L&M reports first loss

NEW Zealand junior explorer L&M Petroleum has reported its first full financial year results since listing on the Australian and New Zealand bourses last year – a $NZ887,000 ($A760,780) loss on the back of five non-commercial onshore Southland wells.

The Wellington-headquartered company said on Friday afternoon that its total income for the December 2007 year was almost $NZ5,299,000 (about $A4.54 million), with $NZ4,892,000 ($A4.2 million) of that amount arising from the "debt forgiveness" that occurred as part of the listing of the company.

The company successfully raised $NZ23.3 million ($A20 million) via its initial public offering and listed on the ASX and NZX on January 11, 2007.

L&M said other miscellaneous income totalling $NZ407,000 ($A349,084) was derived during the year but that total costs incurred were $NZ7,260,000 ($A6,226,902).

The company also said it changed its accounting policy to the "successful efforts" basis of accounting for exploration expenditure, which resulted in $NZ2.66 million ($A2.28 million) of exploration expenditure.

Non-cash stock compensation expenses, relating to share options issued, totalled $NZ2,226,000 ($A1,909,240).

Other expenses, primarily general and administration expenses, totalled $NZ2,374,000 ($A2,036,180). These were offset by net interest income of $NZ1,074,000 ($A921,170) earned on funds invested.

Last year L&M drilled five wells - Eastern Bush-1 - to a depth of 1780m without any hydrocarbon shows; Dean-1, to a depth of 1428m then plugged back and sidetracked as Dean-1A to a depth of 1591m, with several strong indications of gas and heavier hydrocarbons; Sharpridge Creek-2, 3 and 4, with some sub-commercial hydrocarbon shows in the first two wells.

Government-owned Mighty River Power funded the cost of the Eastern Bush and Dean wells to earn a 50% interest in licence PEP 38226.

L&M also said that throughout last year it continued to progress geophysical and geological projects to meet its permit obligations and define future targets, as well as its first farm-in in onshore West Coast licence PEP 38521 where it expects to recommence drilling the suspended shallow Fireball Creek-1 well next week.

Managing director John Bay said that at the end of the year, working capital was about $NZ13.9 million ($A11.9 million) and that L&M had no debt.

After the drilling of 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%).