MEC RESOURCES LIMITED - AGM Information 2008

MEC RESOURCES LTD ACN 113 900 020

NOTICE OF GENERAL MEETING

TIME : 10.00 am (WDST) DATE : 30[th] June 2008 PLACE : 14 View Street NORTH PERTH WA 6006

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on + 61 8 9328 8477.

CO NTENTS PAG E

Notice of General Meeting (setting out the proposed Resolutions)	3
Explanatory Statement (explaining the proposed Resolutions)	6
Glossary	16
Proxy Form	18
Independent Expert’s Report	20
Independent Accountant’s Report	30
TIME AND PLACE OF MEETING AND HO W TO VO TE

VENUE

The General Meeting of the Shareholders to which this Notice of Meeting relates will be held at 10.00 am (WDST) on 30[th] June 2008 at:

14 View Street, North Perth, Western Australia, 6006

YOUR VOTE IS IMPORTANT

The business of the General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the General Meeting on the date and at the place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

(a) post to MEC Resources Ltd, PO Box 317, North Perth, Western Australia, 6906; or (b) facsimile to the Company on facsimile number +61 8 9328 8733,

so that it is received not later than 10.00 am (WDST) on 28[th] June 2008.

Proxy Forms received later than this time will be invalid.

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NO TICE OF GENERAL MEETING

Notice is given that the General Meeting of Shareholders will be held at 10.00 am (WDST) on 30[th] June 2008 at 14 View Street, North Perth, Western Australia.

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the General Meeting. The Explanatory Statement and the Proxy Form are part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders of the Company at 10.00 am (WDST) on 28[th] June 2008.

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

AGENDA

1. RESOLUTION 1 – SALE OF SUBSTANTIAL ASSETS TO ADVENT ENERGY AND SUBSCRIPTION FOR SHARES

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That for the purpose of Listing Rule 10.1 of the Listing Rules, Section 208 of the Corporations Act and for all other purposes, approval is given for the Company to:

(a) sell 100% of the issued, fully paid ordinary shares in the capital of Asset Energy (a wholly owned subsidiary of the Company) to Advent Energy for a total consideration of $660,062, to be satisfied in full by the issue of 13,201,240 Advent Energy shares to the Company;
(b) sell the Central Petroleum Shares to Advent Energy for a total consideration of $1,625,000, to be satisfied in full by the issue of 32,500,000 Advent Energy shares to the Company; and
(c) subscribe for up to 20 million Advent Energy shares at an issue price of $0.05 per Share, a total of $1 million,

on the terms and conditions set out in the Explanatory Statement.”

Short Explanation: Approval is required under Listing Rule 10.1 in order for the Company to dispose of a substantial asset to a related party of the Company. Approval is also sought under the related party provisions of the Corporations Act. Please refer to the Explanatory Statement for details.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by a party to the transaction and a person who may obtain a benefit, except a benefit solely in the capacity of a security holder, if the Resolution is passed and any associates of those persons.

Expert’s Report: Shareholders should carefully consider the Independent Expert’s Report prepared by TJ Spooner of MGI Bridge Partner Corporate Service Pty Ltd for the purposes of the Shareholder approval required Listing Rule 10.1 which comments on the fairness and reasonableness of the transaction to the nonassociated Shareholders in the Company.

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2. RESOLUTION 2 – ALLOTMENT AND ISSUE OF SHARES – CAPITAL RAISING

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to allot and issue up to 25,000,000 fully paid ordinary shares in the capital of the Company at an issue price of not less than 80% of the average market price of the Shares calculated over the last 5 days on which sales in the Shares were recorded before the date the Shares are issued on the terms set out in the Explanatory Statement accompanying this Notice.”

Short Explanation: Under Listing Rule 7.1, the Company may issue up to 15% of its ordinary share capital in any 12 month rolling period without shareholder approval. By obtaining the prior approval of shareholders for the issue of securities proposed under this resolution, the Company retains the flexibility to make future issues of securities up to that threshold. Please refer to the Explanatory Statement for details.

Voting Exclusion: The Company will disregard any votes cast on this resolution by any person who may participate in the proposed issue and a person who may obtain a benefit, except a benefit solely in the capacity of a security holder, if the resolution is passed and any associates of those persons.

3. RESOLUTION 3 – ISSUE OF SHARES TO MR GOH HOCK

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 10.11, Section 208 of the Corporations Act, clause 3.5 of the Constitution and for all other purposes, approval is given for the Directors to allot and issue 3,100,096 Shares to Mr Goh Hock (or his nominee) on the terms and conditions in the Explanatory Statement.”

Short Explanation: The ASX Listing Rules require the Company to seek shareholder approval prior to the issue of securities to a related party. Mr Hock is a related party of the Company by virtue of the fact that he is a director.

Voting Exclusion : The Company will disregard any votes cast on this Resolution by Mr Hock or any associate of Mr Hock.

4. RESOLUTION 4 – ISSUE OF SHARES AND OPTIONS TO MR DING GUI MING

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to:

(a) issue 2,000,000 Shares to Mr Ding Gui Ming (or his nominee); and
(b) grant 500,000 Options to Mr Ding Gui Ming (or his nominee),

on the terms and conditions in the Explanatory Statement.”

Short Explanation: Under the ASX Listing Rules, the Company may seek shareholder approval prior to a placement to authorise it to make an issue of securities in excess

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of the 15% threshold of its total ordinary securities and to allow it the flexibility to make future issues of securities up to the threshold of 15% of its total ordinary securities in any 12 month period.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Mr Ding and any associate of Mr Ding.

DATED: 22[ND] MAY 2008

BY ORDER OF THE BOARD

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DAVID BREEZE EXECUTIVE DIRECTOR

Voting Exclusion Note:

Where a voting exclusion applies, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the General Meeting to be held at 10.00 am (WDST) on 30[th] June 2008 at 14 View Street, North Perth, Western Australia.

This purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolution in the Notice of Meeting.

1. RESOLUTION 1 – SALE OF SUBSTANTIAL ASSETS AND SUBSCRIPTION FOR SHARES

1.1 General

Resolution 1 seeks Shareholder approval for:

(a) the sale of 100% of the issued, fully paid ordinary shares in the capital of Asset Energy (a wholly owned subsidiary of the Company) ( Asset Energy Sale ); and
(b) the sale of the Central Petroleum Shares ( Central Petroleum Sale ); and
(c) the subscription by the Company for 20 million shares in Advent Energy at an issue price of $0.05 per Share ( Subscription ).

1.2 Share Placement

On 8 December 2005, the Company and Advent Energy entered into an initial agreement whereby Advent Energy granted the Company an exclusive right to negotiate the acquisition of a minimum 19% interest in Advent Energy. On 20 November 2006, the Company agreed to invest an amount of $1 million into Advent Energy, subject to conditions. On 28 December 2007, the Company formalised this agreement and executed a Subscription Agreement with Advent Energy ( Subscription Agreement ) by which the Company agreed, subject to, among other things, Shareholder approval and the approval of the shareholders of Advent Energy, to subscribe for 20 million Advent Energy shares at an issue price of $0.05 per Share, a total of $1 million ( Subscription Amount ).

Under the Subscription Agreement, the Company is entitled to satisfy the Subscription Amount by a cash payment and/or the deduction of all loan funds owing by Advent Energy to the Company.

1.3 Asset Energy Sale

On 20 October 2007, the basis of an agreement was finalised between the Company and Advent Energy whereby Advent Energy could acquire the Company’s interest in the PEP11 project for an amount equal to the Company’s cost of acquiring the project. On 28 December 2007, the Company executed a Share Sale Agreement with Advent Energy by which the Company agreed, subject to Shareholder approval and other conditions precedent, to sell 100% of the issued capital of Asset Energy to Advent Energy.

In consideration for the acquisition of the Asset Energy shares, Advent Energy agreed to issue 13,201,240 Advent Energy shares to the Company at a deemed issue price of $0.05 per share, a total of $660, 062.

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1.4 Central Petroleum Sale

On 22 October 2007, the basis of an agreement was finalised whereby Advent Energy could acquire all of the shares which the Company owned in Central Petroleum from the Company at the market value on that day (Central Petroleum shares being traded on the Australian Securities Exchange), to be satisfied by the issue of shares in Advent Energy, subject to certain conditions. The Company owned 6,250,000 shares in Central Petroleum, which on 22 October 2007 had a closing share price of 25 cents.

On 28 December 2007, the Company executed a Share Sale Agreement with Advent Energy by which the Company agreed, subject to Shareholder approval and several other conditions precedent, to sell the Central Petroleum Shares to Advent Energy.

In consideration for the acquisition of the Central Petroleum Shares, Advent Energy agreed to issue 32,500,000 Advent Energy shares to the Company at a deemed issue price of $0.05 per share, a total of $1,625,000.

1.5 Background information

(a) Central Petroleum

Central Petroleum is one of Australia’s largest net onshore acreage holders with permits spanning more than 250,000 square kilometres. Since 1998, Central Petroleum has undertaken a strategy to secure acreage within the areas it considers to be the most prospective for oil and gas within central Australia.

