Oil and gas explorer prepares for $23m float by end of month

Gas and petroleum exploration company L&M Mining expects to launch its initial public offering to raise $A20 million ($23.2 million) this month.

The plan is that the new company, floated on 20c shares, will be dual-listed on the New Zealand and Australian stock exchanges by the end of November.

L&M is the largest and most aggressive of all the "junior" exploration companies in New Zealand, not only in oil and gas, but also in promoting the vast southern lignite resource as a potential petrochemical source.

It has five permits covering Otago and Southland containing an estimated 2 billion tonnes of lignite, a separate venture from the proposed float.

While juniors historically stake a prospect and undertake drilling to work up estimates of the target oil, gas or minerals and on-sell the claim to larger companies, L&M appears set to try to stay in the game through to production.

ABN Amro Craigs investment adviser Peter McIntyre said investors in the Australian marketplace had a greater appetite than New Zealand investors for resource-based companies.

He was unable to comment on L&M's plans until a prospectus was lodged, noting only that in order to reach both New Zealand and Australian investors, the company was using, respectively, brokers McDouall Stuart Securities and Intersuisse Corporate.

L&M is spinning off its petroleum division in order to concentrate resources on its 26 offshore and onshore oil and gas prospects in Southland.

It intends to drill nine prospects during the next two years, starting soon after its listing.

This month L&M confirmed it was teaming up with state-owned enterprise North Island-based Mighty River Power in an unspecified multimillion-dollar 50-50 investment to explore the onshore Waiau Basin area, about 70km northwest of Invercargill.

L&M holds five southern petroleum exploration permits: four onshore permits covering a total of 4300sq km - nearly all of the Te Anau and Waiau Basins - and an offshore permit of 4450sq km covering the Waitutu and Solander Basins.

- OTAGO DAILY TIMES