PEP 50348 covers a 3920 square kilometre area south of Hamilton and includes the Kawhia, Tihiroa, Te Kuiti and Mangapehi (or Benneydale) coal fields.

Work program commitments for the permit include determining the potential scale of the CSM resource and the potential gas content of the coal within the area, estimating the potential gas in place and determining the potential economics of gas production in the first year.

Other obligations involve drilling up to five exploration wells within two years.

The company holds four South Island permits, two in Otago (Kaitangata-Benhar and Hawkdun) and two in Southland (Ohai and Winton).

Former subsidiary L&M Petroleum last month said its initial review of the CSM potential within its onshore Western Southland Basin licences PEP 38226 (Waiau), PEP 38230 (Te Anau) and PEP 38238 (Blackmount) had identified three potential CSM fairways - one of which, Takitimu South, borders the Ohai coal field.

The company is embarking on a possible $NZ2 million ($A1.62 million) program aimed at evaluating up to 300 billion cubic feet of possible CSM reserves in Eocene-aged Beaumont coals and older Cretaceous-aged Morley coals.

L&M Coal Seam Gas is undertaking similar programs in its permits.