Southern oil exploration company L&M Petroleum has been granted a 650sq km exploration permit in the onshore Westland basin, near its existing West Coast exploration permit near Hokitika.
L&M managing director John Bay said yesterday when contacted the existing historical technical data would first be analysed, followed up by seismic testing in the region which would determine the promising drilling targets.
Mr Bay said it could be late 2009 or 2010 before a decision was made on any test drilling programme in the new permitted area.
L&M was able to fund its share of the work programme out of its current cash reserves, he said.
In mid-October last year, L&M's fourth test drilling well in the Waiau basin in Southland was abandoned as commercially unviable.
The well, drilled to almost 450m, was completed after about a week but was plugged and abandoned. Interpretation of the logs showed that the oil and gas shows recorded in the well were not commercially sufficient to justify development, Mr Bay said at the time.
L&M, which raised $23.2 million in a share float in January last year, intends to drill nine prospects in its southern permit area during the next two years, having spent more than $7 million to date on both onshore and offshore exploration.
Mr Bay said yesterday the new area not only extended L&M's exploration interests in the Omotumotu Sandstone biogenic gas fairway, but also gave the company a substantial holding in the proven oil-prone Niagara Sandstone fairway.
The new permit-holders are L&M Petroleum (operator) 40%, Twinza Oil Ltd 40% and 5% each for McKenzie Petroleum Ltd, EF Durkee and Assoc, GRDC Inc and Labrador Energy Inc.