A memorandum of understanding ( MOU ) was entered into between Advent Energy and Central Petroleum on 22 June 2007, with the intention for Advent to Farmin to Central’s portfolio of prospective acreage in central Australia consisting of over 55 million acres, four basins, 200 prospects and leads (Neoproterozoic to Jurassic, one well on average per 1.2 million acres, oil, gas and helium targets and gas to liquids options. The Farmin deal was to include drilling up to 3 wells and up to $3 million of seismic per permit at the promoted 40% level with the Company earning a 20% interest in all petroleum pools drilled and a 20% interest in the underlying suite of permits.

Central believes that the oil and gas potential of central Australia has been significantly overlooked and the area remains one of the true underexplored and under-developed proven petroleum provinces within Australia. To date over 14.5 MMbbl of oil and 285 BCF of gas have been produced within central Australia leaving existing known resources significantly under-developed.

Estimates by independent or government agencies have indicated potential recoverable hydrocarbons of 650 MMbbloe remain to be discovered in the Amadeus Basin alone. The Pedirka Basin is estimated to contain at P10 level, upside potential recoverable resources of about 137.8 MMbbl of oil in just two prospects considered mature for drilling by Central Petroleum. In addition there are numerous untested other leads.

Since entering into the MOU with Central pursuant to its terms Advent has been resolving the Farmout Agreement with Central. However, on 6 February 2008 Central (by email to Advent) on its own behalf and on behalf of its subsidiaries purported to unilaterally withdraw from its contractual obligations under the MOU and from any Farmout Agreement.

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Advent considers that the email from CTP constitutes a repudiatory breach of its obligations under the MOU, and have, via Advent’s solicitors, put Central on notice that Central’s purported unilateral withdrawal from its obligations under the MOU is not accepted, and that Advent reserves its rights to claim damages from Central and its subsidiaries for their repudiatory breach of contract.

(b)

PEP 11 Oil and Gas Permit

The Company was granted an option to invest into the exploration of PEP 11, one of the largest remaining unexplored permits for oil or gas in Australia.

As referred to above, the Company has now entered into an agreement which will allow the Company to sell the rights up to an 85% interest in the PEP 11 oil and gas permit located in the Offshore Sydney Basin to Advent Energy, through the sale of the Company’s Asset Energy shares.

Subject to the successful passage of the Resolutions the subject of this General Meeting and the raising of the necessary capital by Advent Energy, the Company will vend out and/or complete the key components of this transaction through the following corporate actions.

The option to farm in to the PEP11 permit and to take up to an 85% interest in PEP11 is currently held by Asset Energy. This transaction will be completed by the sale and purchase of 100% of the issued capital in Asset Energy (a wholly owned subsidiary of the Company) to Advent Energy for a consideration of $660,062. This transaction is also subject to the PEP11 permit being extended in accordance with its terms.

Entirely covered by the PEP 11 permit (200km long, 8,100km[2] ) the Offshore Sydney Basin is a significant exploration area with large scale structuring and potentially multi-TCF gas and condensate-charged Triassic and Permian reservoirs. The permit has well defined gas prospects and evidence of the potential for oil. PEP 11 contains all the elements for success needed in world class sized structures. The Company has the potential to earn up to 85% interest in this highly prospective basin.

By pursuing the exploration and drilling of PEP 11, the Company is targeting an oil and gas project with potential in the hundreds of millions of dollars. A rig is to be secured, in the near future to fulfill the work commitments of PEP11.

The exploration programme, if successful, could meet Sydney’s gas consumption needs for the next decade. Seismic reprocessing of a prospect named ‘Baleen’ in the northern sector of the permit suggests potential recoverable resources of 1.6 TCF (P10) or 405 BCF (P50) in that prospect alone.

Four other large leads, each with significant potential gas recoveries have also been identified elsewhere in the permit. If available estimates were to be realised, PEP 11 would be on a par with some of the largest gas reserves in the world. The combined total potential resources for the permit’s 7 prospects and leads is now estimated to be more than 3.4 TCF (P10) of recoverable gas, net to Advent. Should an oil play be established, potential oil resources could be in excess of 1.0 billion bbl in place. Oil has been recorded from some 55 locations within the onshore basin. The potential reward from a successful drilling programme makes this a very attractive exploration opportunity. Landsat analysis has also revealed

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streaming slicks clustered over the Baleen South prospect that may provide evidence of an active petroleum system.

Subscription for Shares

The Company has agreed to subscribe the Subscription Amount in order to capitalise Advent Energy.

The current capital structure of Advent is as follows:

Shareholder	Shares Options
MEC Resources Other Shareholders TOTAL	2,967,200 0 16,135,000 14,450,000
	19,102,000 14,450,000

Following the Transaction, the capital structure of Advent will be as follows:

Shareholder	Shares Options
MEC Resources Other Shareholders TOTAL	65,701,240 0 16,135,000 14,450,000
	81,836,240 14,450,000

MEC Resources’ voting power in the Company following the Transaction will be 80.28%. This represents a maximum increase of 64.75 % in MEC Resources’ voting power in the Company.

1.6 Listing Rule 10.1

ASX Listing Rule 10.1 provides that an entity (or any of its subsidiaries) must not acquire a substantial asset from, or dispose of a substantial asset to, inter alia, a related party or a substantial holder (if the person and the person’s associates have a relevant interest, or had a relevant interest at any time in the 6 months before the transaction, in at least 10% of the total votes attached to the voting securities).

For the purposes of ASX Listing Rule 10.1, Advent Energy is a “related party” of the Company due to the fact that Mr David Breeze, a director of the Company, has a relevant interest in greater than 10% of the issued capital of each of Advent Energy and MEC Resources.

A “substantial asset” is an asset valued at greater than 5% of the equity interests of a company.

The value of the Central Petroleum Shares, the PEP 11 oil and gas permit and the amount of the subscription for the Asset Energy shares is greater than 5% of the Company’s equity interests on a consolidated basis as set out in the latest accounts given to the ASX by the Company. As a result, the Company is seeking Shareholder approval for the purpose of ASX Listing Rule 10.1.

1.7 Independent Expert’s Report

Shareholder approval sought for the purpose of ASX Listing Rule 10.1 must include a report on the proposed disposal from an independent expert. Accompanying this Explanatory Statement is an Independent Expert’s Report prepared TJ Spooner concluding that the proposed transaction is not fair but reasonable to the nonassociated Shareholders.

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1.8 Section 208 of the Corporations Act

Under Chapter 2E of the Corporations Act, a public company cannot give a “financial benefit” to a “related party” unless one of the exceptions to the section apply or shareholders have in general meeting approved the giving of that financial benefit to the related party.

In the current circumstances, the transaction between Advent Energy and MEC Resources, including the issue of the Shares to MEC Resources, could constitute the provision of a “financial benefit” to a related party of the Company pursuant to section 228(6) of the Corporations Act. In summary, that section provides that an entity is a related party of a public company at a particular time if the entity believes or has reasonable grounds to believe that it is likely to become a related party of the public company of at any time in the future. An entity that controls a public company is also a related party of the public company. MEC Resources is therefore a related party of Advent Energy because, following the Share Placement, the Asset Energy Acquisition and the Central Petroleum Acquisition, MEC Resources will control Advent Energy (please refer to section 1.7. above for details of the capital structure of the Company following the acquisitions). The Company therefore has reasonable grounds to believe that it is likely to become a related party of Advent Energy at some time in the future, and approval from Advent Energy shareholders has already been sought and given.

Further, and more relevantly, because MEC Resources will control Advent Energy, Advent Energy could be deemed a future related party of MEC Resources. It is not certain if the carve-outs in the Corporations Act for closely-held subsidiaries would apply (because Advent is not presently a closely-held subsidiary), and while this is uncertain, the Directors have determined to seek Shareholder approval under Section 208 of the Corporations Act to permit the issue of the Shares.

1.9 Sections 217 to 227 of the Corporations Act

Pursuant to Sections 217 to 227 of the Corporations Act, the Company provides the following information to Shareholders in respect of the proposed financial benefits to be given to Advent Energy:

(a) the related party to whom the financial benefit will be given is Advent Energy;
(b) the nature of the financial benefit to be provided is the subscription of cash and the transfer of the shares in Asset Energy and the Central Petroleum Shares in consideration of the issue of 65,701,240 Shares to MEC Resources pursuant to the transactions outlined above. Based on a price of $0.05 per Advent Share, the value of the consideration being paid to MEC Resources is $3,285,062. As Advent is an unlisted public company with less than 50 shareholders there is no market for Advent Shares and accordingly this value has been agreed at arms length but is supported by independent advice received by the Board. Shareholders should refer to the independent expert’s report commissioned by the Board;
(c) the transactions will give MEC Resources control of Advent Energy as a special purpose vehicle which can raise funds, without the restrictions of the pooled development fund status of MEC Resources;
(d) the Directors (other than Mr David Breeze who has a substantial shareholding in each entity), who do not have a personal interest in the outcome of Resolution 1, recommend that Shareholders vote in favour of Resolution 1 as they are of the view that the transactions will give MEC

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Resources control of Advent Energy as a special purpose vehicle which can raise funds, without the restrictions of the pooled development fund status of MEC Resources. This will allow Advent Energy, with MEC Resources as its main shareholder, the ability to properly manage and exploit the projects, something that MEC Resources would not be allowed to do due to its pooled development fund status;

(e) Mr David Breeze declined to make a recommendation in relation to Resolution 1 because he could be deemed to have a conflict due to his having a relevant interest in shares in each entity;
(f) MEC Resources currently has an interest in the following securities in Advent Energy:

Shares	Options
2,967,200	0

(g) the Directors are not aware of any further information that Shareholders should consider before making a decision to vote on Resolution 1, other than the independent report referred to above, which must be read in full.

