Hi MeomitesI’m still here, waiting patiently on a small corner...

Hi Meomites

I’m still here, waiting patiently on a small corner of the MEO raft, having touched base from time to time to read the posts of so many knowledgeable investors in this company during difficult times.

Thanks to you all for keeping the information coming. MEO itself has also kept us well up to date which, cumulatively, gives Meomites the luxury of being some of best informed investors in the market.

It is quite mind blowing how far the company has come since the last time we were drilling NT/P68. We are no longer the ’one horse pony’ some would want us to believe. The company has moved forward but the SP hasn’t.

I suppose, after the Heron 2, Zeus and Artemis disappointments it is more a wait and see situation for many investors on the sidelines. This hasn’t been helped by unscrupulous institutions such as Credit Suisse/CS Forth churning >5m shares between accounts each month, on small volumes. Traders will tell us that the market needs the volatility but I always feel for the small investors who get caught out in the manipulated market and the small public companies alike who are trying to forge ahead with their sound business plans.

It’s been a long time between drinks in more ways than one but I am sure that is due to change soon. We have been driving into a headwind since Artemis with only one downwind leg, namely the run up to 38c at the end of March. This was a chance for those struggling with their investment to bail or average down.

For the true long term investors who have faith in this company then our day is yet to come. It was thought the Tassie Shoal concept would become reality years ago but with so many obstacles and bad luck we never quite got there. Apart from a lack of genuine partners the concept will not get off the ground without a gas supply.

We have discussed this endlessly over the years but the question is: is it different this time?

IMHO, of course it is.

We have JV’d a progressive company in ENI who are determined to put their money to good use. Their initial drill to explore the HS1 lead is crucial to the continuation of the farmout process. The reason for the HS1 drill is to gauge the extent of the Greater Heron structure. As a reference please refer to my previous post regarding the ENI farmin:

* here *

The estimated Heron reservoir contour is shown in the following diagram:

From this we can see that H2 reached 4115m (LKG) before the problems started. MEO states that ’This leaves the potential for the interpreted gas column to extend another 210m below the base of the Heron-2 well to the interpreted structural saddle that spills to the nearby Evans Shoal gas field.’ so there is a potential further 210m reservoir depth to the LCC at 4325m. ENI have indicated a TD of 4590m (RT) for HS1.

* See Ya’s Post # 8405553 re EP*

Using the seismic and H2 data MEO commissioned Gaffney Cline & Associates (GCA) to undertake an independent assessment of the Heron North gas discovery. The results can be found in the ASX release:

* MEO opens NT/P68 (Heron) data room *

There is gas but now is the time to verify the extent of the discovery.

Similarly the Greater Blackwood structure needs to be tested. It is interesting to note, to get the P68 farmout deal, ENI insisted that Blackwood be included. ENI fast tracked the Blackwood East seismic. We know that in the:

* NT/P68 EP *

ENI have indicated that (in the intro) the drilling programme ’will involve drilling between one and three wells, each well taking approximately 70 days to complete. Drilling of the first well, Heron-3, is scheduled to commence in August 2012. The locations and timing of subsequent wells will be dependent on the results of Heron-3, but will be within the following 18 months and inside the boundaries of the permit area.’

The EP also says (P9) that ’the requirement for hydraulic stimulation will not occur in Heron-3 but may be considered on any subsequent wells’. So HS1 is an exploratory well upon which decisions will be mad on the progress (or not) of the farmout agreement.

I can’t help but wonder about the change in Ensco 109 schedule:

This was the May release: ’17 May 2012 - Next to ENI/Murphy/Vermillion/Santos for work to Feb.13, mid 170s. Plus one 1-well option at same rate’

and in June ’14 June - Next to ENI/Murphy/Vermillion/Santos for work to Apr. 13, mid 170s'.

Perhaps the deletion of the 1 well option’ and the inclusion of an extra two months means that the delay in delivery of the rig has resulted in the extra two months. My hope is that the option was dependent on the results of the Blackwood East seismic, ENI liked what they saw and have taken up the option for at least one additional well in the permit during this campaign. After all ENI only have 365 days (from 5 Jan 2012) to elect whether to drill the Blackwood 2 well:

* ASX release 6 Jan 2012 *.

Knowing ENI is a progressive company they would want to make use of the rig while it is in the area.

Another pointer is that Blackwood alone has enough gas for one of the Tassie Shoal 1.75MTA Methanol plants and MEO have:

‘Expressions of Interest received for 8.3MTA methanol off-take from TSMP1 (capacity 1.75MTA)’ * see ASX release 12 Apr 2012 *

This, along with the pre-FEED work already completed for the Tassie Shoal projects, would be an attractive selling point.

So, where do I think we are at:

The jewel in the crown for MEO has always been the TSMP and TSLNG projects.

What has delayed the project has been the a lack of a gas supply.

There is sufficient gas for one methanol plant and potential low CO2 gas for the LNG plant within the NT/P68 permit owned by the MEO/ENI joint venture.

It would be ideal for the TSMP and infrastructure to be built first and the TSLNG plant to be added later.

Once the Tassie Shoal projects are in place it will be an attractive proposition to put to the Evans Shoal partners and other third parties, to invest in developing the stranded permits in the area.

IMO, I think that plans for the area are already in an advanced stage.

Of course the plan could fail, but only through a lack of a gas supply of any quality. I think ENI have invested in the area with a view to TS as the preferred, economically viable, solution for the stranded gas at Evans Shoal. Low CO2 gas at Heron would be an ideal addition to that supply and ensure the TSLNG project to go ahead. But ENI probably wouldn’t mind high CO2 gas for LNG, provided there is plenty of it.

Like all long term investors in MEO I know, and have lived through, the risks of more than one emerging junior O&G company. At the same time I have seen the MEO put together a portfolio greater than just a solution for stranded gas in the Timor Sea. Whilst the SP has been depressed for some time now I have always felt my investment has been safe with a good management team with a sound business plan. There are not many other companies who have had the difficulties we saw at H2 followed by two dusters but in the mean time still been able to attract major companies as partners and add six viable projects with excellent prospects.

There are three, possibly five, new wells to be drilled along with four farmouts over the next few months. Add to that up to six wells at the end of 2013 and the company will remain strong.

The SP will continue to bob in the doldrums but once MEO begins to put the final pieces of the jigsaw in place and the value of the company becomes more apparent to the market then that will change – especially a couple of HC charged reservoirs.

But this, as always, is only my opinion.

Please DYOR

#:>))