announcment, page-2

MEO Australia Limited
ABN 43 066 447 952
Tel: (+61 3) 8625 6000
Level 17 Fax: (+61 3) 9614 0660
500 Collins Street Email: [email protected]
Melbourne Victoria 3000 Australia Website: www.meoaustralia.com.au
8th October 2010
Mr Dean Litis
Principal Advisor, Issuers
ASX Compliance Pty Limited
Level 45, Rialto South Tower
525 Collins Street
Melbourne VIC 3000
By Email: [email protected]
Dear Dean,
Re: Price query
We refer to your correspondence received yesterday afternoon (7th October 2010) in relation
to the price increase in our stock from a closing price of 49 cents on Wednesday 6th October
2010 to an intra-day high of 55 cents on Thursday 7th October 2010 (closing at 53.5 cents),
accompanied by above normal trading volumes.
MEO makes the following responses to your specific numbered points:
1. The Company is not aware of any information that has not already been announced to
the market.
2. Not applicable.
3. It is likely that MEO�s operating result for the financial half year ended 31 December
2010 will vary by more than 15% compared to the operating result for the previous
corresponding period due to a potential gain arising from the disposal of the 50%
interest in exploration permit WA-360-P to Petrobras.
In accordance with MEO�s accounting policy for Farm-outs, the cash consideration
received from Petrobras will be credited against costs previously capitalised in relation
to the area of interest with any excess to be accounted for by the Group as a gain on
disposal.
At 30 June 2010, MEO had capitalised exploration costs for WA-360-P of approx
$12m which together with any expenditure incurred by MEO relating to WA-360-P
during the six months to 31 December 2010 is expected to be more than offset by
proceeds of approx AUD$41M (approx US$39m) from Petrobras. The excess of
proceeds over capitalized costs will be to be accounted for as a gain on disposal.
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4. There is no reason, at this point in time, to think that MEO will record any material
abnormal or extraordinary item for the half year ended 31 December 2010.
5. The Company notes the rise in the share price and significant turnover on Thursday 6th
October 2010 and offers the following possible explanation for this increase.
The Company has recently made positive announcements in relation to the Petrobras
farm-in to WA-360-P and preparations for drilling the Artemis-1 exploration well in
WA-360-P which include:
The Company advised that all Australian regulatory approvals have been received
in relation to the Petrobras farm-in to exploration permit WA-360-P. MEO has
subsequently invoiced Petrobras for the cash bonus (US$31.5m) and seismic
related back costs (approx US$7.5m).
The Company advised that the Site-Survey over the Artemis-1 well location was
completed.
The Company advised it had executed a contract securing the Songa Venus to drill
the Artemis-1 prospect.
The Company had previously reported that the drilling of the Artemis-1
exploration well was expected to commence in November 2010, subject to timely
handover of the Songa Venus drill rig from the current rig operator. The Company
advises there has been no material change in the timing of the handover of the
Songa Venus drill rig.
6. We confirm that to the best of our knowledge, the Company is in full compliance with
the listing rules and, in particular, listing rule 3.1.
We trust these explanations satisfy your query.
Yours sincerely,
Colin H Naylor
Chief Financial Officer and Company Secretary
MEO Australia Limited