2. RESOLUTION 2 – ALLOTMENT AND ISSUE OF SHARES – CAPITAL RAISING

ASX Listing Rule 7.1 provides that a company must not, subject to certain exceptions, issue during any 12 month period any equity securities or other securities with rights of conversion to equity (such as an Option) if the number of those securities exceeds 15% of the total ordinary securities on issue at the commencement of that 12 month period.

One circumstance where an issue is not taken into account in the calculation of this 15% threshold is where the issue has the prior approval of shareholders in a general meeting.

The Company is seeking approval under this Listing Rule for the proposed offer of up to 25,000,000 Shares to allow this number of securities not to be included in the calculation under ASX Listing Rule 7.1. This will enable the Company to have the flexibility to issue equity securities in the future up to the 15% threshold without the requirement to obtain shareholder approval.

ASX Listing Rule 7.3 requires that the following information be provided to shareholders when seeking an approval for the purposes of ASX Listing Rule 7.1:

(a) the maximum number of securities to be issued is 25,000,000 Shares;
(b) the Shares will be issued no later than three (3) months after the date of the General Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules);
(c) the Shares will be issued at a price of not less than 80% of the average market price of the Shares in that class, calculated over the last 5 days on which sales in the Shares were recorded before the date the Shares are issued;
(d) the Shares will be offered to the general public and /or to professional investors . No Shares will be issued to any related parties or associates of the Company;

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(e) the Shares will rank equally with the Company’s current issued Shares;
(f) the Company intends to use the funds raised from the issue of the Shares to provide working capital, for corporate and administrative expenses and for further investments in accordance with the Company’s status as a pooled development fund. This could include providing further funding to Advent Energy, if so required, given that the Company will be the largest shareholder in Advent Energy (holding in excess of 80%). A detailed budget will be provided for the use of funds if and when they are raised; and
(g) it is intended that allotment of the Shares will occur on one date.

3. RESOLUTION 3 – ISSUE OF SHARES TO MR GOH HOCK

3.1 Background

The Company and Mr Hock had agreed for the Company to issue 568,182 Shares to Mr Hock in lieu of the cash component of $50,000 of his remuneration package. Approval is being sought to issue the Shares to Mr Hock to secure his ongoing commitment to the continued growth of the Company. This arrangement is being extended for the second year and approval is being sought to issue a further 531,914 shares for the second year of his package. The period of 2 years for Mr Hock’s initial employment commenced on 17 November 2006 and will expire on 16 November 2008.

As a separate matter, the Company proposes to issue 2,000,000 Shares to Mr Hock subject to shareholder approval. These shares are to be issued in recognition of Mr Hock’s advice and service for the introduction of C.N.L.C and Mr Ding Gui Ming to the Company.

The approval is sought for the purposes of Chapter 2E of the Corporations Act 2001, which governs the giving of financial benefits to directors and other “related parties” of a company, and clause 3.5 of the Company’s Constitution.

The Board considers that the issuing of Shares will contribute to the preservation of the Company’s cash reserves.

3.2 Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. Section 208 of the Corporations Act prohibits a public company giving a financial benefit to a related party unless one of a number of exceptions applies.

A “financial benefit” is defined in the Corporations Act in broad terms and includes a public company issuing securities.

For the purposes of this meeting, a “related party” includes a director of the Company. Accordingly, the proposed issue of Shares to Mr Hock involves the provision of a financial benefit to a related party of the Company.

Where no exception is applicable (as is the case in these circumstances), Section 208 of the Corporations Act provides that for a public company to give a financial benefit to a related party of that company, the public company must:

(a) obtain the approval of members in the way set out in Sections 217 to 227 of the Corporations Act; and

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(b) give the benefit within 15 months after the approval is obtained.

In accordance with the requirements of Sections 217 to 227 of the Corporations Act, the following information is provided to allow shareholders to assess the proposed issue of Shares to Mr Hock:

(a) the related party to whom the financial benefits will be given is Mr Hock;
(b) the maximum number of Shares (being the nature of the financial benefit being provided) to be issued to Mr Hock is 3,100,096 Shares;
(c) the Shares will be issued for no consideration;
(d) the Shares are to be issued in lieu of Mr Hock’s cash component of his remuneration package of $50,000 per annum over two years and as recognition of his advice and services referred to above;
(e) as at the date of this Notice, the annual remuneration (inclusive of superannuation where applicable) payable to Mr Hock is $50,000;
(f) during the previous financial year, no remuneration was paid to Mr Hock;
(g) as at the date of this Notice, Mr Hock has no notifiable interests in the securities of the Company:
(h) other than as set out above, Mr Hock receives no other emoluments from the Company;
(i) if Shareholders approve the issue of Shares to Mr Hock, the effect will be to dilute the shareholding of existing Shareholders by approximately 4.61% (based on the number of Shares currently on issue and assuming no other options are exercised);
(j) Mr Hock declines to make a recommendation to Shareholders in relation to Resolution 3 due to his material personal interest in the outcome of the Resolution. The independent Directors recommend that Shareholders vote in favour of Resolution 3 as they are of the view that the issue of Shares to Mr Hock is an appropriate form of remuneration payment. The Directors are not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass the Resolution other than:
(i) the Board considers that in view of the financial, legal and other responsibilities assumed by directors of public companies, the payment of monetary fees alone is not an adequate reward and does not provide an adequate incentive to enable the Company to attract and keep board members and executive directors of the requisite level of experience and qualifications. The Board considers that equity participation by way of the grant of securities to members of the Board is appropriate for these purposes. In addition, the Board considers that the issuing of securities such as the Shares will contribute to the preservation of the Company’s cash reserves; and
(ii) the number of Shares being granted is in accordance with the agreement reached with Mr Hock. In determining this number, consideration was given to the relevant experience and role of Mr Hock, his respective overall remuneration terms, the current market

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price of Shares and the terms of securities packages granted to directors of other companies within the sector.

3.3 ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires a listed company to obtain shareholder approval by ordinary resolution prior to the issue of securities (including an option) to a related party. Mr Hock is considered a related party of the Company by virtue of the fact that he is a director of the Company.

Approval pursuant to Listing Rule 7.1 is not required in order to issue the Shares to Mr Hock as approval is being obtained under ASX Listing Rule 10.11. The issue of the Shares will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11. The following information is provided to shareholders for the purposes of Listing Rule 10.13:

(a) the name of the person being granted the shares is Mr Goh Hock;
(b) the maximum number of Shares to be issued to Mr Hock is 3,100,096;
(c) the Shares will be issued no later than one (1) month from the date of approval of the Resolution (or such later date as approved by ASX) and it is anticipated that all of the Shares will be issued on one date;
(d) the terms and conditions of the Shares are the same as the existing Shares; and
(e) no money is raised from the issue of the Shares.

4. RESOLUTION 4 – ISSUE OF SHARES AND OPTIONS TO MR DING GUI MING

4.1 Background

On 19 December 2006, MEC appointed Mr Ding Gui Ming, a former President of the world’s largest oil producers (and a former senior Chinese Government Ministerial official) as a key member of it’s advisory panel.

The Company has entered into an agreement to provide Mr Ding with a Share Incentive Package which was part of his remuneration package. As part of Mr Ding’s remuneration package and subject to shareholders approving Resolution 4, Mr Ding will be entitled to 2,000,000 Shares and 500,000 Options.

4.2 ASX Listing Rules

Accordingly, the Company is seeking approval under ASX Listing Rule 7.1 for the proposed issue of the Shares and Options to Mr Ding to allow this number of securities not to be included in the 15% calculation under ASX Listing Rule 7.1.

ASX Listing Rule 7.3 requires that the following information be provided to shareholders when seeking an approval for the purposes of ASX Listing Rule 7.1:

(a) the maximum number of Shares to be issued to Mr Ding is 2,000,000 and the maximum number of Options is 500,000;

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(b) the Shares and Options will be issued no later than three (3) months from the date of approval of the Resolution (or such later date as approved by ASX) and it is anticipated that all of the Shares and Options will be issued on one date. The Shares do not vest for a period of 12 months after the date of grant, and only vest in the event Mr Ding remains employed by the Company on the expiry of that period. If Mr Ding is not employed at the time the Shares shall not vest and Mr Ding’s rights in respect of those shares shall lapse;
(c) the terms and conditions of the Options are set out in Annexure A, and these options will be granted subject to Mr Ding agreeing a voluntary restriction on trading of the Options or the shares issued on exercise for a period of 12 months from the date of grant;
(d) the Shares will rank equally in all respects with the Company’s existing issued Shares; and
(e) the Shares and Options are being granted in accordance with the agreement reached between the Company and Mr Ding. The Shares will be granted as consideration for performance of work in the future by Mr Ding for the Company and to secure the ongoing commitment of Mr Ding to the continued growth of the Company.

