PO Box 317, North Perth, WA 6906 14 View Street, North Perth, WA, 6006

T: + 618 9328 8477 F: + 618 9328 8733

info@mecresources.com.au www.mecresources.com.au

ACN 113 900 020

14 September 2008

Companies Announcements Office Australian Stock Exchange Limited 10th Floor, 20 Bond Street SYDNEY NSW 2000

Dear Sir/Madam

Geophysical Indications of Gas in Offshore Sydney Basin

MEC Resources Limited (ASX: MMR) is pleased to advise that investee company Advent Energy Ltd (“Advent”) has received a report from Fred Kroh, former Project Leader of the Geophysical Processing and Data Access Project with Geoscience Australia, describing geophysical evidence for gas in the offshore Sydney Basin, NSW.

The report states that the geophysical data collected as part of Geoscience Australia’s NSW Continental Slope Survey SS10/2006 (voyage lines indicated right), especially Swath Bathymetry and TOPAS Sub-Bottom Profiles, have replicated features demonstrated previously (from SS06/2005) to have been derived from implied thermogenic hydrocarbon seepage emanating from the Cornea Oil Field, in the Timor Sea, north western Australia.

The Cornea seepage, published in Marine and Petroleum Geology 23 (2006) pp145-164, was the first time in Australia that active present-day hydrocarbon seepage had been imaged.

The swath bathymetric analysis (SS10/2006) has been published and commented on previously by Geoscience Australia in the March 2008 edition/Issue 89 of AusGeo News. Here, Kriton Glenn, chief scientist aboard the SS10/2006 voyage states:

“Many remarkable features were also seen for the first time, such as mid slope channels off the Hunter region. Some of these channels have levees and a V shaped morphology, suggesting that both active erosion and deposition are taking place. Additionally, a series of large pockmarks (~600 metres in diameter and ~70 metres deep) were found in water depths exceeding 1300 metres. The ages of the pockmarks are hard to determine, as they are formed as a result of an ongoing gas or liquid escape from much deeper in the geological profile. Seismic data indicate that the fluid is migrating along faults and escaping via these features into the water column. The profiles show little infilling of the steep walls of the pockmarks, indicating an active erosional process.”

For

per

sona

l use

onl

y

The image below of a swath bathymetric image demonstrates these pockmarks and features on the continental shelf of the Sydney Basin.

Similar features are noted in the North Sea, as illustrated in the image below (from European Commission report “The Deep Sea Frontier”, 2007) of the largest gas field on the Norwegian continental shelf, Ormen Lange comprising 14 Tcf. The European Geosciences Union (2006) further states that “The Norwegian-Barents-Svalbard margin is not only an important gas hydrate province, but also an area where numerous seeps are documented, and we thus know that there is gas migration in the sediments.” and “…we observe outer shelf cracking, gas blow outs, shallow faulting and fluid escape features such as pockmarks in sediments.”

For

per

sona

l use

onl

y

The Kroh report identifies four incidents of potential gas seepage in the water column. An example, provided below, shows a vertical noise feature extending throughout the TOPAS sub-bottom profile ‘Apparent Polarity’ image profile in the right of the image. The seabed bottom, that provides a strong reflective signal to the TOPAS sub-bottom profiler, is still visible as a strong horizontal line at this point. Sources of possible interference, including other geophysical equipment and vessel machinery, have been precluded from generating these noise patterns in these instances. It has been proposed that the inclusion of gas in the water column is the most likely cause of this noise signal.

For

per

sona

l use

onl

y

The Kroh report has also identified fourteen (14) occurrences of reverse polarity events observable in the sub-bottom profile data. The report states:

“Line 42 demonstrates a very intense reverse polarity event on the apparent polarity plot. The trace to the right of the image demonstrates the deviation from normal polarity levels. These plots are demonstrating incidences of phase reversal of the reflected signal, thereby implying that the signal has passed through a significantly and physically different medium such as gas. Enhanced reflections with a reversal in reflection polarity occur in response to an acoustic impedance contrast where, unusually, the overlying layer has a higher density or rigidity than the lower layer. This may be because the lower layer comprises softer sediment, or because its bulk density is reduced by the presence of gas rather than water in the pore spaces (Rollet et al, 2007).”

For

per

sona

l use

onl

y

The Kroh report further states:

“The TOPAS sub-bottom profiles presented in Figures 5 – 27 showing the vertical noise feature and/or coincident/adjacent reverse polarity events has been captured previously in Geoscience Australia research survey SS05/2005 to the Arafura Sea. These observations, indicative of gas, included multi beam echo sounder profiles, TOPAS sub-bottom profiles, side scan sonar and visual sea surface bubbles (Kroh et al, 2006). Surveying during voyage SS06/2006 over the Cornea Oil Field, found by Shell in 1997, yielded similar and significant observations that were indicative of hydrocarbon seeps. Due to the water depth, inspection of the seabed surface to observe gas venting and gas bubbles in the water column was possible. Gas seepage capture and subsequent analysis demonstrated a methane source related to the Cornea Oil Field. The isotopic signature implied that the methane was thermogenic in nature. The TOPAS sub-bottom profile, with inset echo sounder image over the proven Cornea seep is provided in Figure 28, below. The distinct similarities between this proven Cornea seep and those provided in Figures 5 – 27 above further strengthen the conclusion that the offshore Sydney Basin is an active petroleum system with ongoing and observable fluid escape.”

