MEO Australia Limited : Quarterly Activities Summary For Period Ended 31st December 2011

MEO Australia Limited

ABN 43 066 447 952

Tel: [phone]

Level 23 Fax: [phone]

500 Collins Street Email: [e-mail]

Melbourne Victoria 3000 Australia Website: www.meoaustralia.com.au

Quarterly Activities Summary For Period Ended 31st December 2011

Highlights

Rig contract awarded for ENSCO-109 jack-up to drill Heron-3 in 2012

WA-360-P participating interest to increase to 62.5% prior to permit renewal Acquisition of 1,318 km2 multi-client Zeus 3D survey completed (covers WA-361-P) Eni acquires 766 km2 Bathurst 3D seismic survey in NT/P68 over Blackwood East Completed acquisition of 708 km2 Ibu Horst 3D seismic survey in Seruway PSC Regained 100% unencumbered interest in Tassie Shoal Methanol Project

Head office relocated to Level 23, 500 Collins Street, Melbourne

Consolidated cash balance at 31st December A$83.7 million ($0.155/share)

MELBOURNE, AUSTRALIA (23rd January, 2012)

MEO Australia Limited (ASX: MEO; OTC: MEOAY) provides the following information in relation to its activities for the quarter ended 31st December 2011.

Executive Summary

MEO commenced a period of high field activity during the quarter and made significant progress in all areas of its portfolio.
In NT/P68, Operator Eni Australia Limited ("Eni") awarded a rig contract for the drilling of the Heron-3 appraisal well. The rig is expected to arrive late in the second quarter this year, with drilling to occur during the third quarter. Eni also brought forward the exercise of their 3D seismic option and acquired some 766 km2 of 3D seismic data over the eastern extension of the Blackwood gas discovery. Acquisition of this survey was
completed in early January and the survey will now undergo extensive processing to a pre-stack depth migrated volume to resolve depth conversion challenges. The final processed volume is expected in November.
Our Tassie Shoal Gas Processing Projects entered a new phase during the quarter with the appointment of Mr Robert Zammit to a new position of Executive Manager - Business Development. His primary role is to drive the Company's efforts to monetise the Tassie Shoal projects. We terminated the Joint Development Agreement (JDA) with Air Products which had been suspended since 2006 and regained a 100% unencumbered interest in all components of this project, materially enhancing our commercialization options. Concurrent with terminating the JDA, we announced our intention to seek expressions of interest from companies seeking to participate in these projects. We are confident that this year will see significant progress in finally moving these projects towards commercial reality.
Work on MEO's Carnarvon basin permits continued with the acquisition of 3D seismic in WA-361-P and the submission of a renewal application for WA-360-P. Two of our WA-360-P joint venture partners - Petrobras and Moby - have elected to withdraw at the expiry of the current permit year. The WA-360-P renewal application includes the proposed purchase of existing multi-client 3D seismic in the first year. Our plans for both these permits involve maturing several leads into prospects before seeking a farm-in partner for either or both of the permits.

MEO Australia Limited - Quarterly Report 1

Since we were awarded the WA-454-P in the Bonaparte Gulf in June 2011, we have moved rapidly to assess the potential of the permit. A technical evaluation of the Marina-1 gas and liquids discovery has provided sufficient encouragement to warrant an early investment in 3D seismic. The nearby Breakwater prospect represents a very attractive exploration target. Design of and tendering for the Floyd 3D seismic survey targeting Marina, Breakwater and two other leads was completed during the quarter and the contract for acquisition of the Floyd 3D seismic survey was awarded in early January. Acquisition is expected to commence in February and be completed in March.
In our contiguous AC/P50, 51 and 53 exploration permits in the Vulcan sub-basin, we completed design and tendering of the Zeppelin 2D and 3D seismic surveys during the quarter. A contract for the 2D and 3D Zeppelin seismic surveys was awarded in January. The surveys were combined with the Floyd contract for efficiency and cost reasons.
In Indonesia, acquisition of the 708 km2 Ibu Horst 3D seismic survey commenced and was completed in early January. This survey will provide the technical basis to evaluate the exploration potential of the Ibu Horst section of the block. We will use this evaluation to select a candidate for drilling the commitment well due by the end of
2012. In addition, MEO is working on a variety of activities aimed at maturing a Plan of Development (POD) for the Gurame gas discovery within the Seruway PSC. This POD maturation, coupled with the Kuala Langsa discovery and the improved definition of the Ibu Horst exploration prospects will underpin our future plans to attract a farm-in partner for the Seruway block.
The last quarter also saw MEO's subsidiary South Madura Exploration Company (SMEC) acquire an additional
60% interest and operatorship (subject to regulatory approval) in the South Madura PSC from AED South Madura BV (AED). AED's parent company went into administration and subsequently receivership in the last half of 2011 which had the unfortunate effect of suspending progress of the work program in the block. MEO decided to acquire the increased interest in the South Madura block from AED's new owners to drive exploration efforts and we are now focused on discussions with the Indonesian regulator aimed at arriving at an achievable work program designed to test the exploration concepts our technical team has identified.

