Disappointing year for L&M Energy
Last year was a disappointing year of prospecting for L&M Energy, its chairman told shareholders at the NZX-listed company's annual general meeting in Wellington.
The company made a loss of $4.78 million in the year to December 31, after a loss of $12.77m in 2010.
In Friday's address, chairman Geoff Loudon said the energy exploration company had done a lot of work around its Taranaki permits, but it was yet to bear fruit.
A well drilled in its Alton permit did not strike any hydrocarbons, but the full cost of the project was borne by its joint-venture partner, Canadian-listed New Zealand Energy Corporation.
A promising 3D seismic survey of the area tracing nearby deposits and their potential to extend into the Alton permit could lead to drillable prospects by early next year, Loudon said.
Meanwhile, the NZ Energy Corporation and British-listed explorer Kea Petroleum have struck oil and natural gas in sites close to L&M's sites.
The company's second Taranaki permit, Kahili, would be drilled before the end of the year, Loudon said.
The company's coal-seam gas programme in Ohai, Southland, had followed the same trend of underachievement, he said.
"The results to date have been disappointing, particularly when we know the permit contains substantial amounts of gas and there is a market close by. Our intention is to drill further wells in the Ohai permit to test the permeability of the coal and determine if we can achieve a commercial gas flow from the coals."
The company was assessing the potential for extracting shale gas from its Waiau, Southland permit, and was looking at underground coal gasification near Huntly, where state-owned Solid Energy has a pilot plant for the method.
L&M Energy managing director Kent Anson said the last 12 months had been frustrating, but the company's efforts were being focused on Taranaki.
The company is free of debt, however Loudon has bought $5 million of convertible notes. The notes can be either converted into shares or repaid in cash at the company's choosing.
- © Fairfax NZ News
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