Ann: MEO acquires 30% equity in South Madura PSC , page-15

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

I notice that I duplicated some of your great research (which I am prone to do) so sorry about that.

I am not sure whether or not this link has been posted yet but it has a great deal of technical data and costings re the:

* Gurame Deep(GD) Prospect *

Evidently, because GD lies in 10m water, a drilling barge can be used or even an onshore well with a < 60deg deviation. According to the costings, which were done last year, an appraisal well should only cost US$18.1m, with a dry hole C.US$16.5m (see P19&23). This is cheap in comparison to the deepwater wells around Oz.

MEO will probably do the 700km2 3D seismic first (perhaps around the yellow IBU area) to attractive a farmin partner to share or take over the costs. We know MEO are quite good at this and. IMO, are gaining respect in the O&G industry, contrary to the beliefs of some. The permit will then have two gas finds (Kuala Langsa and Gurame Deep), along with the extra seismic of a third area.

The whole permit is also dotted with wells so there should be plenty of data to show us where not to drill, along with the problems already encountered:)

Regarding Kuala Langsa it will be dependent on how MEO can get along with the Block A PPs. With such a high CO2 content it may not be suitable for Methanol but with a number of depleted wells in the area there will be a lot of scope to bury the stripped CO2. This is what the Block A pps are working on and what Empire Oil was talking about in their reports. As the LNG trains are running below capacity I feel Medco will want to get as much gas as they can, especially if it is high in CO2 and only 20% can be used for LNG.

On P17 of the above document it states that:

'It is possible that any gas (in GD) will contain from 0% up to 25% CO2. Transworld believes that existing local markets can accept blended production with such characteristics.'

So CO2 stripping is again a possible option. Who knows about the Methanol solution but I always come back to the Tassie Shoal projects and the aim of any other ventures would be to provide income to help realise this goal.

On P12 is a table showing the results of the 9 GD wells to date with the estimated recoverable resources on P17. With a ready made market (Arum) then the quantity is not as crucial as Artemis as the LNG trains are already in place.

All in all the Seruway PSC looks like an exciting acquisition. If GD is as good as the farmout document says then it will not be far from development, with eager local buyers waiting. This could be MEO's first upstream income within the next couple of years.

Hi Botchee

Yes the jury is still out on Carnarvon. PBR are still reviewing their 2011-15 business plan and 360P must be in there somewhere. MEO and CUE will also have to decide about their future participation in the permit when it is up for renewal this year.

As far as the SP, the bears have got hold of most stocks at the moment and have hibernated for the EOFY. This can be a depressing time for some LT investors and world events are not helping. The SP of junior explorers generally fluctuates around drilling events so Heron#3 will be the next trigger for volatility. I just hope they are able to keep away from cyclones this time.

The games were on again today as the 17.5c sell side was cleared this AM to let it run if it wanted to - or those stacking pulled their sales in case they got taken. As the day progressed the stackers came back and those wanting to sell for CGT breaks were forced down to 17c again. At the closing auction, a tick trader was active, as usual, as they wanted the close to show 17.5c - perhaps for TA purposes.

It will be interesting to see if this month's T20 has changed much. A number of those selling ATM are probably post A#1 retail (and some insto) holders who were hoping for a bounce, but were unlucky and took more of a loss. These are being picked off by the accumulators holding the SP down. Alternatively, perhaps more of a loss is better for some (tax credits?).

Those buying now will reap the benefits in the new financial year as the SP increases IMHO.

Hi blurrt

MEO seems to be rubbing shoulders with a number of O&G players now. It has been quiet for us SHs but there must have been a flurry of activity around the MEO office.

They also have a new office in Jakarta now which would be just around the corner from Eni Indonesia. I will also be looking to see how this liaison progresses along with the AED JV in South Madura.

The AED story follows on from the Magellan play in ES.

It seems we are always second guessing the 'coincidences' across a multitude of possible scenarios in Carnarvon, Bonaparte, Ashmore and now Indonesia.

The jigsaw is getting bigger and a little more complicated so there will be some very busy MEOmites running around.

#:>))

Please DYOR.