Office Relocation

In November the Company relocated its head office to Level 23, 500 Collins Street Melbourne.

Cash balance at end of quarter

At 31st December 2011, the consolidated cash balance was A$83.75 million equivalent to $0.155/share. The cash balance includes $23.25 million held in US dollars.

Share buy-back

On 28th September, MEO announced it intended to initiate an on-market share buy-back for up to 10% of its issued capital following a period during which its shares traded at below cash backing. The share buy-back allows for the purchase of up to 47.7 million shares over a 12 month period commencing on/about 13th October.
No shares were purchased during the quarter under this initiative which lapsed on 13th December.

Priorities for the current quarter ending 31st March 2012

Regulatory approval for renewal of WA-360-P for further 5 years
Flawless execution of seismic acquisition programs in AC/P50, AC/P51, AC/P53 and WA-454-P Evaluate fast-track cube of Ibu Horst 3D seismic in Seruway PSC
Continue planning for drilling Seruway PSC commitment well in late 2012
Achieve regulatory approval for increased interest and work program variation in South Madura PSC Continue to advance Tassie Shoal gas projects towards commercial development
Continue to seek attractive New Venture opportunities to supplement acreage portfolio
Jürgen Hendrich

Managing Director & Chief Executive Officer

MEO Australia Limited - Quarterly Report 2

Timor Sea: Bonaparte Basin

NT/P68 (MEO 50%1, Eni Australia Ltd 50% & Operator)

Eni is earning an initial 50% interest in the Heron area by funding the Heron-3 and Heron-4 wells. Eni also has an option to earn a 50% interest in the Blackwood area by acquiring a
minimum 500 km2 of 3D seismic and drilling Blackwood-2 (refer ASX release 18th May 2011).
During the quarter, Eni awarded a contract to Ensco Australia Pty Limited ("Ensco") for the provision of the ENSCO-109 jack-up drilling rig and associated services to drill Heron-3 which is designed to test the Heron South fault block. The rig is now expected to become available
late 2nd quarter 2012.

Blackwood 3D

Seismic Survey

498 km2 (2008)

Bathurst 3D Seismic Survey

698 km2

Evans Shoal 3D

Seismic Survey

Eni also acquired the Bathurst 3D seismic survey over Blackwood East. A total of 766 km2 of full fold data was acquired, exceeding the 500 km2 minimum requirement under the farm-in agreement. The survey was
completed in early January. Eni has
365 days from the completion of the survey to elect whether or not to drill Blackwood-2 to fully earn its 50% interest in the Blackwood area.

Epenarra 3D Seismic Survey

500 km2 (2006)

Figure 1. Location Map - NT/P68 Exploration Permit showing nearby gas fields and 3D

seismic surveys.

Figure 2. Heron Cross Section.

