The Wellington-headquartered company said it had recorded several elevated gas peaks at various depths, including 14% at 1249m and 19.5% at 1253m, from what were believed to be fractures within thin limestone sections.

Analysis of the gas indicated the presence of hydrocarbons up to C5.

“The company considers this encouraging,” said L&M managing director John Bay.

Bay told PetroleumNews.net that background gas readings of 1% or less were common during drilling operations but that these elevated levels warranted further investigation.

He remained cautiously optimistic about the well, though logging would be necessary to determine the significance of the readings.

Earlier this week L&M plugged back and cemented the Dean-1 well then deviated it.

The borehole is now vertical as a result of the directional drilling operations and the renamed Dean-1A well is now more than 1328m down towards the targeted McIvor limestones.

Bay said the target depth remained about 2100m and that drilling should be completed within a week or so.

Dean-1A is L&M’s second deep well in licence PEP 38226 and its last deep well for the year.

The Dean prospect has best estimate potential resources of 194 billion cubic feet of gas originally in place.