Coal Seam Gas Exploration Operations to Begin

Coal Seam Gas Exploration Operations to Begin

Highlights

• Drilling rig contract signed with Washingtons Exploration Ltd to drill coal seam gas wells in South Island of NZ.

• Contact signed with Southern Geophysical Services to acquire 17.2 kms of new 2D seismic data to delineate further CSG targets.

L&M Petroleum Limited (LMP) is pleased to announce that it has entered into a contract with Washingtons Exploration Limited’s to use its Rig #8 to drill the first three coal seam gas (CSG) wells to be drilled in the Company’s 2008 CSG exploration program.

All necessary land access consents for the three drill sites have now been secured and construction of the drill sites is underway. The first well to be drilled will be Goodwin-1, located in the eastern portion of petroleum exploration permit (PEP) 38226 (Waiau) adjacent to the proven Ohai coalfield (see map). The Washingtons Rig #8 will begin mobilising to the Goodwin-1 drill site by the end of this week (weather permitting) and drilling of the Goodwin-1 well is expected to commence within the next seven to ten days. The Goodwin-1 well drilling and coring operation is projected to take a week to reach the base of the coals at ~250m.

The Goodwin-1 well will be followed immediately by Mt Linton-1, also in PEP 38226 (Waiau), and Wairaki-1, located in the adjacent PEP 38238 (Blackmount). All three wells will be air drilled to the top of the Beaumont coals and then cored through the entire coal section. The cores will then undergo analysis to determine the coal’s properties, gas content and gas desorption.

LMP is also pleased to announce that it has entered into a contract with Southern Geophysical Services to acquire 17.2 kms of new 2D seismic data within PEP 38226 (Waiau) (see map). The seismic acquisition program is also expected to start next week (weather permitting) and will be run in parallel with the well drilling operations. The new seismic data is being acquired over the western end of the proven Ohai coalfield area and will be used to confirm the location of subsequent CSG wells to be drilled. Once the seismic data has been processed and interpreted, the necessary drill site access permits will be obtained and site construction undertaken.

The Company’s initial analysis indicates its onshore Western Southland Basin permits may hold up to 300PJ of CSG potential resources. LMP plans to drill up to another five wells in 2008 to help confirm the extent of the coal seam gas potential resources contained within its Southland permits.

ENDS

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$20 million in a fully underwritten Initial Public Offering. The Company is currently carrying out an aggressive conventional exploration programme focused on discovering major oil and gas resources in the South Island of New Zealand. The Company is also embarking on a multi-well drilling campaign to confirm the coal seam gas resources in its onshore permits in the Western Southland Basin. L&M Petroleum is the only exploration company in New Zealand with both conventional (deep) hydrocarbon opportunities and shallow coal seam gas opportunities. The Company has equity interests in four permits in the Western Southland Basin and in two permits in the onshore Westland Basin of New Zealand. The Company is the Operator of all of its joint ventures. The Company is well funded with ca. NZ$ 11 million in cash available to undertake its work programs.

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