Fireball Creek-1, in licence PEP 38521, is the first of possibly five onshore wells that L&M and its partners could drill this year as part of an overall $NZ22 ($A19 million) exploration program.

“We hope we will get the rig early next week and spud Fireball Creek a few days later,” company managing director John Bay said this morning.

He said L&M intended using the small Washingtons Drilling & Exploration rig to drill the Fireball Creek well to a depth of about 450m – in the same area as two wells, SFL-0 and SFL-1, drilled in the 1940s, that blew out and flowed uncontrolled gas to surface.

L&M believes the Fireball Creek prospect has a mean estimate of 18 billion cubic feet of gas in place.

Last November L&M announced its first farm-in, taking over operatorship of onshore Westland Basin licence PEP 38521 and earning a 32.5% stake by funding 65% of the cost of drilling Fireball Creek-1.

After drilling Fireball Creek-1, the PEP 38521 participants will be L&M Petroleum (operator, 32.5%), Pacrim Energy (35%), McKenzie Petroleum (8.125%), EF Durkee and Associates (8.125%), GRDC (8.125%), and Labrador Energy (8.125%).

Bay added that a second shallow well, Pounamu-1, could be drilled in the licence late in the year, depending on the reprocessing and interpretation of 200km of 2D seismic.

L&M believes Pounamu has a mean estimate of 43 million barrels of oil in place.

He said L&M’s deep drilling program was likely to start in the Waiau Basin before mid-2008, with a well targeting the Beaumont sandstone structure within the Otahu Prospect in licence PEP 38226, which L&M operated with a 50% stake, in conjunction with state-owned Mighty River Power (50%).

“Although it is not a work program obligation, we do plan on drilling Otahu-1 mid second quarter, depending on rig availability.”

A second deep well in that licence, Rowallan-1, could be drilled in the third quarter, depending on the results of Otahu-1 and on seismic interpretation, he added.

L&M believes Otahu has a mean estimate of 734Bcf of gas in place, while Rowallan could contain 174Bcf.

Bay said that a third deep well, Whitestone Deep-1, could be drilled in nearby licence PEP 38230, in the Te Anau Basin, depending on the interpretation of 20km of new seismic data acquired last year and a successful farm-out of up to 50% of L&M’s present 100% stake.

Meanwhile, work was progressing in L&M’s onshore-offshore Solander Basin licence, PEP 38237, with several surface leads identified by the 1050km of 2D seismic shot in 2006.

Bay said L&M was hoping to work some of those up to drillable status and to farm out a proportion of its 100% interest, prior to a possible drilling campaign starting in late 2009.

L&M’s program was worth about $NZ22 ($A19 million) of exploration effort, with the company spending less than $NZ5 million (about $A4.35 million) of the $NZ23 million ($A20 million) it raised through its initial public offering on the Australian and New Zealand bourses in early 2007, he added.

This year’s program also had the possibility of finding up to 88MMbbl of oil and 460Bcf of gas, Bay said.