Dual-listed southern coal bed methane gas explorer L&M Energy is looking to list on the mining-friendly Toronto stock exchange, in preparation to accelerating exploration drilling in Taranaki during the next 18 months.
L&M, in its various forms and subsidiary companies, had spent almost $40 million in recent years exploring a variety of southern energy resources in the lower South Island, including methane gas deposits around coal deposits near Kaitangata and Ohai. It is listed on both the New Zealand and Australian exchanges.
L&M chairman Geoff Loudon said the company had engaged Calgary-based Canadian broker Casimir Capital to assist with the listing process.
"Casimir's team brings with them an in-depth knowledge of both the producing Taranaki oil fields and the east coast basin of New Zealand," Mr Loudon said.
He did not specify how much might be sought in the capital-raising.
In March, L&M said it would persevere with its Southland efforts, despite its $3.4 million exploration programme not having identified commercial gas finds.
Craigs Investment Partners broker Peter McIntyre said in the company's consolidated accounts its cash in hand at December 2010 of $8.7 million had fallen to $2.1 million last December.
"L&M now have a large number of attractive [exploration] permits around Southland and Taranaki," he said.
He thought L&M might look to raise enough funds to cover two to three years' operation, which could be about $10 million.
Mr McIntyre said investors in the Toronto stock exchange had a higher risk profile for mining companies than New Zealand and Australian counterparts, saying major gold producer Oceana Gold in Otago and, to a lesser extent, smaller exploration company Glass Earth Gold had both successfully sought several recapitalisations from Toronto.
Mr McIntyre said while there would be costs associated with listing, capital-raising, financial reporting and annual exchange costs, it was expected potential access to Canadian capital would exceed these.
However, he said L&M must deliver some returns to shareholders soon, noting the company's managing director had said in March that 2012 would be "a defining year" for L&M.
Mr Loudon said the Taranaki region at present produced 55,000 barrels of oil a day from 18 onshore and offshore oil and gas fields, representing about a third of national needs.
"To encourage exploration and development of petroleum resources, the New Zealand Government has made a concerted effort to stimulate the industry with moderate tax and royalty levels," he said.
Mr Loudon said L&M planned to drill at least three wells at two Taranaki sites and to apply for new exploration blocks in the September blocks offer round, hopefully to increase L&M's Taranaki presence.
L&M posted a loss for the year ended December of $4.8 million, with total costs of $7 million.
The $3.4 million Ohai pilot project was not included in the bottom line because it was exploration work in progress.
