I think that a lot rests on Heron South-1. WA360P still has a lot of potential. Maybe WA361P the adjacent permit. Should be interesting about how the pending farmout of WA454P goes. Very little announced by MEO about the Thailand Block which is also about to be drilled. Given this lack of information I suspect that the prospect sizes are relatively small.
No I don't like the Seruway Block and Gurame in Indonesia and MEO's strategy there, and I'll tell you why.
I think that the farmor market has spoken. Gas in Indonesia is always difficult. Even if Gurame is successful, it won't be the only undeveloped gas field in Sumatra with significant reserves, although possibly not big enough for export LNG.
For such an big investment decision (everyone seems to agree with this at least) MEO has put very little of consequence out about their plans for the gas. I haven't seen MEO expound on a gas strategy for Gurame and other gas fields in the Seruway Block save for some for some generalities. Yes there is a big LNG plant at Arun which is on its last legs because of lack of gas. So yes, a possibility of supplying Arun to keep it going a few new years.
However, I did see a comment from Dr Daz (of all people) I think that an Indonesian government affiliated company was thinking of buying it and turning it into an LNG import facility. If this were to occur then given the high cost I would expect that the company importing the LNG would want a monopoly to sell gas in Sumatra to protect its investment. If this were to happen then it would kill both the domestic market and the possibility of using the gas to prolong the LNG gas processing at Arun. Disastrous. Ah, politics in Indonesia.
And as I have discussed previously, there are other problems with this decision related to the financial capacity of a small company such as MEO to drill the well by itself. While brave, there will be inevitable consequences that all investors should be aware of and take account of when considering the risk of their investment.
MEO Price at posting:
20.0¢ Sentiment: None Disclosure: Held
