L&M Commences Drilling its Second Southland Well

COMPANY ANNOUNCEMENT
For immediate release
10 May 2007

L&M Petroleum Commences Drilling its Second Well in Southland

L&M Petroleum Limited (LMP) announces that, earlier today it ‘spudded’ its second well in its 2007 exploration campaign, the Sharpridge Creek-2 well in Petroleum Exploration Permit (PEP) 38226 in the Waiau Basin, Western Southland District, New Zealand. The well is located north east of the Eastern Bush-1 well currently being drilled by the Company (refer to location map).

The Sharpridge Creek-2 well is being drilled as an appraisal to the Sharpridge Creek-1 well drilled by the Company in early 2006. That well encountered gas and oil shows over a gross interval of 120 metres in the Beaumont Sandstone, including flaring gas from two test zones and recovering a trace of oil from a third zone. Analysis of the Sharpridge Creek-1 wellbore indicated that the wellbore was located on the flank of the structure.

A 2D seismic programme acquired in February this year confirmed that potential exists higher up on the structure from the Sharpridge Creek-1 well. LMP has entered into a contract with Washington Exploration Limited to use their rig and crew to drill the Sharpridge Creek-2 well.

The Sharpridge Creek-2 well will be drilled to a total depth of 459 metres and is targeting Best Case potential resources of 1.5 million barrels of oil at a location predicted to be 58 metres structurally higher to Sharpridge Creek-1.

LMP’s Managing Director, John Bay, said, “The Beaumont Sandstone is the primary exploration objective in the Waiau Basin and the presence of shallow oil and gas in the in the Sharpridge Creek-1 well is very encouraging for ongoing exploration in the area.”

L&M Petroleum Limited is sole owner and operator of the Sharpridge Creek Prospect and this well.

ENDS

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About L&M Petroleum Limited
L&M Petroleum Limited is incorporated in New Zealand and dual listed on the ASX and NZSX on 11th January 2007 after raising AUD$20 million in a fully underwritten Initial Public Offering. The Company holds four onshore and one offshore petroleum exploration permits in the Western Southland Basin of the South Island of New Zealand, and will carry out an aggressive exploration programme over the next two years focusing on the discovery of major oil and gas resources.

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