SOEL to Spud Gurame Well Next Week (Indonesia)

MEO Australia Limited advises that its subsidiary company, Seruway Offshore Exploration Limited (SOEL) has been informed that the Hercules #208 jack-up drilling rig is expected to be handed over to SOEL on 18th September 2012.

MEO anticipates that Gurame SE-1X will commence drilling activities on or around 22nd September 2012 and take approximately 35 days to complete on an untested basis.

The Gurame discovery has been intersected by six previous wells which recovered oil from the two deeper target horizons. A modern transition zone 3D seismic survey was acquired by the previous operator, however no wells have been drilled for the deeper targets with the benefit of this data.

MEO selected the Gurame SE-1X location as the lowest risk, drill-ready candidate with the highest probability of advancing the resource towards commercial development. The well will test the target reservoirs within a structural closure at a level that is substantially higher than where oil samples were recovered from these same intervals in previous wells. MEO expects the target reservoirs at this location to be naturally fractured and gas bearing, a combination which will enhance the potential to achieve a commercial flow rate.

MEO’s CEO and MD Jürgen Hendrich commented:

“SOEL is well positioned to accept assignment of the Hercules #208 drilling rig and to commence the Gurame SE-1X drilling operation. MEO is very excited about the prospects of a commercial development based on the significant in place resource at Gurame. A commercial gas flow rate will accelerate the development potential of this resource. We look forward to SOEL undertaking a safe and successful drilling campaign.“

The Gurame gas and oil field was discovered in 1968. The first well drilled on the field encountered hydrocarbons and experienced a loss of control (blowout) from the Baong Sandstone. Subsequent wells were drilled in a manner to prevent a recurrence of this unfortunate event. MEO’s technical assessment is that the drilling practices employed may have compromised reservoir performance.

Although the blowout demonstrated the presence of hydrocarbons and the ability of the reservoir to flow at high rates, high mud weights used in the subsequent wells at this time may have damaged the reservoir close to the well bore, leading to uncertainty about reservoir performance. Formation Interval Tests (FITs) on these wells recovered both oil and gas low in CO2 from several intervals.

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Press Release, September 13, 2012