production test, page-16

http://www.proactiveinvestors.com.au/companies/news/34817/meo-australia-eni-commence-heron-south-1-production-testing-34817.html

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Analysis

Success at Heron South-1, which is looking increasingly likely, will fuel a major boost to MEO’s valuation as any discovery in the area may be considered into future development of the adjacent Shell-operated Evans Shoal gas field.

This would receive a further boost should the second Eni farm-in commitment well succeed as well.

Eni opting to farm into the Blackwood prospect could also kick valuations higher.

While this will result in the dilution of MEO’s stake in the two prospects, it will also go a long-way towards preserving or even improving MEO’s cash reserves and provide substantial equity in a major gas development project.

With its current shares price of A$0.215 and cash of A$48.5 million as of 30 September 2012, MEO offers a compelling buy before results of the wells it is drilling offshore Australia, Indonesia and Thailand start coming in.