the long road back, page-2

Hi hotbid

I agree it has been a long road, but all roads come to an end eventually for us all. There are twists and turns, forks and intersections, where we must make decisions about the direction of our investments.

There are those of us here on the MEOmite threads that have held this stock for the long haul. Many have been burnt or fallen by the wayside but these are the pitfalls of investment decisions when taking up the type of stock that can give great gains or great losses.

I, for one, have held MEO long term and have posted my interpretations of the business plan over the years, as I see it. I don't have the technical expertise of some posters but, rather, say it as it is by my way of thinking and in my own way. This is interpreted by some as being rampant to the extent of being devious, which is not true. To get the full picture of my analysis my posts should be read as a whole rather than in parts.

Whatever I, or others, say doesn't change the fact that MEO is a high risk stock and needs careful consideration as an investment. MEO does not have the capital to sole drill wells, rather they look for potential, well funded, farmees and investors. These third party JVs are not coerced by MEO to participate without having some compelling data available. The O&G business does not work like that. The same compelling data is researched and discussed in the MEO threads. Sometimes questions are put, and answered, not as advice but generally as part of the discussion as a further tool on which to base our investment decisions.

This is why I always say I like to see those with negative views but they too have to be based on fact and hindsight is not very helpful. Some posters are totally against MEO and say the company will never come to anything. This may be true but the argument is mostly around NT/P68 and Tassie Shoal which, I agree, has taken a ling time to come to fruition. Management decisions are also open to question as well they should be but the business plan as a whole should be looked at, as well as specific decisions.

I have been saying for years now (maybe too long) that TS will not come to pass without a gas supply, obviously, but will it come? Heron does have gas but will not give it up easily, Blackwood has gas but I feel (from DMs technical presentation at the AGM) MEO and Eni have different views on the size and quantity of the reservoir(s). This will only be tested with the drill bit and we will wait the decision by MEO in Feb.

Eni is the operator so they will choose the drill site. They have taken ~700km seismic of Blackwood East so MEO will be at the mercy, once again, of others interpretation as was A1 and HS1. MEO may not agree with Eni but if Blackwood 2 comes up dry the MEO investors will call the MEO management to task as the SP will be hit once again.

This is why MEO have tried to improve on the one trick pony of the Heron/Zeus/Artemis days by adding different projects to their portfolio.

I think MEO would rather have had a farmee to share the cost of Gurame but, as part of the purchase of the Seruway PSC they had to commit to a drill by the end of the year. We were told that any potential farmees were not interested in Gurame. There would not have been any time to prepare any of the Ibu Horst prospects to be drill ready so Gurame was the only option.

Also as part of the original Seruway farmin requirements on the document put out by Transworld Seruway Indonesia Limited (TSEL) was this:

'The work programme for 2011 will comprise one appraisal well targeting the recently remapped deep potential in the Gurame structure and a 100 square kilometer 3D programme over the Ibu Alpha prospect.'

The document 'Farm In Proposal - November 2010' was on the web but the link has since been broken. * See post/thread #: 6881844 *

It is interesting to note in the same TSEL farmout document (I will try to post it online in the future):

'Gurame Deep Appraisal Well

Located in the shallow water transition zone, close to shore, drilled to a TD of 3093 meters at a pre-test cost of $16.5 million, $18 million tested.

Targeting over 400 bcf of in-block recoverable hydrocarbon gas in three stacked reservoirs.

Drilled at the crest of a 3D mapped structural closure.

Will penetrate the principal target formation 300 meters updip of the equivalent formation which tested CO2 free hydrocarbon gas from a structural position close to
the lowermost closing contour on the down-dip flank of the structure in the ONS-A3 well.

Upside potential to 1.4 TCF recoverable in the maximum closure 19 square kilometer case.

Additional gas resources have been established on the same structure to the West in the shallower Keutapang and Seurula formations in the area of the Bago1, Bago2 and ONS-A5X wells which could be further appraised and ultimately linked in to gas development on the Gurame Deep structure.

Economic evaluation of the most likely case development scenario yields a net cash flow in excess of $950 million and a IRR of 40%.