Ann: MAY: Beehive (WA-488-P) Agreement with Total and Santos, page-4

MAY had factored in 5mil for 3D & 20mil for 1 well (ASX release May2013).

Depending on the drilling result, a second well could b drilled in WA-488-P. Water depth is 40m, however drill depth should b 4000-4500m, so better off using a semi-sub instead of a JUR to overcome any High sub-surface pressure zone.

Reservoir looks like Carbonate as its a Reef so will b interesting to see what they discover. (eg Nido's Galoc, Shell's Malampaya in the Philippines & obviously the Chevron's Supergiant Tengiz with 1 mile thick oil payzone). Carbonate reservoirs if oil filled should have good porosity alongwith vugs & thief zones which makes them a pain to drill as they drink a lot of mud whilst drilling. Still the payoff is what one drills a well for. So fingers crossed.

The permit was awarded in 2013 & the 'B'hive' structure etc was defined by a tightly spaced grid of 2D seis lines. MEO needed a big brother to drill this. 588 mmboe is resource within a Carboniferous target. I think there was a deeper Ordovician target mapped out as well.

From a valuation perspective,
- 16% COS * 558 mmboe = 89.28 mmboe gross risked resource.
- Times metric of say USD2.5 to USD$3/bbl gives the gross risked value in USD (convert this to AUD).
- Times net equity, ie 20% for MAY & 80% STO
- Divided by shares is the Net risked resource valuation for Beehive.
(ie (89.28 * USD3 * 20% * 0.75)/953.24 mil sh for MAY or 80% for STO & 2083mil shares.

Depending on what they find, they may choose to appraise the well at a later date or just do a plug & Abandon if no HC's are present.

Norm is to open a dataroom & get interested parties to farm-in. If they like what they see & r happy to take the risk to reprocess the vintage data, shoot new 3D, sign a rig & drill the well, then its all good.

The CoS is low, as its essentially a risk factor based on trap, seal, closure etc each of which carries a 'percentage risk' times any Direct HC Indicator (ie DHI) factor.

Hope this helps.