Work Activity Schedule: NT/P68

Permit NT/P68

MEO PI 50%

2011 2012 2013

Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr

Operator Eni Australia J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Work program undertakings

Activities

Historical

Contract rig for Heron-3

150 km2 3D seismic Interpret 3D 1 discretionary well

Bathurst 3D (766 km2)

Outlook

Bathurst 3D (766 km2)

Drill ready Blackwood prospect

Heron-3

Heron-4 drill/drop option

Blackwood-2 drill/drop option

Plan 3D

3D

3DProcess 3D Interpret 3D

<> Heron3

<>

<>

1 Eni has options to increase its equity to 75% in either or both the Heron & Blackwood gas discoveries by funding MEO's expenditures

through to FID & paying MEO a one-off cash bonus of US$75 million on reaching FID for the 1st development.

MEO Australia Limited - Quarterly Report 3

North West Shelf: Offshore Carnarvon Basin WA-361-P (MEO 50% & Operator, Mineralogy 35%, Cue Energy 15%)

During the quarter, Fugro Multi Client Services Pty Ltd completed the acquisition of the 1,318 km2 Zeus multi- client 3D survey. MEO has committed to purchase 363 km2 of this survey which will meet the Permit Year 2 (Jan
2012 - Jan 2013) work program obligation. The 3D survey will determine whether the Heracles lead and other leads can be matured towards prospect status and be considered as potential candidates for a discretionary well in Permit Year 4 (Jan 2014 - Jan 2015).

W A - 3 6 1 - P

Zeus 3D to be

Purchased

WA-360-P (MEO 25% & Operator, Petrobras 50%, Cue Energy 15%, Moby Oil & Gas 10%)

WHEATSTONE

W A - 3 6 0 - P

RANKIN

GOODWYN

PERSEUS RANKIN NORTH

The permit is currently in Permit Year 6 and expires on 31st January 2012. During the quarter, MEO submitted an application to renew the permit for an additional 5 years.
This process involves the mandatory relinquishment of 50% of the permit area. MEO has applied to retain 8 of the 15 current graticular permit blocks.

PLUTO XENA

BRULIMAR

BRUNELLO

IAGO

NORTH TRYAL ROCKS

0

kilometers

20.00

Petrobras (50%) and Moby (10%) elected not to participate in the permit renewal and their participating interests will be distributed between MEO (62.5%) and Cue (37.5%) immediately prior to renewal.

Figure 3. Location Map - Carnarvon Basin Permits showing proposed WA-360-P

JULIMAR

relinquishment and portion of Zeus 3D Multiclient Survey to be purchased

Work Activity Schedule: WA-361-P

Permit WA-361-P

2011 2012

2013

MEO PI 50%

Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr

Operator MEO J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D Work program undertakings Geo studies 150 km2 new 3D, studies 3D interpretation, studies Activities

Historical

Zeus 3D (363 km2)

Outlook

Zeus 3D (363 km2) Drill ready prospect

Plan

3D Proc

Process 3D Interp 323 km2 3D

<>

Potential farm-in discussions Potential Farm-in discussions

Work Activity Schedule: WA-360-P

Permit WA-360-P

2011 2012

2013

MEO PI 25% => 62.5%* Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr

Operator MEO J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Work program undertakings

Activities

Historical

Studies

Permit renewal

Outlook

Permit renewal*

Geo studies Foxhound 3D, studies Reprocess 3D multi-azimuth

>Artemis-1 work

Renew

Foxhound 3D (323 km2) Seismic reprocessing Drill ready prospect

3D Interp 363 km2 3D

Repro

Interp 3D

<>

Potential farm-in discussions Potential Farm-in discussions

* Subject to regulatory approval

MEO Australia Limited - Quarterly Report 4

Bonaparte Gulf: Petrel Sub-Basin

WA-454-P (MEO 100%)

MEO continued to assimilate the available technical data and plan for Permit Year 1 seismic acquisition. Subsequent to the end of the quarter MEO awarded a contract to CGGVeritas Services SA for the acquisition of
the proposed 601 km2 Floyd 3D seismic survey over the Marina gas and liquids discovery, together with the
Breakwater prospect and surrounding exploration leads. Acquisition is scheduled to commence following completion of the Zeppelin 3D seismic survey.
This survey is designed to enhance the mapping of the Marina gas and liquids discovery to: refine the assessment of the discovered volumes; optimise the selection of a drilling location on the Breakwater prospect and determine whether the surrounding exploration leads can be matured to drillable prospects. The commitment to the Floyd 3D seismic survey brings forward the Permit Year 3 commitment and will replace the Permit Year 1 obligation to acquire 300 km's 2D seismic subject to receipt of regulatory approval.

