MEO Australia Provides Q1 Activities Report

MEO Australia Provides Q1 Activities Report

MEO Australia Limited provides the following information in relation to its activities for the quarter ended 31st March 2012.

The quarter ending March 31st featured the conclusion of a major seismic acquisition program, the release of independent resource estimates for WA-454-P, preparations for farmout of the Seruway PSC and the addition of a new project area in the Gulf of Thailand. The Tassie Shoal gas projects received an upgraded environmental approval from the Commonwealth Government during the quarter.

In NT/P68, Operator Eni Australia Limited (Eni) continued to prepare for the drilling of the next Heron well – which will now be named Heron South-1. The Ensco 109 drilling rig is scheduled to arrive between mid-July and mid-August. Acquisition of the 766 km2 Bathurst 3D seismic data over the eastern extension of the Blackwood gas discovery was completed in early January. A fast track volume has been delivered for early interpretation while survey data continues to undergo extensive processing to a pre-stack depth migrated volume to resolve depth conversion issues. The final processed volume is expected in November.

The company has received an upgraded environmental approval from the Federal Government for the Tassie Shoal LNG project with a clear extension until at least 2017. Subsequent to the end of the quarter, Major Project Facilitation Status was renewed by the Federal Government for a further three years demonstrating strong Government support for these projects.

On the North West Shelf, WA-360-P was renewed for a further five years, and MEO’s participating interest officially increased to 62.5%. The commitment in Permit Year 1 will be fulfilled by licencing the Foxhound “on permit” 3D seismic data. Early interpretation of the 3D confirmed the presence of the Maxwell prospect. In the adjoining WA-361-P exploration permit, processing of the Zeus multi-client 3D survey continued, with the final data volume expected to be delivered during the June quarter.

In WA-454-P, an independent assessment by Senergy (GB) Limited (Senergy) confirmed the Marina discovery as containing gas in five zones with probable oil in one zone and possible oil in at least one other zone. Senergy assessed the Marina discovery to host 2C contingent recoverable resources of 98 Bcf gas and 6.5 mmbbls oil and condensate and 3C contingent recoverable resources of 302 Bcf gas and 29.5 mmbbls oil and condensate. In addition, Senergy assessed the Breakwater prospect prospective resources under two scenarios – 1) a gas only case and 2) a mixed gas and oil case. In the gas only case, Senergy estimated prospective resources of 205 – 751 – 2,798 Bcf (low-best-high) with a chance of geological success (“COS”) of 24%. Under a mixed gas/oil case, the prospective resources were estimated to be: 173 Bcf/9.1 mmbbls – 636 Bcf/52 mmbbls – 2,398 Bcf/276 mmbbls (low-best-high) with a COS of 16%. The 501 km2 Floyd 3D seismic survey was acquired during the quarter and is in processing. The final volume is expected in house late in the June quarter.

In the Ashmore Cartier region, the Zeppelin 2D and 3D seismic surveys were acquired over our contiguous AC/P50 (3D), AC/P51 (3D) and AC/P53 (2D) exploration permits. Options granted to Silverwave Energy as part of the purchase consideration to re-acquire a 10% working interest in AC/P50 and AC/P51 lapsed during the quarter.

In North Sumatra, acquisition of the 708 km2 Ibu Horst 3D seismic survey was completed in early January. A fast track volume of the 3D survey was received during February and confirmed the excellent data quality as well as the prospectivity along the Ibu Horst. MEO’s subsidiary Seruway Offshore Exploration Limited (SOEL) commenced activities to prepare for drilling the commitment well, including securing a drilling rig. Several potential well locations were considered before determining that a location on the Gurame discovery was strategically the most attractive option at this stage. Preliminary volumetric estimates for the potential of the Baong and Belumai target reservoirs at Gurame indicates prospective gas and liquids (condensate plus oil) of 497 Bcf and 58 mmbbls at the P50 level and 863 Bcf and 126 mmbbls at the P10 level. The Gurame discovery is close to shore and has a number of wells drilled on the structure. A positive drilling outcome would enable the resource to be rapidly advanced to development.

In East Java, the requisite documentation accompanying the purchase of an additional 60% interest in the South Madura PSC was submitted to the regulator. Pending receipt of regulatory approval, MEO’s wholly owned subsidiary, South Madura Exploration Company (SMEC) will take over as Operator and submit a revised work program that addresses our view of the prospectivity in the PSC.

During the quarter, MEO executed a farm-in agreement with Pearl Oil Offshore Limited (Pearl Oil) to acquire a 50% participating interest in the block G2/48 concession in the Gulf of Thailand. Consideration for the acquisition comprises MEO reimbursing Pearl Oil for 50% of the costs of the 3D seismic survey acquired in the block in 4Q 2011, and paying 66.6% of the 2012 commitment well capped to US$5 million gross. Above this cap, MEO will pay its 50% participating interest share of costs. Discussions by the Operator aimed at securing a drilling rig were advanced at the time of the acquisition with indicative timing for drilling estimated at late 3rd quarter.

Cash balance at end of quarter

The consolidated cash balance at 31st March was A$62.125 million including a USD balance of $24.2 million.

Events subsequent to the end of the quarter

Subsequent to the end of the quarter, MEO announced it had received expressions of interest from a number of major industry participants for the purchase of an aggregate 8.3 MTA from the first Tassie Shoal Methanol Plant which is designed to have a nameplate capacity of 1.75 MTA. The company also launched a farmout process for the Seruway PSC offshore North Sumatra and added further capability to its geoscience team with the appointment of Mr. Oliver Gross to the position of Geoscience Adviser. Mr. Gross brings over 31 years of international technical experience in Production, Exploration and New Ventures with ExxonMobil.

Priorities for the current quarter ending 30th June 2012

– Secure drilling rig and continue planning to drill the Seruway PSC commitment well

– Confirm rig slot for G2/48 Gulf of Thailand commitment well

– Obtain regulatory approvals for the South Madura PSC and G2/48 acquisitions

– Complete seismic processing for Seruway PSC, WA-361-P, WA-454-P and AC/P50, AC/P51 & AC/P53.

– Progress Seruway PSC farm out with prospective farminees

– Continue to screen New Venture opportunities to supplement acreage portfolio.

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LNG World News Staff, April 20, 2012; Image: MEO