L&M Energy raises $8.5m for developing Southland CSG supplies

Sources: L&M Energy and Lindsay Clark

L&M Energy said the funds will also be used for investigating the potential of a micro- LNG facility in the area to fast track development of Southland CSG. Some of the money would also be used for ongoing conventional work programme obligations and working capital.

The CSG pilot testing program is due to start August or September this year with a target of certifying the company’s first 2P reserves around Ohai by early 2011.

The placement of approximately 77 million shares at A$0.09 each was with institutional and other investors and managed by Philip Capital in Australia and McDouall Stuart in New Zealand. Directors said they are considering a share purchase plan on similar terms to existing shareholders.

L&M Energy earlier said it had signed an agreement with Invercargill-based HW Richardson Group to investigate the feasibility of developing small scale liquefied natural gas (LNG) projects using LME’s 173PJ (3P) coal seam gas asset at Ohai.

Invercargill-based HW Richardson Group is one of New Zealand’s largest privately owned transport companies with over 1,000 employees and over 740 trucks.

HWRG is active in a number of industries, including: concrete; construction; drilling; contracting; transport and fuel distribution and through its subsidiary, Allied Petroleum, services over 60 service stations and fuel stops throughout New Zealand.

Mr Scott O’Donnell, managing director of HWRG said, “The most immediate opportunity before us is the potential to develop L&M Energy’s Ohai coal seam gas into LNG for use as an environmentally friendly transport fuel.”

LNG powered vehicles are becoming common in other parts of the world, including Australia, where LNG is recognised to significantly reduce greenhouse gas emissions compared to traditional fuels while insulating from oil price fluctuations.

Related links

CSG - Request copy of Crown Minerals Annual Report - 2010 NZ Petroleum Conference