5. ENQUIRIES

Shareholders are required to contact David Breeze on + 61 8 9328 8477 if they have any queries in respect of the matters set out in these documents.

6. ATTRIBUTION STATEMENTS

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. Please refer to Bounty Oil and Gas (BUY) and grandbridge.com.au, Grandbridge ASX releases for details and attribution. Unless otherwise stated all resource and reserve reporting complies with the standards outlined in the JORC Code. Resources quoted in this report equal 100% of the resource and do not represent MEC’s equity share.

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GLO SSARY

$ means Australian dollars.

Advent Energy means Advent Energy Ltd (ACN 109 955 400).

ASIC means the Australian Securities and Investments Commission.

Asset Energy means Asset Energy Pty Ltd (ACN 120 013 390).

ASX means ASX Limited (ACN 008 624 691).

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Central Petroleum means Central Petroleum Limited (ACN 083 254 308).

Central Petroleum Shares means 6,250,000 fully paid, quoted, tradeable ordinary shares in the capital of Central Petroleum.

Company means MEC Resources Ltd (ACN 113 900 020).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

General Meeting means the meeting convened by the Notice of Meeting.

Notice of Meeting or Notice of General Meeting means this notice of general meeting including the Explanatory Statement.

Resolutions means the resolutions set out in the Notice of Meeting.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

WDST means Perth time or Western Daylight Savings Time as observed in Perth, Western Australia, as the case may be.

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ANNEXURE A

The terms and conditions of the Options are as follows:

(a) each Option entitles the holder to one (1) Share in the Company;
(b) the Options are exercisable at any time on or prior to 5.00pm (Western Standard Time) on 30 June 2010 by completing an Option exercise form and delivering it together with the payment for the number of Shares in respect of which the Options are exercised to the registered office of the Company;
(c) the Option exercise price is $0.20 each;
(d) an Option does not confer the right to a change in exercise price or a change in the number of underlying Shares over which the Option can be exercised;
(e)
the Options are not transferable;
(f) the Options can be cancelled at the Directors discretion with no reason being given;
(g) all Shares issued upon exercise of the Options will rank pari passu in all respects with the Company’s then issued Shares. The Company will apply for quotation of all Shares issued upon exercise of the Options on ASX;
(h) there are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 Business Days after the issue is announced. This will give Option holders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue; and
(i) if at any time the issued capital of the Company is reconstructed, all rights of an Option holder are to be changed in a manner consistent with the ASX Listing Rules.

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APPOINTMENT OF PROXY MEC RESOURCES LTD ACN 113 900 020

PROXY FORM

GENERAL MEETING

I/We

being a member of MEC Resources Ltd entitled to attend and vote at the General Meeting, hereby

Appoint

Name of proxy OR

Mark this box if you wish to appoint the Chair of the General Meeting as your proxy

or failing the person so named or, if no person is named, the Chair of the General Meeting or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, as the proxy sees fit, at the General Meeting to be held at 10.00 am (WDST), on 30[th] June 2008 at 14 View Street, North Perth, Western Australia and at any adjournment thereof.

If no directions are given, the Chair will vote in favour of all the Resolutions.

Voting on Business of the General Meeting

FOR AGAINST ABSTAIN

Sale of Substantial Assets to Advent Energy and Subscription For Shares Allotment and Issue of Shares – Capital Raising Issue of Shares to Mr Goh Hock Issue of Shares and Options to Mr Ding Gui Ming

OR

If the Chair of the General Meeting is appointed as your proxy, or may be appointed by default, and you do not wish to direct your proxy how to vote as your proxy in respect of Resolutions 1-2 please place a mark in this box.

By marking this box, you acknowledge that the Chair of the General Meeting may exercise your proxy even if he has an interest in the outcome of Resolutions 1-2 and that votes cast by the Chair of the General Meeting for Resolutions 1-2 other than as proxy holder will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on Resolutions 1-2 and your votes will not be counted in calculating the required majority if a poll is called on Resolutions 1-2.

If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not to be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is

Signed this day of 2008

By: Individuals and joint holders Companies (affix common seal if appropriate) Signature Director Signature Director/Company Secretary Signature Sole Director and Sole Company Secretary

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MEC RESOURCES LTD ACN 113 900 020

Instructions for Completing ‘Appointment of Proxy’ Form

A member entitled to attend and vote at a General Meeting is entitled to appoint not more than two proxies to attend and vote on a poll on their behalf. The appointment of a second proxy must be done on a separate copy of the Proxy Form. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member’s voting rights. If a member appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. A duly appointed proxy need not be a member of the Company.
Where a member’s holding is in one name the holder must sign. Where the holding is in more than one name, all members should sign.
Where a Proxy Form or form of appointment of corporate representative is lodged and is executed under a power of attorney, the power of attorney must be lodged in like manner as this Proxy Form.
Corporate members should comply with the execution requirements set out on the Proxy Form or otherwise with the provisions of Section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common seal if the document is signed by:
2 directors of the company;
a director and a company secretary of the company; or
for a proprietary company that has a sole director who is also the sole company secretary – that director.

For the Company to rely on the assumptions set out in Section 129(5) and (6) of the Corporations Act, a document must appear to have been executed in accordance with Section 127(1) or (2). This effectively means that the status of the persons signing the document or witnessing the affixing of the seal must be set out and conform to the requirements of Section 127(1) or (2) as applicable. In particular, a person who witnesses the affixing of a common seal and who is the sole director and sole company secretary of the company must state that next to his or her signature.

Completion of a Proxy Form will not prevent individual members from attending the General Meeting in person if they wish. Where a member completes and lodges a valid Proxy Form and attends the General Meeting in person, then the proxy’s authority to speak and vote for that member is suspended while the member is present at the General Meeting.
To vote by proxy, please complete and sign the enclosed Proxy Form and return by:
(a) post to MEC Resources Ltd, 14 View Street, North Perth, Western Australia, 6006; or
(f) facsimile to the Company on facsimile number +61 8 9328 8733

so that it is received not later than 10.00 am (WDST) on 28[th] June 2008.

Proxy forms received later than this time will be invalid.

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BURGAN ENERGY PTY LTD

ACN: 125 016 113

1st Floor,30 Richardson Street, WEST PERTH, Western Australia 6005

Telephone: +61 8 9226 3575 Facsimile: +61 8 9226 3590

10[th] December 2007

The Directors MEC Resources Limited 14 View Street NORTH PERTH Western Australia 6006

PEP 11, Offshore Sydney Basin, New South Wales, Australia

Introduction

This report has been prepared at the request of the Directors of MEC Resources Limited (“MEC” or “the Company”). The prime purpose of this Report is to provide an estimated valuation for the Petroleum Exploration Permit (PEP) 11 (“Project” or “the Permit”) located offshore Sydney Basin, New South Wales, Australia and provide a justification for accounting purposes of the entrance price by the Company on acquiring its interest by way of farmin to this Project area.

Petroleum Exploration Permit PEP 11 is situated in the offshore portion of the Sydney Basin of New South Wales (Figure 1). This permit is located in shallow water at depths of less than 200 metres. It is immediately offshore from the New South Wales mainland east of Australia’s largest city, Sydney. The Project has an aerial extent of about 8,000 square kilometres and extends from latitude 32[0] 30’ south to 33[0] 50’ south.

Project history

PEP 11 was awarded to Flare Petroleum on the 24[th] July 1999 for an initial 6 year term. The permitees have subsequently been granted several extensions in which to complete various work obligations for PEP 11 by the New South Wales Department of Primary Industries. The Permit is presently in its 5[th] year and the Government work commitments require a well to be drilled during this period.

In 2003 Bounty Oil and Gas acquired the permit from Flare Petroleum. During November 2007 MEC Resources Limited investee Asset Energy Ltd negotiated an option to acquire up to 85% interest in the Permit. Subsequently the Company earned its presently held 25% interest in this permit by way of farmin by acquiring 1,450 line kilometres of new 2D seismic. MEC has an option to earn an additional 60% interest,

bringing its total equity to 85% by drilling one well. The remaining equity in this permit is still held by the Australian listed company Bounty Oil & Gas Limited.

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Figure 1.

Prior to the award of PEP 11 the area now contained within was held by a number of petroleum exploration groups. During the tenure of earlier permits 2D seismic was recorded over the area but no wells were drilled. Sydney Oil Company recorded over 1,740 line kilometres of 2D seismic during 1981. Santos and Ampolex who held the area as P/10 between 1989 and 1992 recorded a further 605 kilometres of 2D seismic. They also reprocessed 1,742 kilometres of the 1981 Sydney Oil data.

Hydrocarbon Potential

The permit is close and adjacent to Australia’s most densely populated area. Significant secondary industry exists from Newcastle south to Wollongong. Discovery of hydrocarbons be it oil or gas would therefore have a market in close proximity.

Given the closeness to this major market and that gas was first discovered onshore at Narrabeen 1 in 1885 surprisingly little exploration has been undertaken within the Basin. To-date hydrocarbon exploration has been concentrated to the north within the Surat/Bowen Basin System and to the southwest within the Eromanga/Cooper Basin System where a number of commercial oil and gas fields have been discovered which have been generated and trapped in sediments of a similar age to those contained within the Sydney Basin.

