So, MEO doesn't intend to participate in a 454 well at current cost levels (Circa A$12m) so essentially, if they can't farm down to a free carry for a retained 20% its either a sale or worse a relinquishment. Bet Origin are rubbing their hands together for the latter to eventuate.
Same may even eventuate for 488 as its marked down for farm out/sale (in the indicative activity pipeline chart) though it seems they are still progressing it, at least for now.
Now, I know they don't have the money for any drills at present and I know the low oil price has made the ii's all but evaporate, but it seems that the oil price is at least, on the cusp of a decent recovery and the ii's will soon be sniffing around for investment.
It appears to me that MEO have hung their hat on Cuba at the expense of all else. They haven't even identified a prospect or lead in Block 9 yet for heavens sake. To say nothing of the sovereign risk attached Cuba. Whereas, 488 and 454 in particular ,are well progressed with identified prospects and in 454's case, a 50% farm in already completed. Both are also home grown.
The latest two announcements don't fill me with much hope I'm afraid. I think the focus is all wrong. The first thing PS should do is test the market and existing shareholders with a placement and rights issue to support a drilling program. (Yes, I understand it would mean massive dilution for those who don't participate)
Ive said this before, but I believe that 488 and 454 are the real jewels in the crown for MEO and that is where, in my opinion, the focus should lay. IMHO of course.
MEO Price at posting:
2.1¢ Sentiment: None Disclosure: Held
