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L&M Petroleum, which is drilling for coal seam gas in Southland, is also aiming to join a drilling programme in California.
The company said that it had agreed principal commercial terms to farm-in to Perth-based Salinas Energy's search for light oil in the San Joaquin Basin.
L&M managing director and chief executive John Bay said the development was an important first step in the company's first move into a prospect outside this country.