The Sydney Basin of New South Wales could be considered one of the last of the world’s great untested frontier basins. No wells have been drilled into the offshore portion of the Basin and its stratigraphy is interpretated by extrapolating onshore data and information eastward. Structuring is interpretated from 2D seismic data recorded in the region of PEP 11.

While no commercial traditional hydrocarbon production has been established from the Sydney Basin, sediments of similar age are highly productive within the Cooper Basin to the southwest and Bowen Basin to the north. Significant commercial coal seams are widely distributed through the basin and have been mined for over 175 years. These Permian aged coals provide a likely source for natural gas. In recent years coal bed methane exploration within the basin has proved successful in a number of locations.

Both oil and gas shows have been reported from drilling in the onshore Sydney Basin. Between 1900 and 1970 over 80 wells were drilled into the Sydney Basin, many of these without the modern aid of seismic. A review of 68 of these wells indicated that about 41% of them had flowed small quantities of gas. Of these, gas has been tested at subeconomic rates from two wells near the coast.

Oil has been recorded from 55 locations within the onshore portion of the Basin. These occurrences include oil shows, oil bleeding from core, oil staining, and fluorescence in core. Oil has also been reported from surface oil seeps at Terrigal, Richmond and Shellharbour; and seeping into coal mines in the southern coalfield. Gas occurrences have been encountered during coal mining operations as well as from 34 onshore petroleum and coal exploration wells with flows ranging up to 2.5 MMCFPD with an average of about 100 MCFPD.

Oil seeps have also been recorded from the offshore portion of the Basin. Residual oil shows were reported from both Glenmore 1 and Fairlight 1, Oil shows in these two wells drilled during the year 2000 were reported in Triassic and Permian aged sandstones at depths ranging from 580 to 830 metres.

These hydrocarbon shows testify to the generation and migration of both oil and gas within the Sydney Basin.

The offshore portion of the Sydney Basin is likely to be more mature for hydrocarbon generation than the onshore sequence. Thus structures within PEP 11 are well positioned to capture oil or gas migrating out of the Basin’s kitchen area.

Geology

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Figure 2.

Numerous petroleum exploration wells and water bores provide a detailed stratigraphy for the onshore portion of the Sydney Basin (Figure 2). That data is supplemented with coal mining and exploration results. Information for the offshore is extrapolated from the onshore using 2D seismic data. Until drilled much of the offshore geological information is less certain.

Situated east of the Blue Mountains, the Basin extends north towards Newcastle and south towards Goulburn. To the east it extends about 70 kilometres offshore to the continental shelf. The Basin has an aerial extent of about 8,500 square kilometres.

The Sydney Basin has a long and complex history commencing during the Permian. During this period of time the Basin has undergone several periods of subsidence and thrusting. It is a major structural basin which contains a thick sequence of Permian to Triassic sediments. The Basin is part of a much larger digressional sequence comprising the Sydney-Gunnadah-Bowen Basin system which extends from Townsville in the north to Darras Lake in the south.

The Sydney Basin was initiated in the Early Permian by crustal rifting. Early deposition consisted predominantly of marine sediments which changed to dominantly non marine coal measures towards the end of the Early Permian. At the end of the Permian deposition again changed and is dominated by alluvial fan and fluvial environments.

Offshore the Sydney Basin contains about 5 kilometres of Permo-Triassic sediments which inturn are overlain by a thin veneer of post breakup Cainozoic rocks. It is possible that some Mesozoic sediments are preserved across down faulted basement.

Offshore seismic data indicates that the major onshore Sydney Basin trends are truncated by major thrust zones running parallel to the margin. These thrust zones represent extensions of the Hunter-Mooki Thrust which forms the boundary between the onshore northern Sydney and Gunnedah Basins and Palaeozoic New England terrain to the north. Compressional movements including overthrusting along this boundary resulted in several episodes of foreland loading, the associated sedimentation being instrumental in the formation of the Sydney Basin .

A number of thick marine shale and siltstone sequences are known to occur onshore in the Lower to Middle Permian sequence. These Permian units are separated by a number of near shore and shoreline marine sandstone sequences and a brief terrestrial depositional event represented by the Greta/Clyde Coal Measures. These sequences are believed to extend offshore and offer potential reservoir objectives particularly where deposited in shoreline facies with source and seal rocks provided by the surrounding marine shales and siltstones.

The Upper Permian sequence is dominated by the Sydney Basin Coal Measures which onshore contains about 50% of Australia's black coal resources. These coal measures also contain sediments deposited during marine incursions. The north eastern portion of the coal measures is dominated by large conglomeratic tongues.

The Permian sequence is overlain by the Triassic Narrabeen Formation and Hawkesbury Sandstone. Both are massive fluvial sandstones sequences above which in the central onshore portion of the Basin lies the Wianamatta Shale. This unit, provides regional seal for underlying sandstones.

The two principal Sydney Basin coal measure sequences; the Newcastle and Tomago are known to underlie most of the onshore portion of the Basin and interpreted from seismic to extend across much of the offshore areas. Geochemical analysis of these coal measures shows they constitute regional source rock sequences principally for gas but also with minor liquids, levels of maturity being predicted across the proposed gazettal areas within the gas and condensate windows

Exploration Results

The acquisition, interpretation and mapping of 1,450 line kilometres of new 2D seismic data acquired by Bounty in 2004 together with pre-existing data highlighted a number of structures which, if conditions are right, could contain commercial quantities of hydrocarbons. From the interpretation and mapping of 2D seismic data Bounty estimated that the seven prospects and leads could, if all contain commercial quantities of hydrocarbons, contain up to 7 Tcf of gas in place. Of these mapped structures the largest was interpreted to potentially hold 1.2 Tcf of gas. At a 10% discount and if filled 1.2 Tcf of gas were discovered in a single prospect the NPV was calculated to be in the range of US$600 million. It would not be expected that all structures contain commercial quanties of hydrocarbons but these calculations by the operator indicate that mapped structures within the permit are large and warrant drilling.

Bounty has undertaken Landsat seep analysis over its permit area. This study suggests seeps may be associated with the Baleen Prospect. This work therefore indicates that oil rather than gas may be associated with this prospect. The significance of this study can only be determined by drilling and it does not guarantee that hydrocarbons are contained within this feature.

Further seismic and mapping may also highlight stratigraphic structures within the permit. Such can only be mapped with confidence once initial drilling has confirmed rock types present within PEP 11and the characteristics of these sediments.

No comment can be accurately made about reservoir quality of sandstones in the offshore portion of the Sydney Basin. In the past unsubstantiated perception that such rocks will contain poor quality reservoirs has inhibited exploration. This aspect cannot be quantified until drilling is undertaken but remains a risk. Elsewhere in the world gas is successfully produced from low permeability sandstones. Given the size of mapped structures reservoir is considered an acceptable risk.

Future Exploration Drilling

Bounty believe the Baleen Prospect (previously referred to in early ASX releases by MEC as the Biggus Prospect) with PEP 11 is gas prone. Bounty estimate based on

mapping of 2D seismic data that if this structure contains trapped gas, it has the potential to hold 1.2 Tcf. On the 25[th] October 2006 the MEC made an announcement to the Australian Stock Exchange Limited (ASX) that the Biggus structure would cost $20 million to drill. While drilling rig and associated costs have significantly increased since 2006, the potential size of this prospect and its possible reserves (if it contains economic quantities of hydrocarbons) indicate that it and possibly other features contained within PEP 11 warrant drilling. At the time of making this market release MEC estimated that 1.0 Tcf was worth about $3 billion. The Company is seeking Farmin partners.

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Figure 3

Proposed Baleen 1 details Proposed location: about 22 kilometres offshore About 25 kilometres southeast of Newcastle Proposed total depth: 1,500 – 2500 metres Estimated time to drill : 23 days

Valuation

MEC investee Asset Energy has paid for the 1,450 line kilometres of 2D seismic acquisition earning the right to drill 1 well to earn a total of 85% interest in this very large petroleum exploration permit. The seismic data has already been acquired and the company earned 25% interest in the project area by undertaking this work programme.

The Company’s 2007 Annual Report of page 30 records payment for deferred exploration expenditure of $660,062. An announcement to the ASX by the Company on 17[th] November 2006 indicated US$498,000 had been paid for seismic acquisition. The total cost of the 2D seismic survey acquired within PEP 11 by Fugro including processing and interpretation was about $1.2 million.

Based on the present oil price exceeding US$80 per barrel, perceived future demand for hydrocarbons on a global scale where economic growth in both China and India are likely to increase pressure and hence stimulate demand coupled with the Projects closeness to Australia’s largest industrial centre which needs both oil and gas hydrocarbon exploration in the region is justified. On an international basis oil company take after government royalties and taxes in Australia is one of the more favorable countries in which to explore and exploit both oil and gas. Needless to say, both political and legal risks in Australia are extremely low. Compared to farmin deals elsewhere in Australia and the world the terms negotiated by MEC for its equity in PEP 11 are very favourable. Mapped size of structures justify the risk, even though the Basin does not contain any known commercial oil or gas fields and the offshore sector of the basin has never been drilled. Given these criteria one can justify the $660,062 expenditure undertaken thus far by MEC.

