KEY POINTS:
The sharemarket's first new listing of the year, junior oil and gas explorer L&M Petroleum, made a modest but positive start yesterday.
Its dual-listed shares, issued at 22c, closed 1c higher on the NZX main board after initially trading as high as 25c. They were half a cent higher in late trade on the ASX.
The company late last year raised A$20 million ($22.7 million) in the fully subscribed issue of its dual-listed shares, 45 per cent of which went to New Zealand investors.
L&M will use the money to fund its 11-hole drilling programme in two permit areas in West Southland over the next two years.
"This opens the door for us to begin the next phase of exploration on our march to become one of New Zealand's premier oil and gas companies," said L&M chief executive John Bay.
NZX markets development manager Geoff Brown said it was encouraging to see another New Zealand resources sector company raising capital on the NZX and to see such an enthusiastic uptake by investors.
The value of the company's shares will depend directly on the success of its drilling programme.
The company decided to list after an initial well at Sharpridge Creek, northwest of Invercargill, tested positive for "sub-commercial" amounts of hydrocarbons early last year.
Bay was sure there was more where that came from.
"The average industry expectation is one in 10 [success rate for drilling] and we've identified 11 wells we're going to drill over the next two years. So statistically, we have as good a chance as anybody.
"I am very confident that we will find at least something," he said.
L&M will drill its first well in late March or early April after conducting further analysis on its seismic data.
It will continue to look for other exploration opportunities before this programme ends and hopes to begin offshore drilling late next year, subject to the availability of a suitable rig.
Investors who buy shares over the next three months will be entitled to buy more at 25c each in a two-for-one bonus.
The initial offer was fully underwritten by McDouall Stuart in New Zealand and Intersuisse in Australia.
L&M Petroleum is a member of the privately held L&M Group of companies.
