MEO 0.00% 0.0¢ meo australia limited

flowing gas

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    HERON-2 WELL UPDATE
    MELBOURNE, AUSTRALIA (January 4, 2008) -- MEO Australia Limited (ASX: MEO)
    advises the market that the Heron-2 well has commenced flowing from the gas charged zone
    of the Heron North Elang/Plover formation. The well flowed gas to surface and is currently
    undergoing a prolonged clean-up period to clear the drilling fluids from the wellbore and
    formation.
    While drilling the formation, the well experienced significant losses of synthetic based mud
    (1180 bbls). The formation in proximity to the wellbore was further impaired by the
    subsequent LCM (loss circulation material) treatment, which effectively inhibited much of the
    formation’s permeability. The clean-up is required to sample gas and obtain gas flow data in
    order to make the best estimate of reservoir potential given the possible impact to the
    formation from the drilling fluids.
    The well was shut-in today at approximately 2.30 pm (EST) as the tropical low pressure
    system located in the Joseph Bonaparte Gulf formed into a category 1 cyclone (Cyclone
    Helen). The cyclone is within the 500 km radius of the rig, which necessitates the mandatory
    securing of the rig prior to de-manning.
    The cyclone is forecast to move eastward over the weekend across the Northern Territory
    south of Darwin and is expected to weaken to a tropical low. The rig will re-commence
    operations upon this reclassification and proceed with the production testing of Heron North.
    MEO Australia has entered into a trading halt commencing 10 am today due to these
    uncertainties. A detailed release will be made before trading recommences at 10 am on
    January 8, 2008 to allow a more extensive disclosure of the Heron-2 well activities.
 
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