When the area was held during the 1990’s by Santos a total of 10 structural leads are reported to have been identified. Based on an estimated 15 metres of net pay in each of these leads Santos estimated structures mapped by them could contain 975 BCF of gas in place. Ampolex identified the Baleen South lead as a major exploration target. They mapped unrisked reserves for this prospect as 1.5 Tcf. Subsequent to undertaking further seismic acquisition Bounty re-evaluated its prospect and leads inventory as detailed below:

NAME	STATUS	RECOVERABLE Gas P10 (BCF)
Baleen	Prospect	1,200
BaleenSoutheast	Lead	750
Offshore Sync	Lead	450
Alpha	Lead	200
Beta	Lead	150
Gamma	Lead	90
Dalta	Lead	550
TOTAL		3,390

The volumetric calculations contained in the above table are rounded P10 predictions undertaken by Bounty. The nature of this report did not necessitate recalculation of these estimated recoverable gas reserves. While there is some probability of oil or condensate associated with these prospects and leads, most source information indicates the Sydney Basin offshore is more gas than oil prone. P10 calculations represent the maximum recoverable reserves if the structures as mapped are full to spill point. Using these calculations and assumptions if all mapped structures contain gas and are filled to spill point they could collectively contain 3.4 Tcf of recoverable gas. All of these structures with the exception of Baleen are considered leads and therefore require further evaluation and data prior to drilling. Such evaluation including the recording of additional seismic data may reduce or enhance their size.

In reality not all leads will be matured to drillable prospects but further seismic acquisition and mapping may highlight other as yet undetected structures. Rarely are prospects filled to spill point and it would not be expected that all or any will contain economic quantities of hydrocarbons. This table therefore represents a maximum case.

Bounty has previously undertaken scoping economics for the Baleen Prospect based on it containing 1,200 Bcf recoverable of gas. At an NPV discounted at 10% the feature could have a value of $600 million. If the Baleen Prospect is condensate rich or contains an oil leg this value would increase. At an extreme value case if all prospects were filled to spill point and contained dry gas they could therefore have an NPV of $2.3 billion. A more likely case is that lower volumes of gas could be discovered in prospects not filled to spill point resulting in economic discoveries requiring several production facilities.

It cannot, however be stressed that this is a rank wildcat province and it is possible that no commercial hydrocarbon pools will be discovered. Therefore there is both risk and a high degree of uncertainty in the final exploration outcome but the risk reward is such that warrants an initial well.

Summary

MEC is actively seeking a farmin partner(s) to contribute to a portion of the cost of drilling the first well into the permit. While the permit is situated within an untested

basin, shows thus far recorded testify that it is situated within a petroleum province. A discovery within the permit should find a ready market from Sydney and hinterland once all environmental requirements are satisfied. If a commercial hydrocarbon discovery is made within PEP 11 it would have considerable impact on the company.

It must, however, be pointed out that the government work obligations require a well to be drilled into PEP 11. Negotiations with the Relevant Authority may gain further extensions of time in which to drill a well. If a well is not drilled, the permit will ultimately be cancelled and have zero value.

Burgan Energy Pty Ltd has been employed to independently report and justify the expenditures commitments made by MEC under its PEP 11 farmin terms. Burgan will charge a fee for these services. This report has been prepared by Ivan BURGESS , a director of Burgan Energy who is a geologist with about 30 years professional experience. For the purpose of making these assumptions, he is a qualified technical person.

It is noted the Directors of MEC have provided information requested to undertake this evaluation. This data is considered sufficient to provide the Directors with an estimation of the worth of the Project area. This report has relied on seismic mapping by Bounty and previous operators of this area including statements made by the New South Wales Department of Primary Industries in various publicly available documents. The nature of this work did not require new seismic interpretation for the reasons given here in.

Yours faithfully

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Ivan Burgess

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INDEPENDENT EXPERT’S REPORT

MEC RESOURCES LTD

16 MAY 2008

Level 41, BankWest Tower, 108 St George’s Terrace, GPO Box 2570, Perth, Western Australia 6001 Tel: 08 9463 2463 Fax: 08 9463 2499 Email: [email protected]

MGI Bridge Partners Corporate Services Pty Ltd ABN 84 009 342 661 A member of MGI, an association of independent accounting firms with offices throughout the world

MEC Resources Ltd Independent Expert's Report

Page 1

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16 May 2008

PRIVATE & CONFIDENTIAL

The Directors MEC Resources Ltd PO Box 317 NORTH PERTH WA 6906

Dear Sirs

INDEPENDENT EXPERT REPORT

1. INTRODUCTION

MGI Bridge Partners Corporate Services Pty Ltd (MGIBPCS) have been requested by MEC Resources Ltd (‘MEC’ or ‘the Company’) to prepare an Independent Expert Report in relation to a related party transaction (‘the Proposed Transaction’) which under Listing Rule 10.1 of the Australian Stock Exchange (ASX) Listing Rules and Section 208 of the Corporations Act requires shareholder approval.

The Proposed transaction comprises the following:

sell 100% of the issued, fully paid ordinary shares in the capital of Asset Energy (a wholly owned subsidiary of the Company) to Advent Energy for a total consideration of $660,062, to be satisfied in full by the issue of 13,201,240 Advent Energy shares to the Company;
sell the Central Petroleum Shares to Advent Energy for a total consideration of $1,625,000, to be satisfied in full by the issue of 32,500,000 Advent Energy shares to the Company; and
subscribe for up to 20 million Advent Energy shares at an issue price of $0.05 per Share, a total of $1 million

(collectively referred to herein as the Proposed Transaction).

The details of the Proposed Transaction are set out fully in the Explanatory Statement accompanying the Notice of Meeting of MEC to be held on or about 27 June 2008. We understand that this Report will accompany the Notice of Meeting and Explanatory Statement.

Level 41, BankWest Tower, 108 St George’s Terrace, GPO Box 2570, Perth, Western Australia 6001 Tel: 08 9463 2463 Fax: 08 9463 2499 Email: [email protected]

MGI Bridge Partners Corporate Services Pty Ltd ABN 84 009 342 661 A member of MGI, an association of independent accounting firms with offices throughout the world

MEC Resources Ltd Independent Expert's Report Page 2

2. SUMMARY OF OPINION

Based upon the information set out in this report, we are of the opinion that the Proposed Transaction is not fair but reasonable having regard to the interests of the non-associated shareholders of MEC.

MGIBPCS has formed the opinion that the Proposed Transaction is not fair because the value of the assets being sold to Advent is less than the value of the consideration being paid by the company.

ASIC Regulatory Guide 111 (RG 111), states that an offer is reasonable if it is fair. Notwithstanding this, MGIBPCS has also had regard to other relevant considerations in assessing the reasonableness of the Proposed Transaction. Further details are set out in Section 8 of this Report.

Our opinion is based solely on the information available at the date of the report as detailed in Section 9 of the Report.
The principal factors that we have taken into account in forming our opinion are set out in the supporting detail to this report.
The decision of each shareholder as to whether to approve the Proposed Transaction is a matter for individual shareholders. This decision should be based on each shareholder’s views as to matters including value and future market conditions, risk profile, liquidity preferences, investment strategy, portfolio structure and tax position. In particular, taxation consequences may vary from shareholder to shareholder. If shareholders are in any doubt, they should consult an independent professional adviser.
The opinion should be read in conjunction with the full text of this report which follows after our Financial Services Guide, which sets out our scope and findings.

The supporting detail of our report (set out in the sections that follow after our Financial Services Guide and Qualifications Declarations and Consents), comprises the following sections:

Summary of the Proposed Transaction
Purpose of the Report
Basis of the Assessment
Valuation of shares – MEC Resources Pre Proposed Transaction
Valuation of shares – MEC Resources Post Proposed Transaction
Assessment as to Fairness and Reasonableness
Sources of Information

Yours sincerely

MGI BRIDGE PARTNERS CORPORATE SERVICES PTY LTD

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T J SPOONER CA FCA(UK) ACIS DIRECTOR

MEC Resources Ltd Independent Expert's Report Page 3

MGI Bridge Partners Corporate Services Pty Ltd (“MGIBPCS’) FINANCIAL SERVICES GUIDE

Complaints

MGIBPCS (ABN 84 009 342 661) provides valuation advice, valuation reports, Independent Expert's Reports and Investigating Accountant’s Reports in relation to takeovers and mergers, prospectuses and disclosure documents, commercial litigation, tax and stamp duty matters, assessments of economic loss, commercial and regulatory disputes. MGIBPCS holds Australian Financial Services Licence No. 289358.
MGIBPCS has been engaged to provide general financial product advice in the form of the attached report to be provided to you.

Financial Services Guide

The Corporations Act 2001 authorises MGIBPCS to provide this Financial Services Guide (FSG) in connection with its provision of an Independent Expert’s Report (IER) to accompany the Notice of Meeting to be sent to MEC shareholders.
This FSG is designed to assist retail clients in their use of any general financial product advice contained in the IER. This FSG contains information about MGIBPCS generally, the financial services we are licensed to provide, the remuneration we may receive in connection with the preparation of the IER, and if complaints against us ever arise how they will be dealt with.

