Te Anau Permit Surrendered, Blackmount Extended

COMPANY ANNOUNCEMENT

For Immediate Release
Friday, 17 October 2008

LMP Surrenders Te Anau Exploration Permit And Extends Blackmount Exploration Permit

L&M Petroleum has elected to surrender to the government its onshore Western Southland Basin exploration permit, PEP 38230 (Te Anau), in return for being granted an extension to its existing PEP 38238 (Blackmount) permit (see map below).

The extended area includes the Takitimu North coal seam gas fairway and the portion of the former permit area which contains the Company’s Whitestone exploration lead. The Takitimu North fairway is part of the trend of coal seam gas opportunities currently being explored by the Company, which are estimated to contain up to 300 PJ of coal seam gas resource. The Whitestone structure is estimated to contain up to 156 million barrels of potential oil resources.

L&M’s Managing Director, John Bay, stated, “This is a great outcome for the Company. Amalgamating the acreage in this way will allow us to undertake a more rational exploration programme over the area of the permit that we believe has the greatest potential. For example, the Takitimu North coal seam gas trend previously straddled both permits, with each permit requiring separate work programmes for the portion contained within the individual permit area. Extending the Blackmount permit to encapsulate the entire Takitimu North coal seam gas trend has allowed us to consolidate the two individual programmes into a single, more rational, programme to aggressively explore the trend in the most cost effective manner. Including the Whitestone lead within the extension area has provided us with the additional time we believe is needed to acquire seismic confirmation of the closures over our Whitestone lead. Previously we would have either been forced to drill Whitestone this year or to surrender the opportunity. We elected to surrender the northern portion of the Te Anau permit as this was an area in which we had little exploration interest and by surrendering it, the Company is able to reduce its overall acreage holding costs.”

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$20 million in a fully underwritten Initial Public Offering. The Company is currently carrying out an aggressive conventional exploration programme focused on discovering major oil and gas resources in the South Island of New Zealand. The Company is also embarking on a multi-well drilling campaign to confirm the coal seam gas resources in its onshore permits in the Western Southland Basin. L&M Petroleum is the only exploration company in New Zealand pursuing both conventional oil and gas and coal seam gas. The Company has equity interests in four permits in the Western Southland Basin and in two permits in the onshore Westland Basin of New Zealand and is the Operator of all of its joint ventures. The Company is well funded with ca. NZ$ 10 million in cash available to undertake its work programs.

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