Breakwater

Prospect

Leads

Floyd 3D

601 km2

Marina

Discovery

Figure 4 Location Map - Petrel Sub-Basin Permits showing Floyd Seismic Survey

Work Activity Schedule: WA-454-P

Permit WA-454-P MEO PI 100%

2011 2012 2013

Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr

Operator MEO J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Work progra m unde rta kings

Activitie s

Historica l

Data assimilation Resource estimation Planning for 3D seismic Work program variation

Outlook

Work program variation*

300 km new 2D, studies 750 km 2D repro, studies 400 km2 3D

Data

Volume

Planning

Resource estimation

Volume

Volume

Floyd 3D seismic

Reprocessing

Drill ready prospect

3D Process 3D Interpret 3D

Repro Interp

<>

Farm-in discussions Farm-in talks

* Awaiting regulatory approval

MEO Australia Limited - Quarterly Report 5

Ashmore Cartier Region, Timor Sea: Vulcan Sub-Basin AC/P50 (MEO 100%)

TENACIOUS PENGANA

JABIRU

AC/P51 (MEO 100%)

During the quarter, planning for seismic data acquisition continued. Subsequent to the end of the quarter, MEO awarded a contract to

CASH MAPLE

SWAN

CHALLIS CASSINI

DELAM ERE

HALCYON

CGGVeritas Services SA for the acquisition of the Zeppelin 3D seismic survey. Acquisition commenced on 20th January.

PUFFIN

SKUA

ECLIPSE

EAST SWAN A C / P 5 3

BIRCH

A C / P 5 0

TALBOT

AC/P53 (MEO 100%)

During the quarter, planning for seismic data acquisition continued. Subsequent to the end of

SWIFT NORTH SWALLOW

PADTHAWAY BILYARA MONTARA LEEUWIN

A C / P 5 1

Zeppelin 2D

169 line km

Zeppelin 3D

500 km2

the quarter, MEO awarded a contract to CGGVeritas Services SA for the acquisition of the Zeppelin 2D long offset seismic survey.

MARET

CRUX (GAS)

TAHBILK

CRUX

0 25.00

Acquisition was completed on 17th January.

LIBRA

kilometers

Work Activity Schedule: AC/P50 Work Activity Schedule: AC/P51

Figure 5. Location Map - Vulcan Sub Basin Permits with Zeppelin Seismic

Surveys

Permit	AC/P51	2011	2012	2013
MEO PI Operator	100% MEO	Sep Qtr	Dec Qtr	Mar Qtr	Jun Qtr	Sep Qtr	Dec Qtr	Mar Qtr	Jun Qtr	Sep Qtr	Dec Qtr
MEO PI Operator	100% MEO	J A S	O N D	J F M	A M J	J A S	O N D	J F M	A M J	J A S	O N D
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)	1,000 km 2D	Studies	1,000 km 2D
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)	Planning 3D
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)		WPV
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)		3D	Process 3D	Interpret 3D
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)			<>
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)			Farm-in talks
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)				Optional well
Work progra m unde rta kings Activitie s Historica l Zeppelin 3D Work program variation Outlook Work program variation* Zeppelin 3D Drill ready prospect Farm-in discussions Discretionary well (2014/15)

* Awaiting regulatory approval

Work Activity Schedule: AC/P53

Permit	AC/P53	2011	2012	2013
MEO PI Operator	100% MEO	Sep Qtr	Dec Qtr	Mar Qtr	Jun Qtr	Sep Qtr	Dec Qtr	Mar Qtr	Jun Qtr	Sep Qtr	Dec Qtr
MEO PI Operator	100% MEO	J A S	O N D	J F M	A M J	J A S	O N D	J F M	A M J	J A S	O N D
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions	825 km2 3D repro, studies	150 km long offset 2D	Studies
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions	Planning 2D
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions		WPV
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions			Repro
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions		2D	Process 2D	Interpret 2D
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions			<>
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions			Potential farm-in discussions
Work program undertakings Activities Historical Zeppelin 2D Work program variation Outlook Reprocessing Zeppelin 2D Lead inventory Farm-in discussions

