PRIVATE & CONFIDENTIAL MEO Australia Limited Placement of up to A$32.65m November 2010 E.L. & C. Baillieu Stockbroking Ltd Lead Manager Preliminary Term Sheet Sales Memo Overview Transaction: Fixed Price Placement Issuer: MEO Australia Limited (ASX:MEO) Lead Manager: E.L. & C. Baillieu Stockbroking Limited Placement Agent: Casimir Capital (United Kingdom, North America) Country: Australia Sector: Oil & Gas Offer Details Offer type: Placement of up to 62.8 million new fully paid ordinary shares to investors exempt from disclosure under s.708 of the Corporations Act. Offer size: Up to A$32.65 million Offer price: A$0.52 per share Discount: Last closing price (22-Nov-10): Discount to last close: 1 week VWAP: Discount to 1 week VWAP: 2 week VWAP: Discount to 2 week VWAP: A$0.585 11.1% A$0.58 10.4% A$0.57 8.8% Use of proceeds: The funds raised will be utilised to strengthen MEO?s current cash position and may be applied for working capital and future acquisitions. Capital Structure ? post Placement Shares: 540m (477.2m pre raising) + 10.4m options (pre-AGM) (various ex prices and dates) Market Capitalisation: $280.8m (at A$0.52 per share) Cash: ~A$104m (A$71m pre raising) ? pre offer costs, A$0m debt Enterprise Value: A$177.2m Baillieu Research ? recommendation (7 August 2010) Baillieu Research has a current short and long term BUY recommendation and price target of $0.75 per share. The following paragraph has been extracted from the Baillieu Research report dated 9 August 2010: MEO Australia shares offer investors exposure to two high-risk, high-impact oil and gas exploration and development plays in offshore Western Australia and the Northern Territory. The potential rewards upon exploration success in WA-360-P (Artemis project) or upon commercial realisation of the Tassie Shoal methanol and LNG projects are very significant, but the risk of capital losses is also significant. Due to the significant upside upon exploration/development success, we rate MEO as a short- and long-term BUY. However due to the high risks, the stock is only recommended to professional investors or investors with a very high risk tolerance. Important dates *full timetable provided at the end of this term sheet Trading halt: Tuesday 23 November and Wednesday 24 November 2010 Offer closes: 4pm Wednesday 24 November 2010 (Baillieu reserves the right to close the offer early) Acceptances due: 9am Wednesday, 24 November 2010 PRIVATE & CONFIDENTIAL MEO Australia Limited Placement of up to A$32.65m November 2010 E.L. & C. Baillieu Stockbroking Ltd Lead Manager Preliminary Term Sheet Sales Memo Investment highlights Material gas projects near existing infrastructure 25% equity in ~12 Tcf Artemis prospect - drilling December 2010 Proposed Tassie Shoal development hub o Robust economic solution for all undeveloped gas TSMP sequesters CO2 into methanol derivatives LNG project approved for low CO2 gas 100% equity in two NT/P68 gas discoveries o Seeking farminee to appraise Heron gas discovery Balanced Board and experienced Management team Company description MEO Australia Limited is focused on developing material gas processing projects in provinces with established LNG infrastructure. The company is currently focused on the Bonaparte Basin and Carnarvon Basin, Australia. MEO is currently focused on its Artemis prospect (WA-369-P) off the north west coast of Australia: Petrobras farmed in for 50% interest (April 2010) o Paying 100% of 1st well (to US$41m cap, MEO o MEO received US$31.5m cash, plus US$7.5m in seismic related back-costs o Success case Paying 70% of 2 additional wells (MEO carried for 20% PI, to US$62m cap/well) MEO receives additional US$31.5m cash payment MEO has 25% participating interest & Operator All approvals in place to drill Artemis-1 Rig handover expected +- November 11th, 7 day tow to location ion PRIVATE & CONFIDENTIAL MEO Australia Limited Placement of up to A$32.65m November 2010 E.L. & C. Baillieu Stockbroking Ltd Lead Manager Preliminary Term Sheet Sales Memo Board and Management Nick Heath Non-Executive Chairman Appointed May 2008 Engineer >30 years with ExxonMobil Past APPEA President Colin Naylor Chief Financial Officer / Company secretary 30 years at Woodside, BHP, Rio Jurgen Hendrich Managing Director & Chief Executive Officer Appointed July 2008 Geologist, Investment Banking 12 years at Esso Australia 13 years financial markets Robert Gard Commercial Manager 22 years with ExxonMobil Greg Short Non Exec Director Appointed July 2008 Geologist >33 years with ExxonMobil Retired 2006 Ken Hendrick Implementation Manager >40 years with large companies Michael Sweeney Non Exec Director Appointed October 2008 Barrister, arbitrator and mediator Practicing Barrister 10 years Mimi (Mitsui / Mitsubishi) Dave Maughan Exploration Manager 35 years with ExxonMobil Stephen Hopley Non Exec Director Appointed October 2008 Financial Services background 14 years with Macquarie Bank Retired 2003 Errol Johnstone Chief Geoscientist 29 years with Exxonmobil PRIVATE & CONFIDENTIAL MEO Australia Limited Placement of up to A$32.65m November 2010 E.L. & C. Baillieu Stockbroking Ltd Lead Manager Preliminary Term Sheet Sales Memo Timetable Date / Time (Melbourne) Placement Trading Halt Tuesday 23 November and Wednesday 24 November 2010 Bids due: 4pm Wednesday 23 November 2010 (Baillieu reserves the right to close the offer early) Acceptances / CARD Forms due: 9am Thursday 24 November 2010 Announce Placement and recommence trading: 10am Thursday 25 November 2010 DvP settlement (T+3): Tuesday 30 November 2010 Allotment and quotation on ASX: Wednesday 1 December 2010 ** Timetable is indicative only and subject to change Baillieu contacts Corporate: Stephen Macaw +61 3 9602 9205 [email protected] Daniel Baohm +61 3 9602 9357 [email protected] Rebecca Lambis +61 3 9602 9207 [email protected] Dealing Desk: Please contact your Baillieu representative Research: Ivor Ries +61 3 9602 9275 [email protected] Disclaimer The information in this presentation has been prepared for information purposes only and may be changed at the absolute discretion of MEO Australia Limited (ASX:MEO) without notice to you. The information has been prepared based on information available to it at the time of preparation. Whilst MEO has taken reasonable care in preparing the information, MEO does not make any representation or warranty as to the accuracy, correctness or completeness of the information herein. To the maximum extent permitted by law, none of MEO, its directors, employees, agents or contractors or any other person accepts any liability for any loss or damage whatsoever arising from or in connection with the use of or reliance on this document or its contents. This document and its contents do not constitute a solicitation, offer or invitation to buy, subscribe for or sell any security in the United States or in any other place or to any other person to whom it would be unlawful to make any such offer or invitation. As distribution of this document outside Australia may be prohibited or restricted by law persons outside Australia who come into possession of this document should seek their own independent advice. This document may not be transmitted, copied or distributed, directly or indirectly in the United States or to any US person including: any US resident, any partnership or corporation or other entity organised or incorporated under the laws of the US or any state thereof, any trust of which the trustee is a US person or any agency or branch of a foreign entity located in or resident of the United States. By accepting this document you agree to be bound by these terms. The information in this document does not take into account your financial objectives, situation or needs. Before making any investment decision you should consider, with appropriate advice, whether an investment in MEO is appropriate to your financial objectives, situation and needs
MEO Price at posting:
58.5¢ Sentiment: None Disclosure: Held