MEC Resources : Investee Advent - Farmout Agreement

ASX ANNOUNCEMENT

5 April 2022

INVESTEE ADVENT ENERGY LIMITED SIGNS FARM OUT AGREEMENT WITH OMV NEW ZEALAND

LIMITED IN THREE OFFSHORE TARANAKI BASIN EXPLORATION PERMITS.

• ▪ Advent Energy Limited, through its subsidiary Aotearoa Offshore Ltd NZ (AOLNZ), has the right to acquire a 30% participating interest in Petroleum Exploration Permits 57075, 60092 and 60093 covering an area of 5,180 km2 in the Taranaki Basin from OMV New Zealand Limited.

• ▪ Toutouwai-2 appraisal well is being assessed for drilling early in 2023.

• ▪ OMV New Zealand Limited to remain operator of all three permits with a 40% participating interest.

• ▪ SapuraOMV will continue to hold their 30% participating interest in the licences.

MEC Resources Limited ("MEC" or the "Company") (ASX:MMR) highlights the following information provided by its investee company, Advent Energy Limited ("Advent").

Advent is pleased to announce that through its subsidiary, Aotearoa Offshore Ltd NZ ("AOLNZ"), it has the right to acquire a 30% participating interest in Petroleum Exploration Permits ("PEP") 57075, 60092 and 60093 covering an area of 5,180 km2 in the Taranaki Basin from OMV New Zealand Limited ("OMV NZ").

The three permits are governed by individual (but identical) Joint Venture Operating Agreements ("JVOA's") and, as such, each intersects in the same fashion with the Farm Out Agreement ("FOA"). The FOA covers all three permits. Mitsui E&P withdrew from the PEP 60092 and PEP 60093 JVOA's in April 2021 with OMV NZ being assigned their 30% participating interest. Following this assignment, the joint venture for PEP 57075, 60092 and 60093 consisted of OMV NZ with a 70% participating interest and SapuraOMV Upstream (NZ) SDN.BHD having a 30% participating interest ("Joint Venture").

In mid-2021 OMV NZ commenced a farmout process in respect of its 70% participating interest. Following engagement with OMV NZ, extensive review of their data room and significant due diligence, Advent submitted its bid in November 2021.

Early in December OMV NZ formally notified Advent that its bid submission, for a 30% participating interest in the offshore Taranaki Basin petroleum exploration permits 57075, 60092 and 60093, was successful and Advent signed the FOA on 24th December 2021. The material terms of the FOA are summarised in Annexure A and it is

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subject to conditions precedent covering JV, regulatory and ministerial approvals and agreement by the JV to have responsibility for future liabilities, relating to any ongoing/future exploration activities.

The current JV has approved the farmout and it is expected that the remaining approvals will be in place by the middle of 2022, resulting in the respective participating interests of the parties in the Joint Venture being OMV NZ 40%, SapuraOMV Upstream (NZ) SDN.BHD 30% and AOLNZ 30%.

In the short term, Advent has agreed with BPH Energy Limited ("BPH"), an ASX listed entity that has a relevant interest in 36% of Advent, that BPH has provided loan funding for Advent of $3.0 million on commercial terms to make a cash payment to cover expenditure on the licences over 2022 including a loan of $800,000 to cover agreed work programme and budget expenditures for 2022 under the FOA, which means that sufficient funds for all 2022 commitments, are in place. The material terms of the funding by BPH are set out in Annexure A.

The FOA is considered to be a positive development for Advent and its major shareholders, BPH and MEC, as it provides a significant new project for Advent which enables it to diversify beyond its current oil and gas portfolio assets.

For BPH, as it has provided the initial funding to Advent, this reduced its cash at bank in the amount of $3.0 million (as of 31st December 2021, BPH's cash at bank was $7.66 million). The funding is unsecured and will be repaid by Advent on the terms of that loan in due course and after Advent has raised sufficient funds. It is intended by Advent that it will undertake a capital raising in due course, which may be a placement to third parties, its existing shareholders, or possibly via a future listing, or a rights issue. Advent is working through a plan at present. It is not intended that BPH will increase its relevant interest in Advent.