Financial services we are licensed to provide

Our Australian financial services licence allows us to carry on a financial services business to provide financial product advice for securities and deal in a financial product by arranging for another person to issue, apply for, acquire, vary or dispose of a financial product in respect of securities to retail and wholesale clients.

General Financial Product advice

The IER contains only general financial product advice. It was prepared without taking into account your personal objectives, financial situation or needs. It is not intended to take the place of professional advice and you should not make specific investment decisions in reliance upon the information contained in this report.
You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. You may wish to obtain personal financial product advice from the holder of an Australian Financial Service Licence to assist you in this assessment.
Fees, commissions and other benefits we may receive
MGIBPCS charges fees to produce reports, including this IER. These fees are negotiated and agreed with the entity which engages MGIBPCS to provide a report. Fees are charged on an hourly basis or as a fixed amount depending on the terms of the agreement with the person who engages us.
Neither MGIBPCS nor its directors and officers receives any commissions or other benefits, except for the fees for services referred to above.
All of our employees receive a salary and do not receive any commissions or other benefits arising directly from services provided to our clients. The remuneration paid to our directors reflects their individual contribution to the company and covers all aspects of performance. Our directors do not receive any commissions or other benefits arising directly from services provided to our clients.
We do not pay commissions or provide other benefits to other parties for referring prospective clients to us.
If you have a complaint, please raise it with us first, using the contact details listed below. We will endeavour to satisfactorily resolve your complaint in a timely manner.
If we are not able to resolve your complaint to your satisfaction within 45 days of your written notification, you are entitled to have your matter referred to the Financial Industry Complaints Services (FICS), an external complaints resolution service. You will not be charged for using the FICS service.

Contact details

MGIBPCS contact details are contained on the first page of our Independent Expert’s Report.

QUALIFICATIONS, DECLARATIONS AND CONSENTS Qualifications

MGIBPCS is licensed under the Corporations Act to carry on a financial services business to provide the financial services referred to in section 5 of our Financial Services Guide (refer above). MGIBPCS's authorised representatives have extensive experience in the field of corporate finance, particularly in relation to the valuation of shares and businesses and have undertaken a significant number of valuations, IER’s, IAR’s and similar assignments.
This report was prepared by Mr TJ Spooner, who is an authorised representative of MGIBPCS. Mr Spooner has substantial experience in the provision of valuation and similar advice and has been a qualified Chartered Accountant for over 20 years.

Declarations

This report has been prepared at the request of the Directors of MEC to accompany the Notice of Meeting to be sent to MEC shareholders. It is not intended that this report should serve any purpose other than as stated therein.

Interest

MGI is not the auditor of MEC. At the date of the attached report, neither MGIBPCS, nor Mr TJ Spooner or any other director, executive or employee of MGIBPCS or MGI has any material interest in MEC either directly or indirectly, or in the outcome of the offer, other than in the preparation of this Report for which normal professional fees of approximately $17,500 will be received. Such fee will be payable regardless of whether or not shareholders approve the Proposed Transaction.

Indemnification

As a condition of MGIBPCS's agreement to prepare this report, MEC agrees to indemnify MGIBPCS in relation to any claim arising from or in connection with its reliance on information or documentation provided by or on behalf of MEC which is false or misleading or omits material particulars or arising from any failure to supply relevant documents or information.

Consents

MGIBPCS was not involved in the preparation of any other part of the Explanatory Statement to accompany the Notice of Meeting (Explanatory Statement), and accordingly makes no representations or warranties as to the completeness and accuracy of any information contained in any other part of the Explanatory Statement. MGIBPCS consents to the inclusion of this report in the Explanatory Statement in the form and context in which it is included. At the date of this report, this consent has not been withdrawn.

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3. SUMMARY OF THE PROPOSED TRANSACTIONS

3.1 Asset Energy Sale

In October 2007, the basis of an agreement was finalised between MEC Resources and Advent whereby Advent could acquire MEC’s interest in the PEP11 project for an amount equal to MEC’s cost of acquisition of the project. On 28th December 2007, the Company executed a Share Sale Agreement with Advent by which the Company agreed, subject to Shareholder approval and other conditions precedent, to sell 100% of the issued capital of Asset Energy to Advent.

In consideration for the acquisition of the Asset Energy shares, Advent agreed to issue 13,201,240 Shares to MEC Resources at a deemed issue price of $0.05 per Share, a total of $660,062.

3.2 Central Petroleum Sale

In October 2007 the basis of an agreement was finalised whereby Advent could acquire all of the shares which MEC Resources owned in Central Petroleum from MEC Resources at the market value on that day (Central Petroleum shares being traded on the Australian Securities Exchange), to be satisfied by the issue of shares in Advent subject to certain conditions. On 28[th] December 2007, the Company executed a Share Sale Agreement with Advent by which the Company agreed, subject to Shareholder approval and several other conditions precedent, to sell the Central Petroleum Securities to Advent.

In consideration for the acquisition of the Central Petroleum Securities, Advent agreed to issue 32,500,000 Shares to MEC Resources at a deemed issue price of $0.05 per Share, a total of $1,625,000.

3.3 Share Placement

On 8th December 2005, Advent and MEC Resources entered into an initial agreement whereby MEC was granted an exclusive right to negotiate the acquisition of a minimum 19% interest in Advent. On 20th November 2006, MEC agreed to invest an amount of $1,000,000 into Advent, subject to certain conditions. On 28th December 2007, the Company formalised this agreement and executed a Subscription Agreement with MEC Resources (Subscription Agreement) by which the Company agreed, subject to, among other things, Shareholder approval and the approval of the shareholders of MEC Resources, to issue and allot 20 million Shares to MEC Resources at an issue price of $0.05 per Share to raise $1 million (Subscription Amount).

Under the Subscription Agreement, MEC Resources is entitled to satisfy the Subscription Amount by a cash payment and/or the deduction of all advances made to the Company by MEC Resources.

For the purposes of this report the above events are to be considered as one transaction.

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4. PURPOSE OF THE REPORT

ASX Listing Rule 10.2 states that “an asset is substantial if its value, or the value of the consideration for it, is, or in the ASX’s opinion is, 5% or more of the equity interests of the entity set out in the latest accounts given to ASX under the listing rules.

The value of the Central Petroleum Shares, the PEP 11 oil and gas permit and the amount of the subscription for the Advent Energy shares is greater than 5% of the Company’s equity interests on a consolidated basis as set out in the latest Financial Report lodged with ASX by the Company. As a result, the Company is seeking Shareholder approval for the purpose of ASX Listing Rule 10.1.

Further, under Chapter 2E of the Corporations Act, a public company cannot give a ‘financial benefit’ to a ‘related party’ unless one of the exceptions to the section apply or shareholders have in general meeting approved the giving of that financial benefit to the related party.

It is the view of the Directors that the exceptions under the Corporations Act to the provision of financial benefits to related parties may not apply in the current circumstances. The Directors have determined to seek Shareholder approval under Section 208 of the Corporations Act.

To assist shareholders in making a decision on the Proposed Transaction, the directors have requested that MGIBPCS prepare an independent expert's report, which must state whether, in the opinion of the independent expert, the Proposed Transaction is fair and reasonable to the non-associated shareholders of MEC.

5. BASIS OF THE ASSESSMENT

Set out in the Notice of Meeting accompanying this Report are the ASX Listing Rule provisions relevant to the Proposed Transaction and information in relation thereto.

In preparing our Report, we have had regard to ASIC Regulatory Guide 111 and 112 relating to independent experts’ reports.

The term ‘fair and reasonable’ has no legal definition although over time a commonly accepted interpretation has evolved. However, fair and reasonable has different meanings for different regulatory purposes.

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ASIC Regulatory Guide 111 provides that the assessment of whether a proposal is fair and reasonable should involve a comparison of the likely advantages and disadvantages for non associated shareholders if the Proposed Transaction is implemented and if it is not.

In essence, the proposal will be “fair and reasonable” if the non associated shareholders are better off if the proposal is implemented. They will be better off if the expected benefits outweigh the disadvantages to the non associated shareholders.

ASIC regulatory Guide 111, states, inter alia:

an offer is considered ‘fair’ if the value of the offer price or consideration is equal to, or greater than, the value of the securities that are the subject of the offer.
an offer is considered ‘reasonable’ if it is fair. It might also be ‘reasonable’ if, despite being ‘not fair’, the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of any higher bid before the close of the offer.

ASIC Regulatory Guide 111 requires the assessment of ‘fair’ to be made assuming 100% ownership of the company. It considers it to be inappropriate to apply a discount to the value of the securities under the offer that would normally be considered in the valuation of a minority interest to reflect such factors as a lack of control.

ASIC Regulatory Guide 111 also provides examples of factors that are relevant in an assessment of reasonableness. The form of analysis the expert uses to evaluate a transaction should address the issues faced by security holders.

In our opinion, for the purposes of this report ‘fairness’ is taken to mean a reference to quantification of respective values of consideration being paid compared to the value of assets being transferred. ‘Reasonableness’ is taken to include consideration of other qualitative factors which can be assessed on objective grounds.

The assessment as to the fairness and reasonableness of the Proposed Transaction is set out in Section 8 of this Report.

