Dual-listed coal-bed methane gas explorer L&M Energy's estimated gas reserves in Ohai, Southland, have been upgraded by almost 60%, from 173 petajoules of energy to 274 petajoules, in an independent report.
L&M Energy managing director for coal seam gas Kent Anson said the increase applied only to L&M's Ohai permit area and did not include potential gas resources from the adjoining permit area around Waiau.
"It is anticipated that, with further exploration, work within the adjoining Waiau acreage will contribute significantly to future reserves upgrades," he said in a statement yesterday.
The gas upgrade followed a review and certification of the reserves, done by independent consultants MHA Petroleum Consultants LLC, in Denver in the United States, following results from the recent completion of the well at Ohai.
In mid-September, L&M booked a $9.7 million loss for the six months to June, but, following capital-raising of $10 million, will underpin continued southern exploration. Costs of $11.8 million during the period included a non-cash stock option of $7.1 million, to acquire sister company L&M Coal Seam Gas Ltd, $2.6 million in exploration, and staff and overheads of $1.2 million, managing director John Bay said.
It has been estimated L&M and former subsidiaries have spent about $30 million in recent years on coal seam gas exploration.
Most of the $10 million raised is to be used for southern exploration, including about $2 million for its pilot production project at Ohai which began in August.
Mr Anson said the pilot project at Ohai was advancing, with the drilling phase of the project scheduled to commence this quarter, with a view to certifying the company's first tranche of reserves early next year.
"The [Ohai] reserve increase is another significant step forward for the company in developing the South Island's first commercial gas field. We expect further reserve upgrades when the rest of our acreage is taken into account, giving us a tremendous opportunity to supply into what is a very buoyant energy market."
