Coal-seam gas has been identified this week in the first of a seven-hole test programme in Southland by listed explorer L&M Petroleum.
Since the announcement, shares in L&M have risen from 16c, yesterday closing at 21c, but on relatively low volumes.
L&M's drilling programme is targeting an estimated 300 petajoules of the coal-seam gas resource within onshore western Southland basin permits, including the Beaumont coals in each of the Takitimu North and Longwoods areas, chief executive John Bay said in a statement.
The Bogle-1 test well, near Waiau and next to the Ohai coalfield, reached its programmed depth of 561m with about 5m of coal intersected, "encouraging results" indicating the presence of coal-seam gas, Mr Bay said. The rig would now be moved to its second test site.
Various "commercialisation options" were being explored for any coal seam gas discovered and discussions were "ongoing with potential end-users for the gas", he said.
L&M listed in New Zealand in January 2007 after raising $A20 million in a fully underwritten initial public offering.
Earlier this year, L&M reported having $9.4 million cash in hand.
