Coal seam gas explorer L&M Energy has completed a $10 million capital raising programme, having raised $1.4 million from small shareholders.
In early July, LME announced it had raised $A7 million ($NZ8.5 million) following a placement to institutional and "sophisticated" investors of about 77 million fully paid ordinary shares at NZ11c per share.
The total $10 million will be used to boost coal-seam gas exploration around Southland. It is estimated the various private and public subsidiary companies under the wider L&M group umbrella have spent more than $30 million exploring for oil, gas, lignite and coal-seam gas in the South.
LME's permits to explore for coal-bed methane gas cover 13,000sq km, including Otago, Southland, the West Coast, Taranaki and Waikato.
Its southern Ohai tenement is tagged for most of the $10 million exploration capital, starting with a gas pilot programme at Ohai which could cost about $2 million and encompass up to five test holes and up to four months of gas-flow testing.
There are an estimated 173 petajoules of energy in the southern holdings, following widespread seismic and test drilling in the area in recent years.
LME managing director John Bay said it was planned to connect the Ohai pilot plant, where initial work started in mid-August, to a multilateral well consisting of four horizontal lateral drill holes through one well head.
"Drilling of the multilateral production well is planned to start in late October and first production under way by the end of the year," Mr Bay said in a statement.
Analysts have said should LME successfully pilot its Ohai coal seam gas, it would open up a range of options, including supply of coal-seam gas diesel alternative fuel, and electricity and heat generation for large companies.
