MEO Australia Provides 2Q Activity Report

MEO Australia Limited provided the following summary in relation to its activities during the quarter ended 30th June 2012.

Highlights:

• Launched farmout of Seruway PSC, North Sumatra ahead of drilling Gurame SE-1x
• Continued negotiations for rig slot to drill Gurame SE-1x – earliest spud early October
• Gulf of Thailand well location selection advance, rig expected early 4Q
• Heron South-1 in NT/P68 on track for mid-August spud
• Received regulatory approval for transfer of additional 60% interest in South Madura PSC
• Processing of 3D seismic surveys continued in several permits
• Early interpretation of “Fast track” 3D seismic processed data sets in Seruway PSC, WA-454-P and AC/P50 & 51 yielding encouraging results

Executive Summary

The current quarter will see MEO resume drilling for the first time since late 2010. The first well in a three well program, Heron South–1, remains on track to commence drilling around mid-August in NT/P68 in the Bonaparte Basin, utilizing the Ensco-109 jack-up drilling rig. Eni Australia Limited is the Operator. Interpretation of the Bathurst 3D seismic “fast-track” data provided encouragement that the Blackwood gas discovery potentially contains an easterly extension. Pre-stack depth migration (PSDM) processing of this data set continues and is expected to be finalized during 4Q.

During the quarter ending June 30th MEO launched a farmout of the Seruway PSC in North Sumatra, to attract a funding partner for the upcoming drilling of Gurame SE-1x, targeting the crest of the Gurame structure that is expected to host a significant gas cap to two deeper proven oil bearing horizons. The data room was heavily booked during May and demand necessitated extending the close to the end of June. Concurrently, the company continued negotiations to secure a drilling slot on a rig that is currently operating in the vicinity of the Seruway PSC. Current estimates are that the potential spud dates range from early October through to early January depending on which rig slot is secured. Any farmout transaction would need to close during the current quarter, ahead of the earliest commencement of drilling.

In the Gulf of Thailand, technical workshops were held to determine the most attractive drilling candidate. The Operator Pearl Oil Offshore Limited (a wholly owned subsidiary of Mubadala Petroleum) has secured a drilling rig for an expanded program, however the G2/48 Joint Venture has not yet confirmed which slot on the rig line it will be offered. At this stage, drilling looks likely in early 4Q.

A concerted investor relations program was also initiated during the quarter seeking to raise the profile of the company with the international investment community. In parallel, MEO upgraded its US ADR program to the OTCQX platform which facilitates real time electronic trading in North America in local currency.

Early in the quarter, MEO received Expressions of Interest (EOI’s) from highly credible customers for 8.3 Mta of methanol demand, representing multiples of the 1.75 Mta output from the first Tassie Shoal Methanol Plant.

Regulatory approvals were also received for the transfer of a further 60% interest and Operatorship of the South Madura PSC.

Processing of several newly acquired seismic data sets continue during the quarter with the delivery of several “fast-track” volumes and “preliminary final” volumes. Several final processed surveys are expected this quarter.

Processing of the Floyd 3D seismic data continued during the quarter. A fast-track cube was delivered in early July and clearly illustrates the Marina gas and probable oil discovery is a robust structure. The significantly larger Breakwater prospect is also clearly imaged. Some slippage in processing timing now has the final processed cube expected to be delivered in September, with a farmout expected to be launched during 4Q.

On the North West Shelf, interpretation of the Foxhound “on permit” 3D seismic data confirmed the concept of the Maxwell prospect. Additional “off permit” multi-client 3D seismic data was purchased over WA-269-P by the WA-360-P joint venture to provide continuous 3D seismic coverage to the Wheatstone gas field. WA-269-P is Operated by Woodside who is drilling Ananke-1 during July/August and MEO believes this well will test the concept behind the Maxwell prospect. A positive result at Ananke-1 would significantly upgrade Maxwell.

In the adjoining WA-361-P exploration permit, processing of the Zeus multi-client 3D survey continued. Some slippage in processing will now see the final data volume delivered during the September quarter.

In the Ashmore Cartier region, the Zeppelin 3D seismic fast-track data was delivered in June. Preliminary evaluation has confirmed promising leads not previously evident on pre-existing seismic data. These will be further evaluated once the final processed data is delivered in September.

Offshore North Sumatra, the 708 km2 Ibu Horst 3D seismic “fast track” data was delivered in April and confirmed the data quality is excellent. The final processed data is expected in August and will enable a comprehensive prospect inventory to be developed by year end.

Cash balance at end of quarter

The consolidated cash balance at 30th June was A$55.3 million including a USD balance of $19.2 million.

Priorities for the current quarter ending 30th September 2012

• Conclude Seruway PSC farm out with preferred farminee
• Secure rig slot and prepare to drill Gurame SE-1x
• Secure regulatory approvals for the G2/48 Gulf of Thailand farm-in
• Finalise G2/48 Gulf of Thailand preferred well location and confirm rig slot
• Complete seismic processing for Seruway PSC, WA-361-P, WA-454-P, AC/P50 and AC/P51
• Continue to screen New Venture opportunities for attractive growth options.

[mappress]
LNG World News Staff, July 20, 2012