Southern exploration for oil and gas by listed L&M Petroleum may reach $15 million this year with a drilling programme targeting up to five test holes in Southland and on the West Coast.
L&M's programme, which includes coal seam gas exploration, is financed from almost $NZ10 million cash in hand, but it is still seeking a joint-venture partner to contribute towards two of the five planned test holes, worth a combined $15 million.
Five of L&M's six permits, covering about 6000sq km in total, are in the South Island; three in Southland and two on the West Coast.
Chief executive John Bay, noting L&M is the only company targeting both conventional oil and gas and coal seam gas (csg) in the country, wants to aggressively progress csg exploration this year, but alongside its commitments to oil and gas exploration.
With $9.4 million in the bank, L&M is well set to fund its exploration programme of up to five holes this year.
However, two of those new sites in the Southland Basin (Otahu and Whitestone) require respectively $5 million and $10 million apiece for drilling, Mr Bay said.
The pair of prospects have "mean potential resources" of 300 billion cubic feet of gas and 156 million barrels of oil respectively.
They will require a "farm out" joint venture partner to proceed.
Mr Bay declined to comment further, other than to say L&M was "quietly confident" of finding a partner.
He highlighted that there is not enough csg in the country to warrant construction of an liquid natural gas conversion plant, as operates Queensland at present, and L&M would be tied to supplying the domestic New Zealand gas market.
He rated oil exploration above gas, simply because by volume and even at depressed global oil prices, gas had to be roughly multiplied six times for a similar return.
Mr Bay is buoyant about the National-led Government, compared with the "less than friendly Labour-Green" government, citing National's rescinding of a thermal energy development ban and its commitment to review the Resource Management Act to "hopefully streamline" exploration processes.
"These are all early, energy-encouraging movements by the new Government," he said.
L&M Coal Ltd, another subsidiary under the L&M Group banner, has five exploration permits and applications covering several hundred square kilometres, including three in the South Island at Buller, Kaitangata and Ohai.
The areas contain an estimated 125 million tonnes of coal, based on historical data and recent exploration, with more drilling planned to work-up the estimated resources.
Overall, coal, lignite and csg investigations and exploration may yet gain greater encouragement, if only understanding, than the previous nine years under a Labour (Green Party supported) government, with National making its own commitments to energy and infrastructure in the face of recession.
L&M was last week granted a second five-year term to drill the onshore Waiau field, 60km west of Invercargill, which it shares with Mighty River Power, NZPA reported.
The company was required to surrender 50%, or 563.3sq km, of the original area and submit a new work programme to permit agency Crown Minerals.
L&M was obliged to drill at least two coal seam gas wells this year, with the first scheduled for May, depending on rig availability.
"We are very happy that we have been able to keep what we consider to be the juiciest parts of both the conventional and coal seam gas exploration areas," Mr Bay said.
The company aimed to confirm the 300 petajoules of potential coal seam gas it believed was within its two onshore Southland permits.