The loan does not have a conversion right into shares in Advent, and BPH confirms it presently does not intend to increase its shareholding or relevant interest in Advent.

While BPH is not intending to increase its shareholding or relevant interest in shares in Advent, if circumstances changed and it wished to increase its shareholding in Advent (whether it be by way of maintaining its current percentage interest in the event Advent undertook a capital raising, increasing its percentage interest, or a debt for equity conversion), it will need to consult with ASX regarding the application of Listing Rule 10.1.5.

On completion of exploration drilling in 2019/20, the focus for the Joint Venture has been on assessing the results of the Toutouwai-1 discovery whilst further maturing the prospectivity across these permits. There are positive indications that hydrocarbons are present within the Cretaceous and Palaeocene interval with potential also recognised in the shallower Miocene and early Pliocene.

David Breeze Executive Director of Advent said: "Advent is excited to work with a company that has the global presence and technical calibre of OMV. Advent is also delighted to have been selected to join with OMV NZ and SapuraOMV and views this opportunity as an extremely positive investment in a proven basin which provides the opportunity for 1) near term appraisal drilling, development and monetization, 2) a diverse multi-play portfolio across the entire acreage position and 3) reasonably limited cost exposure with significant further exploration potential."

Location of permits in the Taranaki Basin

Work Plan and Budget

The Work Plan and Budget for 2022 across the three PEP's includes seismic reprocessing, post drill benthic surveys relating to a well drilled in 2019 and other Geological and Geophysical studies.

There are also preliminary planning costs relating to the Toutouwai-2 well (currently being assessed) in advance of any future appraisal well decisions.

Please reference extracts from the NZPAM website below, accessible to the public, which show the current committments for the three licenses.

Note that the drilling of the Gladstone-1 and Toutouwai-1 wells over the summer of 2019/20 have met the current licence commitment conditions. There are no further permit obligations to drill until April 2024 for PEP 60092 and PEP 57075 or April 2028 for PEP 60093.

PEP 60093

Minimum Work Programme

PEP Work Programme

05a - Stage 02 - Key - Committed - Well drilling - Due Date: 01/04/2022

This was met by the drilling of the Toutouwai-1 well in 2020.

Minimum Work Programme

PEP Work Programme

08a - Stage 04 - Key - Contingent - Well drilling - Due Date: 01/04/2028

PEP 60092

Minimum Work Programme

PEP Work Programme

07a - Stage 03 - Key - Contingent - Well drilling - Due Date: 01/04/2024

PEP 57075

Minimum Work Programme

PEP Work Programme

09a - Stage 04 - Key - Contingent - Well drilling - Due Date: 01/04/2024

Prospectivity / Exploration Results

The former Joint Ventures drilled two wells, Gladstone-1 and Toutouwai-1, in the Taranaki Basin over the summer of 2019/20.

A review of the results of these wells was undertaken as part of the overall due diligence process, within Advent, prior to the farmout bid offer.

Gladstone-1

The Gladstone-1 vertical exploration well was drilled, during December 2019, in Petroleum Exploration Permit (PEP) 57075, offshore Taranaki Basin, New Zealand approximately 47 km northwest of Port Taranaki. The Joint Venture participants were OMV New Zealand Limited (Operator) with a 70% participating interest, along with Sapura Exploration and Production (NZ) Sdn. Bhd. having a 30% participating interest.

Gladstone-1 intersected the targeted deep-marine channel fill complexes of Waiauan/late Middle Miocene age (T75) and the underlying Moki Formation Gladstone Channel sands of early Middle Miocene age (T66) in 12-1/4" hole between 2710 to 3027 mMDRT. The targeted reservoirs are interpreted as water-saturated (Gladstone Channel Complex) or did not have significant reservoir (Waiauan Channel). Well failure is considered to be due to lack of seal integrity.

Hydrocarbon fluorescence in cuttings, mudgas analysis (C1-C4) and assessment of the real-time and recorded Logging While Drilling ("LWD") data suggest that hydrocarbons migrated into the area at Miocene levels.

