Ann: Goldman Sachs retained to seek buyers for Co, page-31

re: Ann: Goldman Sachs retained to seek buyer... Investment Summary
• We maintain our BUY recommendation and a price target of
$1.49/sh based on a risked valuation of booked 319bcf of 2P
reserves. The March Q will be a critical quarter for MAE with
targeted increased production and a reserves upgrade required in
order to progress corporate level aspirations by mid-2009. Should
production targets be reached shortly, followed by the upgraded
reserves assessment, we remain confident that this will provide the
necessary catalysts within this timeframe.
• Steady-state production of 5mmscfd achieved during the
quarter. Despite historical setbacks MAE commissioned its
production operations, overcoming hydrates and slowly bringing on
production via its upgraded facilities. Although production has been
slow to come online MAE remain confident of achieving its
20mmscf/d target rate - once achieved this will be a significant
catalyst. We eagerly await any upgrade in steady state production.
Sales revenue for the quarter was minimal at $0.9m due to he
delayed start-up and a lag in receipt of sales resulting in net
operating cash flows of ($10.36m) after $7.1m in development costs.
Achieving increased steady state sales during the March Q is critical
for MAE to progress its strategy and to offset expenditure.
• Drilling of the Oman 10-29 successfully completed with a
production test ongoing. The well will add incremental production
and better define proven (1P) reserves for the field.
• Two resource reports were completed during quarter
indicating potential recoverable resources of 2.4 to 4.3 tcf
from non-producing reservoirs. The resource assessments were
an important step in highlighting the long term value of the fields to
a potential buyer. They demonstrate the upside value of the assets
as a resource play, above and beyond the producing Clear Creek
reserves.
• Additional funding of $US10.5m was negotiated at the end of
the quarter, bringing total facilities to $US36m. While additional
debt adds risk at the current production rates, it provides confidence
that the banks due diligence process was supportive of the
investment.
Update for the December Quarter 2008
4 February 2009
12mth Rating BUY
Price A$ 0.25
Target Price A$ 1.49
12m Total Return % 497.0

RIC: MAE.AX BBG: MAE AU
Shares o/s m 343.8
Free Float % 100.0
Market Cap. A$m 86.0
Net Debt (Cash) A$m 36.9
Net Debt/Equity % 41.9
3m Av. D. T’over A$m 0.39
52wk High/Low A$ 1.37/0.13
2yr adj. beta 1.88
Valuation:
Methodology DCF

Disclosure: Patersons Securities Limited acted as
Lead Manager to the Placement issue that raised
$15.0m at $0.86 per share completed in August 2008
and previously acted as Lead Manager to the
Placement issue that raised $43.5m at $0.90 per
share completed in November 2007. In addition,
Patersons Corporate Finance Limited acted as Marion
Energy's merger and acquisition advisor for
the acquisition of Odyssey Energy's assets announced
in June 2008 (due for completion on 1 September
2008) and has been retained by MAE to assist with
both present and possible future corporate advisory
assignments.