For

per

sona

l use

onl

y

Of potential significance for Advent Energy’s hydrocarbon exploration is a point noted by Kroh:

“Gas within shallow sediment can be derived from bacterial activity within the shallow sub-surface or migration from deeper in a stratigraphic section (Kroh et al, 2006). Geoscience Australia (Glenn, 2008) has stated that the gas features visualised as part of survey SS10/2006 were formed as a result of ongoing gas or liquid escape from much deeper in the geological profile, thereby encouraging the view that seepage features identified in this report are related to deeper buried gas systems. Gas accumulations at depth are more likely to be thermogenic in nature – and thereby potentially more economically significant – rather than biogenic.”

Hydrocarbon seeps have been observed at onshore and inshore locations in the Sydney Basin since prospecting for hydrocarbons commenced in NSW. Infrequent seeps have been observed at the Terrigal/Cape Three Points area (adjacent to the recently announced Fish Prospect (ASX: MMR release 8 August 2008), Shellharbour and other areas of the onshore Sydney Basin, as indicated by red circles on the image below of well locations in the greater Sydney area.

For

per

sona

l use

onl

y

More recently, repeated (1996, 1998 and 2002) LandSat imagery interpretation revealed hydrocarbon seeps and slicks over the Baleen Prospect offshore Newcastle.

For

per

sona

l use

onl

y

Repeated observations in international studies of the petroleum industry have observed the significance of such features, e.g. “A look at the exploration history of the important oil areas of the world proves conclusively that oil and gas seeps gave the first clues to most oil-producing regions. Many great oil fields are the direct result of seepage drilling.” (Link, 1952, AAPG, Vol. 36, No. 8)

Jean Whelan, a pre-eminent author in the field of hydrocarbon seepage, has demonstrated a significant link between hydrocarbon seepage and petroleum discoveries in one of the world’s most prolific petroleum producing zones – the Gulf of Mexico:

For

per

sona

l use

onl

y

(from Whelan et al, 2005, Surface and subsurface manifestations of gas movement through a N-S transect of the Gulf of Mexico, Marine and Petroleum Geology, 22, pp479-497)

From an economic point of view regarding the seepage of hydrocarbons: “It is well-known to most in the industry, for instance, that the deepwater Gulf of Mexico is a notoriously leaky petroleum system characterized by more than a thousand hydrocarbon seeps.” (McConnell et al, Seep-hunting in deepwater for frontier basin prospectivity assessment, World Oil, April 2008, pp111-117)

Michael Abrams (in D Schumacher and M.A. Abrams, eds., Hydrocarbon migration and its near-surface expression: AAPG Memoir 66, p. 1-14) states “Active seeps occur where gas bubbles, pockmarks, or bright spots are visible on seismic profiles and where chemosynthetic communities are present in conjunction with large concentrations of migrated hydrocarbons (macroseeps). These generally occur where generation and migration of hydrocarbons from source rocks are ongoing today”.

It is noted of potential importance to the probability of success of hydrocarbon exploration in PEP11, “A recent review of more than 850 wildcat wells – all drilled after completion of surface geochemical surveys – finds that 79% of wells drilled in positive geochemical anomalies resulted in commercial oil or gas discoveries; in contrast, 87% of wells drilled in the absence of an associated geochemical anomaly resulted in dry holes.” (Schumacher, D., 2000, Surface geochemical exploration for oil and gas: New life for an old technology, The Leading Edge)

For

per

sona

l use

onl

y

(European Commission, 2007: Sketch of gas seep related processes. The processes shown include thermogenic oil and deeper gas generation (to the left) and biogenic methane generation (to the right). Gas from either source can migrate upwards, either rapidly through faults and fractures or more slowly by diffusion through sediments into overlying oil and gas reservoirs. If methane concentrations reach saturation in the seafloor, methane hydrate deposits form within the hydrate stability zone. When gas migrates further up to the sediment-water interface it is consumed by anaerobic methanotrophs (bottom right), or by aerobic methanotrophs at the seafloor or in the water column. If gas bubbles escape the seafloor and survive to within 100m of the surface of the ocean, they can emit methane into the atmosphere. After Whelan et al, 2005, Mar. Pet. Geol. 22, 479-497).

Mapping by Advent (previously reported to ASX on 8 August 2008) confirms the presence of the Baleen prospect and indicates the presence of several additional large structures shown in the figure below. Advent presently holds a 25% working interest in PEP11 through Asset Energy Pty Ltd (“Asset”), and has the right to earn an 85% interest.

For

per

sona

l use

onl

y

Advent and an independent international technical consultancy are continuing with technical work on the permit to estimate the prospective resources, and to determine the optimal drilling location. Advent is also continuing to pursue the securing of an appropriate drilling rig as soon as possible.

Yours Sincerely

David Breeze Executive Director MEC Resources Ltd PO Box 317

For

per

sona

l use

onl

y

North Perth WA 6906 Tel: +61 8 9328 8477 Media Enquiries: Bill Kemmery Fortbridge Consulting Tel: +61 2 9331 0655 Mobile: +61 400 122 449 NOTE: In accordance with ASX listing requirements, the geological information supplied in this report has been based on information provided by geologists who have had in excess of five years experience in their field of activity. Asset Energy Pty Ltd is under contract a wholly owned subsidiary of Advent Energy Ltd and is the operator’s agent under the joint operating agreement with Bounty Oil and Gas NL. MEC is an exploration investment company and relies on the resource and ore reserve statements compiled by the companies in which it invests. All Mineral Resource and Reserve Statements have been previously published by the companies concerned. Summary data has been used. Unless otherwise stated all resource and reserve reporting complies with the relevant standards. Resources quoted in this report equal 100% of the resource and do not represent MEC’s investees’ equity share.

For

per

sona

l use

onl

y