L&M Petroleum managing director John Bay told PetroleumNews.net from Wellington today that his company had relinquished PEP 38228 in the Solander Basin, principally because it could not meet an August drilling commitment.

“With the tight global supply situation for rigs, particularly offshore, we couldn’t meet the August 1 drill-or-drop deadline required under the Solander work program,” Bay said.

“Rather than lose the acreage, which we regard as highly prospective, we applied for and have now been granted a significant offshore extension to one of our existing onshore permits.”

Bay said the results of over 1000km of 2D seismic shot over part of the Solander Basin licence PEP 38228 more than a year ago were sufficiently encouraging for L&M to retain that acreage by applying for a 2009 square kilometre offshore extension to PEP 38237.

“We are enthusiastic about the hydrocarbon potential of the Solander acreage but needed a more rational approach to exploration than a quick commitment to drill would have given us,” Bay said.

He said L&M believed some significant offshore structures identified in PEP 38228 trended up to the northern onshore acreage contained in the enlarged PEP 38237.

“We have retained the structures we had already identified and outlined in our prospectus,” said Bay.

“We believe these structures together have potential oil resources … of up to a billion barrels. The big advantage to us is that some of the extensions of those structures should be … drilled from onshore using land rigs, rather than having to use more expensive offshore rigs.”

L&M would need to do technical studies before deciding on the best onshore seismic to shoot, to tie-in with offshore seismic, Bay said. Then possible drilling sites would have to be decided, along with investigating land rig availability.

It was unlikely the company would be ready to drill in the enlarged licence before 2009, he said.