I think that your comments about Seruway/Gurame are right on the money. Although we haven't always agreed in the past, like you I am a also supporter of MEO. But I at the same time did see problems is what MEO was saying in relation to what, I perceived, was actually happening. This includes their need to raise additional capital during the drilling campaigns to fund what I always saw as a likely funding shortfall particularly with drilling at Gurame.
Their drilling budget was always skinny and they did not include the costs of testing even though it was very much a part of their program. Nothing wrong with rasing capital provided the company is up-front about it.
I continue to like some of MEO's acreage and I was a big fan of Heron South particularly with Eni also seing the potential and doing the huge farmin.
The problem with Seruaway and Gurame? It was Jurgen Hendrich's deal, as was Thailand (most of the other permits were acquired before JH's time) and there would seem to be a degree ownership involved with the Seruway Block. I also detected a large large dose of arrogance and what I perceive to be plain wrong thinking.
When farming out you want the potential farminee to buy into the prospect of acreage and he got caught up in the hubrus. This is what happened to JH. He got all excited an a hot flush about what a good deal he had done. Pity nobody else thought so and bought into his farmout.
In addition, he had recruited a new technical team who would be out to prove themselves. Dangerous! There was also arrogence and a degree of smugness displayed by some members of the team and management as was on display at the recent AGM.
The senior members were recruited (most relatively recently)from the majors with little or no small company experience. This might have influenced their technical approach and judgement to the (unsuccessful) farmout and ultimately failure of the well. A did well does not mean as much to a major such as ExxonMoble as it does to small company as MEO.
How you could drill a well in field with six previous wells and come up dry is beyond me. Questions should be asked as to MEO's exploration strategy at Gurame, particularly targeting the gas legs and not the oil.
Except in the early days of MEO with the drilling of Herron-2 and Blackwood-1 (this was pre GFC days), the business model for MEO was to work up acreage then farm the drilling out. MEO went against that with both the Gurame and Thai deals. This is risky business.
It was disappointing that Heron-2 was dry. I don't have a problem so much with this because it was farmed out mitigating the risk to MEO - fully in this case - it was a great deal. I have a problem with Gurame which the company elected to drill 100%. I never bought any of the "sure deal" stuff that several people were floating on this forum.
With over $100 million at the beginning of the year, I am very surprised that MEO didn't buy some production. Other companies did so very successfully.
The future? Basically I don't think they have much. They don't have enough money to continue with their business model. They seem to have a large munber of professionals involved in exploration including many relatively new(and expensive)recruits, pursuing new opportunities. But despite this, no new acreage acquisitions in 2012 and now with very little money to pursue new opportunities next year. Maybe something will come in from a farmout of WA454P in the Petrel SB, but I don't think that the company has any hope of getting back to the position they were in at the beginning of the year - or even close.
MEO Price at posting:
6.8¢ Sentiment: None Disclosure: Held