Geochemical analyses from gas shows (collected in isotubes) having up to 4% total gas peaks and trace hydrocarbon shows also suggest that migrated thermogenic hydrocarbons are present and active in this part of the Taranaki Basin.

Based on real-time LWD data, mud gas and cuttings responses indicating that no moveable hydrocarbons were present over the objective 12-1/4" hole section, no success-case formation evaluation operations were conducted. On reaching TD at 3076mMDRT, Gladstone-1 was successfully plugged and abandoned and is classed as a dry well with hydrocarbon shows.

The Gladstone-1 result is a valuable control point from an exploration perspective in that it proves the Arawa kitchen to the east is working and de-risks charge in the Cretaceous and possibly within the Miocene in the northern Taranaki permits PEP 57075 and PEP 60092, which continue to be assessed.

Toutouwai-1

The Toutouwai-1 vertical exploration well was drilled, during March 2020, in Petroleum Exploration Permit (PEP) 60093, offshore Taranaki Basin, New Zealand approximately 54 km west of the Taranaki Peninsula coast. The Joint Venture participants were OMV New Zealand Limited (Operator) with a 40% participating interest, along with Mitsui E&P Australia Pty Limited and Sapura Exploration and Production (NZ) Sdn. Bhd. both having a 30% participating interest.

Toutouwai-1 intersected shallow marine and lower coastal plain sandstone reservoir objectives, in 12-1/4" hole between 3700 to 4296 mMDRT, within the Paleocene lower Farewell (T10), Upper Cretaceous North Cape (K90), Lower North Cape/Wainui Member Coal Measures (K80) and Rakopi (K70) formations. The uppermost section of Basement (K00) was also intersected as it was also considered as potentially prospective.

Elevated mud gas readings (C1-C5), fluorescence in cuttings samples and zones of probable hydrocarbon saturation on Logging While Drilling (LWD) i.e., GR, Res, Neutron, Density & Sonic data, were encountered within the sandstones in all the target intervals.

An independent petrophysical due diligence assessment by VPPS (a specialist petrophysical consultancy) was commissioned by Advent over the objective T10, K90, K80 and K70 reservoir intervals to determine hydrocarbon potential prior to making a farmout offer. The conclusions from VPPS were that:

• ▪ LWD measurements were of excellent quality with encouraging hydrocarbon indications from the acquired logs.

• ▪ K80/K70 objectives exhibit good hydrocarbon shows and reservoirs appear to be variably charged.

• ▪ Resistivity shoulder-bed effects and coal log responses may impact reasonable reservoir assessment, thus making verification between reservoir and non-reservoir in the formations unclear. It is not possible to really know if the sand layers between the coals could represent one connected column or isolated layers.

• ▪ K80/K70 Thin Bed laminae are probably masking and diluting true resistivity and therefore underestimating hydrocarbon saturation.

• ▪ As calculated deterministically, Total Net Pay ranges from ~45 to 52m.

• ▪ With no Core, Wireline or MDT data available due to the COVID-19 pandemic, evaluation risks persist.

Drilling of the latter stages of Toutouwai-1 took place whilst the global/government responses were increasing to the Covid-19 pandemic in March 2020. As a result, rotating the rig crew and getting specialist personnel and equipment to the rig was severely limited. Success-case operations which included wireline logging and drilling a sidetrack borehole to acquire cores and DSTs to confirm reservoir quality and the nature and movability of the hydrocarbon zones were, therefore, not undertaken.

On reaching TD at 4317.3 mMDRT, Toutouwai-1 was successfully plugged and abandoned as a play-opening technical discovery without achieving its success case exploration objectives.

The Toutouwai-1 result is positively encouraging from a prospectivity perspective in that it proves the presence of an active working petroleum system sourced from a kitchen in the Tane Trough, and thus de-risks similar prospective structures in the northern Taranaki permits PEP 60093 and PEP 60092, which continue to be assessed.

David Breeze (Managing Director) authorised the release of this announcement to the market.

For further information please contact:

David Breeze

Managing Director - MEC Resources Limited Ph: [phone]