also within the Waiau Basin.

L&M Petroleum is drilling the Eastern Bush #1 well under the terms of the Option and Farmout Agreement dated 17 July 2006 between the Company and Mighty River Power Limited whereby Mighty River Power earns a participating interest in the Eastern Bush Prospect and the right to participate in the second well in the drilling programme by contributing to the costs of the Eastern Bush #1 well.

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