Energy firm looking to restructure, raise capital

Listed L&M Petroleum is looking to restructure in the lead-up to a big drilling campaign and a planned capital raising.

The company is talking to privately held L&M Coal Seam Gas about buying part, or all, of L&M Coal Seam Gas or its asset base.

Due to cross shareholdings between the two companies, a committee of independent directors had been set up to discuss it, L&M Petroleum's managing director John Bay said.

L&M Coal Seam Gas is owned by Weaver Holdings, a company in turn owned by Geoff Loudon. Loudon is L&M Petroleum's chairman.

L&M Petroleum and LMCSG are sister companies and it was now thought to be wise to avoid having "two L&Ms".

The two companies started out exploring in different but sometimes adjacent areas and it had become clear there should be a rationalised development plan.

LMCSG was carrying out exploration and production testing activities across its permit base aiming to delineate a resource of more than 1500PJ (petajoules) of coal seam gas in permit areas throughout the country.

L&M Petroleum has coal seam gas test wells in the onshore western Southland Basin permits and plans to embark on a seismic programme targeting oil in Southland, the West Coast and onshore Taranaki over summer. Drilling could follow later next year.

Bay said a capital raising - seeking tens of millions of dollars - could take place later this year.