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L&M Energy Quarterly Activities Report

(PR.co.nz) The Company is pleased to report to shareholders its activities for the fourth quarter of 2009.

The activities of the Company over fourth quarter of 2009 were focussed on negotiating the acquisition of the privately held company, L&M Coal Seam Gas Limited (‘LMCSG’), the holder of the largest number of coal seam gas permits in New Zealand, one of which, petroleum exploration permit (‘PEP’) 38220 (Ohai), contains 173 petajoules (‘PJ’) of independently certified 3P reserves, and which adjoins the Company’s PEP 38226 (Waiau) coal seam gas exploration area. In addition, the Company has increased its equity in PEP 38226 (Waiau) to 90% and, in conjunction with joint venture partners, Roc Oil, Mosaic Oil and Mighty River Power, applied for a new exploration permit over an area of the offshore Taranaki Basin.

The Company’s portfolio of working interests at the end of the quarter consisted of six permits located in four basins within New Zealand:

– Two permits in the onshore Western Southland Basin on the South Island, where the Company is exploring for both conventional hydrocarbon and coal seam gas resources, consisting of:
– PEP 38226 (Waiau); 90% equity in the conventional petroleum prospects (subject to Ministerial consent) and 100% equity in the coal seam gas program (subject to the Sole Risk back-in provisions under the Waiau JOA);
– PEP 38238 (Blackmount); 100% equity
– 100% equity in one conventional petroleum permit, PEP 38237 (Waitutu), in the Solander Basin offshore of the South Island;
– Two conventional petroleum permits in the onshore Westland Basin on the South Island, consisting of:
– 100% equity in PEP 38521 (West Coast);
– 100% equity in PEP 50558 (Hohonu); and
– 50% equity in PEP 51151 (Alton) located in the commercially proven Taranaki Basin on the North Island.

The Company is the Operator of all joint ventures in which it is participating.

SUMMARY OF CORPORATE ACTIVITIES

In the quarter:
– the Company concluded a conditional Sale and Purchase Agreement with L&M Coal Seam Gas Limited (“LMCSG”) (a related party by virtue of common directors) in respect of merging the assets of both companies. The completion of the transaction is conditional on the Company obtaining all required regulatory approvals and shareholder approval to the transaction to be sought at an EGM notified to be held late February 2010;
– to recognise that the Company’s activities include both conventional petroleum and coal seam gas exploration, the Company changed its name to L&M Energy Limited. The new brand became effective on 24 December 2009.
– to reflect the change in name, on 18 January 2010 the Company’s listing on both the ASX and NZX was changed to L&M Energy Limited and the stock code changed to LME;
– PEP 38226 (Waiau): The Company concluded a farmin arrangement with Mighty River Power (subject to Ministerial consent) whereby the Company’s equity in PEP 38226 (Waiau) will increase to 90% in exchange for funding MRP’s share of the costs to drill a well to test the Otahu conventional gas prospect, should the Otahu Prospect be drilled (for which there is no obligation); and
– PEP 52181 (Kaheru): The Company, in conjunction with joint venture partners, Roc Oil (New Zealand) Limited (50% and Operator), Mighty River Power Gas Investments Limited (20%) and Mosaic Oil NL (15%), submitted an application to the Minister of Energy for a new exploration permit over an area of the offshore Taranaki Basin adjacent to the onshore Rimu/Kauri producing fields and the Company’s PEP 51151 (Alton) permit. Subject to the application being successful, the Company will hold 15% equity in the permit.

SUMMARY OF OPERATIONS ACTIVITIES

In the quarter, the following activities were undertaken by the Company within its permits:
– PEP 38226 (Waiau): the Company suspended its coal seam gas exploration drilling activity within the permit pending completion of the LMCSG merger. Once the merger is completed the coal seam gas exploitation programs of both companies within the combined Waiau-Ohai coal seam trend will be rationalised into an integrated exploration/development program. CSG drilling activity is expected to re-commence in Q1 2010 once the appropriate rationalised work program has been determined.
– PEP 38226 (Blackmount): At the end of the quarter, planning is underway for the acquisition of 20 km of new 2D seismic data to confirm the structural closure of the conventional petroleum Whitestone Lead. The seismic acquisition is scheduled to be undertaken in late Q1 2010.
– PEP 38521 (West Coast) and PEP 50558 (Hohonu): Source rock mapping and structural analysis was undertaken in advance of the company acquiring ca. 35km of new 2D seismic to identify potential Niagara oil sands structures in the northern portion of the permit. The seismic acquisition is scheduled to be undertaken in Q3 2010. As the Company now holds 100% of the equity in these adjoining permits, it intends to submit an application in Q1 2010 to amalgamate the two permit areas to enable a rationalised exploration program be undertaken within the area.
– PEP 51151 (Alton): On 6 October 2009, Crown Minerals approved the Company’s application to extend the Permit boundary to include the previously relinquished Mangamingi Block, which includes Mangamingi-1, a well that had encountered several oil shows. At the end of the quarter, planning was completed for the acquisition of ca. 50 km of new 2D seismic to identify Manutahi shallow oil structures within the permit area. The seismic acquisition program is underway at report time.

FUTURE OUTLOOK

In the next quarter, the Company intends to:
– seek regulatory and shareholder approval to complete the merger with L&M Coal Seam Gas Limited;
– integrate coal seam gas work programs and budgets for the combined Waiau-Ohai permit areas and recommence CSG exploration and development drilling;
– progress the initial geological and geophysical evaluation of its two onshore Westland Basin permits, PEP 38521 (West Coast) and PEP 50558 (Hohonu), in preparation for undertaking a 2D seismic acquisition programme over the mapped Pounamu and Hohonu oil leads in late 2010;
– conclude the assessment of geological case for undertaking a 20km 2D seismic acquisition programme of the Whitestone lead within PEP 38238 (Blackmount); and
– acquire 50km of new 2D seismic acquisition programme over PEP 51151 (Alton).

CONCLUSION

At the end of the year, the Company remains the only New Zealand explorer pursuing both conventional petroleum and coal seam gas opportunities. Post the merger with LMCSG, the Company will seek early commercialisation of the 173 PJ of certified 3P coal seam gas reserves being acquired and continue to aggressively pursue both conventional petroleum and coal seam gas opportunities within its diversified exploration portfolio. The Company has ca. NZ$6.4 million dollars of cash available at the end of the quarter to undertake its work programs.
Management will continue to seek opportunities to diversify its portfolio of both conventional and coal seam gas exploration opportunities in order to minimise its exploration risk, access early cash flow generation opportunities and create maximum returns on their investment for our shareholders.

We appreciate the support we have received from our shareholders and look forward to their continued investment in the Company.
ENDS

John W Bay
Managing Director and CEO

Contact for further information:
L&M Energy Limited, LME
http://www.lmpetroleum.com/
+64 4 473 0415

Media Release from NZX.com

About L&M Energy Limited
L&M Energy Limited is a New Zealand based company dual listed on the ASX and NZX stock exchanges. The Company is focused on discovering and developing major oil and gas resources. L&M Energy is the only company in New Zealand currently carrying out exploration programmes targeting both conventional oil and gas and coal seam gas opportunities. The Company has equity interests in over 5,200 km2 of exploration acreage contained within six exploration permits, two permits in the onshore Western Southland Basin, one permit in the offshore Solander Basin, two permits in the onshore Westland Basin on the South Island of New Zealand and one permit in the onshore portion of the commercially proven Taranaki Basin on the North Island of New Zealand and is the Operator of all of its joint ventures. The Company has sufficient funds to undertake

 



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