Ann: MEO acquires 30% equity in South Madura PSC , page-11

re: Ann: MEO acquires 30% equity in South Mad... Hi ANZ

From your interest in AED there are a couple of questions I have regarding the South Madurah (SM) PSC, which you may (or may not) be able to answer.

Have the results of the Gigi East well, drilled recently, been published yet?

Has there been any news re the farmout of SM which was indicated in AED's 3Q report and more recently in their RI document?

Since the RI collapse is it possible that ENI's 60%interest in South Madura might be a potential fire sale target?

How will the AED/MEO JV work as there was no mention of this in the MEO purchase.

Kiwi67 referred to this in an earlier post and the more I look at it I can see MEO may be looking at further interest in the SM permit. Perhaps MEO wanted to be sure of the acquisition of the 30% COE permit share before waiting to see AED's further intentions although AED must have been a party to the discussions and agree to the new partner.

With the AED's recent financial problems they may be looking at other options to consolidate their portfolio.

Of course I may be way off the mark here but to say MEO are getting COE's rubbish?

One man's rubbish is another man's gold.

It is all in the eye, or the vision, of the beholder - even though Mr Market cannot see it just yet.

Regarding MEO's second acquisition:

From the Cooper Energy (COE) ASX release, when they pulled out of Seruway:

* here *

it states:

Cooper Energy loaned CESL funds to complete the acquisition of the 22.5% interest in the Seruway PSC, drill the Gurame-1X well and acquire the 2008 2D seismic. As a result of CESL's exit from the Seruway PSC, Cooper Energy will incur a write off of approximately A$19.8 million.

MEO will get the seismic and well data from the permit which cost COE A$19.8m for a 22.5% share. MEO has purchased 100% for just US$5m plus 3d seismic and one well. Back-costs have been deferred until production. IMO this is a bargain.

The release goes on to say:

.... the fact that CESL would be required to make a number of significant future cash call payments in US Dollars to the permit operator....

Did COE (through CESL) in 2008 (GFC period) really think that there was absolutely no future in the permit or was it really a $$ business decision and funds were needed elsewhere.

Regarding the Seruway PSC, apart from the numerous leads on the permit, I am looking mainly at the Kuala Langsa field.

From the TSEL farmin document posted by shadowboxer1:

* here *

it says:

'Kuala Langsa is an approximately 7 TCF gas accumulation in a carbonate build-up at the southern culmination of the 60km long north-south trending Ibu Horst, the main structural feature of Seruway PSC. The feature straddles the southern block boundary of the Seruway block and approximately 40% of Kuala Langsa is located in the Seruway block. The Kuala Langsa-1 well indicated that at that location the gas contained 80% CO2. The Kuala Langsa project will inevitably be developed in the coming years in conjunction with the owners of the adjacent Block A permit and the owners of the nearby Arun field and LNG facilities.'

So Kuala Langsa straddles Seruway and Block A (with PPs Medco(op) 41.67%, Premier Oil 41.67%, and Japex 16.66%). This gas field was discovered in 1992 and has yet to be developed. Again we can see the problem they have, similar to the majority of the stranded Bonaparte Gas, a high CO2 content.

From P10 of the Premier Oil presentation:

* here *

it states re Kuala Langsa:

Giant Gas Field Discovered in 1992.

c.10 Tcf of Gas in Place - the one well
drilled to date recovered around 80% CO2
in the gas test.

Screening studies undertaken to develop
and sequestrate CO2.

Exploratory development discussions with
operator and approaches from third parties.

(Note on the same page the Peutu Carbonate formation is similar to the Epannara/Elang Plover formation in NT/P68 - Kuala Langsa GWC 3511m, Blackwood GWC 3210m).

So if the KL field holds c.7-10Tcf high CO2 gas and 40% is located in the Seruway block, MEO(100%) now has the ability to participate in the unitisation of the KL field and also a downstream CO2/Methanol sequestration solution whilst the stripped LNG gas is piped up to the Arun LNG plant (athough, technically, I am not sure about the viability of such a high CO2 content with just 20% off-take for LNG).

There will be no need to farmout that portion of the permit as the unitisation should provide the JV mix for the field development with MEO seeking partners for the downstream Methanol plant.

In the farmout document it also states (a further) potential of (P50) 2.3TCF recoverable methane updip along the Ibu Horst to the north. This can be seen as the blue areas above Kuala Langsa in the:

* MEO ASX release *

MEO would still hold 100% of the remainder of Seruway, including the Gurame discovery(?), to farmout in the future. This would be similar to the NT/P68 Blackwood and Heron proposal.

So how much has MEO spent so far since the Artemis farmout?:

100% (with 5% Red Rock and 10% Silver Wave buy back option) equity in AC/P50 and AC/P51: US$270k

100% equity in WA-454-P: permit costs - A$3k?

30% equity in South Madura PSC - US$500k

100% equity in Seruway PSC - US$5m (with cost recovery and interest to come out of production revenue).

Total < US$6m for four new ventures. This will still leave c.$90m in the coffers (16.5cps) but with additional assets. Add to this a potential free carry in Heron and/or Blackwood to FID and, if we get there, an additional US$75m.

And, of course, the Carnarvon permits.

There will be additional costs on the way but also additional potential lucrative farmouts and JVs to diversify the company's portfolio.

I think MEO management are lining up opportunities for SHs but the proof is still in the long term IMO.

MEO have taken their time getting this far so the SH must trust Management's due diligence in looking after our long term investment.

#:>))