heron south-1 progress report no. 7

MELBOURNE, AUSTRALIA (8th October, 2012)

MEO Australia Limited (ASX: MEO; OTCQX: MEOAY) advises that at 0600 Darwin time on Monday 8 th October, Eni Australia Ltd (Eni) as operator of the NT/P68 exploration permit had drilled the 216mm (8 ½”) hole to 4,068.5mMDRT (metres Measured Depth below Rotary Table) and was preparing to cut core from 4,068.5m to 4,105mMDRT. There have been no reportable incidents.

Reservoir quality sands exhibiting gas shows were encountered below 4,059mMDRT. The core will provide a physical sample of the reservoir rock to allow reservoir properties to be measured and to provide a calibration for the well logs.

The forward plan is to complete the current coring operation and resume drilling in 216mm (8 ½”) hole to Total Depth (TD) at 4,265mMDRT or the gas water contact. At TD a full formation evaluation program will be run including formation pressures and fluid sampling. If warranted, a production test will be run to determine reservoir productivity.

Progress since last report:

- Drilled 216mm (8 ½”) hole from 3,818m to 4,068.5mMDRT (coring point)

Present Operation (at 06:00 Darwin time, 8th October 2012):

- Preparing to cut core from 4,068.5m to 4,105mMDRT

Outlook:

- Cut core from 4,068.5m to 4,105mMDRT
- Drill 216mm (8 ½“) to 4,265mMDRT or the gas water contact, cut cores as required
- Evaluate well at TD with full wireline logging suite and production test well if warranted.

The well was spudded on August 24th 2012 and will be drilled to at least 4,265mMDRT or the gas water contact. The key objectives of the well are to determine the productivity of the Elang-Plover reservoir and the gas composition. The drilling program is expected to take around 60 days.
An overview of the NT/P68 permit including location map and simplified Heron structural cross section are attached for reference.

MEO intends to provide the next progress report on Thursday 11th October, ahead of the Share Purchase Plan closing on Friday 12th October.

Jurgen Hendrich