MEO Australia Limited - Quarterly Report 6

Seruway PSC, North Sumatra (MEO 100%)

The PSC contains two significant gas discoveries - Gurame & Kuala Langsa - together with a number of wells that have intersected and tested gas and condensate. The PSC is strategically situated in close proximity to LNG infrastructure which has under-utilised capacity and a strong domestic gas market. MEO has committed to acquiring 700 km2 3D seismic and to drill one well by the end of 2012.
During the quarter, a contract was awarded to PT Nusantara PGS for the acquisition of the Ibu Horst 3D seismic survey. The 3D survey was completed in early January with 708 km2 of full fold data recorded.

NSO J

TERIPANG

S E R U W A Y P S C

Ibu Horst 3D Seismic Survey

ARUN GURAME

Ibu High

Cluster

708 km2

LEMURU

Juaro

Prospect

SALEM

0 25.00

KUALA LANGSA

kilometers

Figure 6.Location map - Seruway PSC (MEO 100%)

GOS

GLAGAH

Work Activity Schedule: Seruway PSC

Permit Seruway PSC

MEO PI 100%*

2011 2012 2013

Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr

Operator SOEL* J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Work program undertakings

Activities

Historical

Work program variation

Plan Ibu Horst 3D

Ibu Horst 706 km2 3D

Outlook

100 km2 3D 1 well

Plan 3D

3D

2 wells

Ibu Horst 706 km2 3D Resource assessment

3DProcess

Interpret 3D Volumes

Well

Volumes

2 wells

Farm-in discussions Farm-in talks

Gurame development plan Gurame P.O.D

Farm-in talks

Kuala Langas JV discussions KL JD talks KL joint devmt discussions KL joint devmt discussions

* via Seruway Offshore Exploration Lim ited (SOEL); 100% owned b y MEO International Lim ited a wholly owned MEO sub sidiary

MEO Australia Limited - Quarterly Report 7

South Madura PSC, East Java (MEO 90%, Operator)

During the quarter, MEO executed a binding agreement to acquire an additional 60% participating interest in the
PSC from AED South Madura BV for US$0.3 million cash. The purchase is subject to customary approvals.

S O U T H M A D U R A P S C

Surabaja

0 25.00

kilometers

Figure 7. Location Map South Madura Island PSC (MEO 90%)

Work Activity Schedule: South Madura PSC

Permit Sth Madura PSC

MEO PI 90%*

2011 2012 2013

Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr

Operator SMEC+ J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Work program undertakings+

Permit expiry

Activities

Historical

AED assumes Operator AED in administration Purchase AED interest

Outlook

Assume Operatorship+ Work program variation

Studies under review+ under review+

<>

Pending + Pending +

* via South Madura Exploration Com pany (SMEC); 100% owned b y MEO International Lim ited a wholly owned MEO sub sidiary

+ sub ject to regulatory approval

MEO Australia Limited - Quarterly Report 8

Tassie Shoal Gas Processing Projects

(MEO 100%)

During the quarter, MEO regained a 100% unencumbered interest in the Tassie Shoal Methanol Project by terminating the 2004
Joint Development Agreement and 2006
Amendment Agreement with Air Products and Chemicals Inc.
In consideration for terminating the agreements, MEO paid Air Products US$1 million cash. Contingent payments capped at US$6 million are payable out of any sale proceeds achieved by MEO. Air Products will receive the first US$1 million of any such
proceeds (refer ASX release of 19th
December 2011).

Figure 8. CAD schematic of Tassie Shoal Projects showing proposed LNG Plant, LNG Storage Tank and Phase 1 Methanol Plant.

New Ventures

MEO continues to seek attractive opportunities to supplement its current acreage portfolio. Our primary focus is on South East Asia however we actively evaluate opportunities beyond this primary focus region using rigorous merit/risk and capability criteria.

MEO Australia Limited - Quarterly Report 9