6. VALUATION OF SHARES – MEC RESOURCES LTD PRE PROPOSED TRANSACTION

6.1 Valuation Overview

The usual approach to the valuation of an asset is to seek to determine what a willing but not anxious buyer, acting at arm's length, with adequate information, would be prepared to pay and a willing, but not anxious seller would be prepared to accept in an open market.

In valuing MEC prior to consideration of the Proposed Transaction, we have considered the following valuation approaches:

Discounted cash flow (DCF) approach;
Capitalisation of future maintainable earnings (earnings based) approach;
Orderly realisation of assets (asset based) approach;
Quoted price for MEC listed securities (market value) approach.

In applying the above methodologies, it would be open to an expert to have regard to the amount an alternative bidder might be willing to offer if all the securities in the target were available for purchase, for example, in selecting earnings multiples and underpinning any overall judgment as to value.

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In such circumstances, the expert should ensure that it has the expertise to value the assets (e.g. to value real property or exploration mining tenements) or retain a specialist to do so. In this respect we have taken note of the valuation report dated 10 December 2007 prepared by Burgan Energy Pty Ltd in respect of the valuation of the company’s Petroleum Exploration Permit (PEP) 11 (‘Project’ or ‘the Permit’) located offshore in the Sydney Basin, New South Wales, Australia (Burgan Report) which is included in Annexure 2 of the Explanatory Statement.

6.2 Valuation Approach

The traditional valuation method used to value companies is the capitalisation of future maintainable earnings, with such earnings being estimated using historical results. However, in order to adopt such a basis of valuation, a business must have a track record of profitability. As MEC does not have a track record of profitability, we consider a valuation on this basis to be inappropriate.

MGIBPCS believes that the most appropriate method for valuing the issued shares in MEC is the asset-based approach. The most common form of asset based approach is the Net Realisable Value method. The resultant net realisable assets of the Company can then be expressed in terms of a value per share. As noted in Section 6.3 of this Report, the major portion of MEC's assets (other than Cash and cash equivalents and its investment in listed shares) comprise exploration expenditure.

In determining the net realisable value of these exploration assets, we have considered available information regarding its key projects and, in particular, the Burgan Report referred to above.

As a crosscheck to the valuation on the above basis, MGIBPCS has used the market value approach with reference to the market price of MEC shares prior to the announcement of the Proposed Transaction. This valuation crosscheck calculation is set out in Section 6.4.5 of this Report.

6.3 Value of MEC Shares

In establishing the value of MEC prior to the Proposed Transaction, the net asset backing per share has been determined based upon the audited consolidated position as at 31 December 2007, with no adjustments for any subsequent transactions. We are not aware of any such material transactions.

Other than the assets the subject of the Proposed Transaction, there are no material balances other than Cash and Cash equivalents and loan balances. Valuation assessments were then carried out on assets and liabilities, with the only revised assessment being made to Exploration Expenditure. We have reviewed the Burgan Report and consider that no adjustment is required to the carrying value of the PEP 11. Further comments on this Report are set out in Section 7.2(a) below.

This has resulted in the following calculation of net asset backing per share:

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6.3.1 MEC RESOURCES LTD AND CONTROLLED ENTITIES

ASX Reported Balance Sheet as at 31 December 2007

	Reported 31.12.07 $
Current Assets Cash and Cash Equivalents Trade and Other Receivables Other Current Assets Total Current Assets Non-Current Assets Financial Assets Capitalised Exploration Costs Property, Plant & Equipment Other Non Current Assets Total Non-Current Assets Total Assets Current Liabilities Trade and Other Payables Short term provisions Total Current Liabilities Non-Current Liabilities Payables Total Non-Current Liabilities Total Liabilities Net Assets Total number of shares on issue Net asset backing per share	2,816,926 62,134 35,086
	2,914,146
	1,673,120 721,670 13,027 167,629
	2,575,446
	5,489,592
	267,298 5,762
	273,060
	-
	-
	273,060
	5,216,532
	67,957,742 0.077

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6.4 Issued Capital and Share Transactions

6.4.1 Issued Capital

As at the date of this Report, the total issued share capital of MEC comprises 67,957,742 fully paid ordinary shares. There have been no movements in MEC's share capital since 31 December 2007. The values below are net of share issue costs.

Balance as at	Number of
31 December 2007	Shares	Note	$
Listed	49,179,153
Unlisted	18,778,589	These shares are to be released
		fromescrow on 29thMay2008
As at the date
ofthisReport	67,957,742		$6,416,279

6.4.2 Options

At the date of this Report, there are 9,000,000 options on issue. These options are exercisable at 21 cents on or before 1 December 2010. There have been no movements in MEC’s options since the 31 December 2007.

Balance as at	Number of
31 December 2007	Options	Note	$
Listed	-
Unlisted – 21 cent	9,000,000	These options are to be released
options		from escrow on 29thMay 2008
As at the date
ofthisReport	9,000,000		$26,001

6.4.3 Share Trading

The following summary provides details of the monthly trading volumes of MEC Resources’ shares on ASX.

MONTH	High	Low	Volume
May 2008 (to 16th)	0.069	0.062	219,000
April 2008	0.077	0.051	313,813
March 2008	0.078	0.068	145,701
February 2008	0.110	0.078	359,500
January 2008	0.140	0.093	461,749
December 2007	0.145	0.120	654,635

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As can be seen from the above table, in the past 6 months the company’s share price has fluctuated from a low of $0.051 to a high of $0.145 and has decreased steadily during the period under review. There has been no noticeable change in the share price pursuant to the announcement on 1 April 2008 regarding the Proposed Transaction. We also note that in the past seven days of trading, MEC’s share price has risen from $0.064 to $0.069 – representing a small increase of some 8%. We further note that the average monthly volume of shares sold is only 359,066, demonstrating a comparatively thin level of trading in the company’s stock.

MEC Resources Recent Share Price History:

The chart below represents the movement in share price of MEC listed shares over the past year:

MEC Resources 1 Year Chart

==> picture [398 x 250] intentionally omitted <==

----- Start of picture text -----

$0.18
$0.16
$0.14
$0.12
$0.10
$0.08
$0.06
$0.04
$0.02
$0.00
Date
Value in AUD
21/05/2007 21/06/2007 21/07/2007 21/08/2007 21/09/2007 21/10/2007 21/11/2007 21/12/2007 21/01/2008 21/02/2008 21/03/2008 21/04/2008
----- End of picture text -----

6.4.4 Schedule of recent ASX Announcements

Recent announcements since the lodgement of the company’s 2007 Annual Report are summarised below:

Date ASX Announcement 2008 07 May Company Secretary Appointment/ Resignation 23 April Carnarvon Basin – EP325 01 April Sale of Interest to Advent Energy Ltd 28 March CTP: Advent Energy Announcement 27 March Update re Central Petroleum (CTP) and Advent Energy 13 February Half Year Report and Accounts

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Date ASX Announcement (continued) 2007 17 December Appendix 3B 3 December Results of Annual General Meeting 19 November PEP 11 – Reference Santos / Ampolex Studies 13 November Renewal Retention Licence RL1 – Northern Territory 31 October Annual Report to Shareholders 31 October Notice of General Meeting/ Proxy Form 08 October Signs MOU with Chinese Oil and Gas Company CNLC

6.4.5 Market Value

In the four weeks prior to the date of the announcement, MEC’s share price fluctuated between $0.068 and $0.078. In the period from the date of the announcement to 16 May 2008, MEC’s share price fluctuated between $0.051and $0.077.

The valuation range determined in Section 6.3.1 is not inconsistent with this market value range.

7. VALUATION OF SHARES – MEC RESOURCES LTD POST PROPOSED TRANSACTION

7.1 Components of the Proposed Transaction

The Proposed Transaction comprises:

The sale of 100% of the issued, fully paid ordinary shares in the capital of Asset Energy (a wholly owned subsidiary of the Company) to Advent Energy for a total consideration of $660,062, to be satisfied in full by the issue of 13,201,240 Advent Energy shares to the Company;
The sale of the Central Petroleum Shares to Advent Energy for a total consideration of $1,625,000, to be satisfied in full by the issue of 32,500,000 Advent Energy shares to the Company; and
The subscription for up to 20 million Advent Energy shares at an issue price of $0.05 per Share, a total of $1 million.
7.2 Net Asset Valuation Post Proposed Transaction

In establishing the value of MEC following completion of the Proposed Transaction, the net asset backing per share has been determined based upon the audited consolidated position as at 31 December 2007 as referred to in Section 6.3.1 of this Report, as adjusted for the Proposed Transaction.

Valuation assessments were then carried out on assets and liabilities, with the following revised assessments being made:

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a) Exploration Expenditure

Utilising the Burgan Report, the book value of exploration expenditure has not been adjusted, as the report concludes that “ Compared to farmin deals elsewhere in Australia and the world the terms negotiated by MEC for its equity in PEP 11 are very favourable. Mapped size of structures justify the risk, even though the Basin does not contain any known commercial oil or gas fields and the offshore sector of the basin has never been drilled. Given these criteria one can justify the $660,062 expenditure undertaken thus far by MEC. We note that the Report does not indicate a range of high, low and preferred values. We further note that the report was prepared in December 2007. We have discussed this with the management of MEC and conclude that nothing material has occurred since that date to the date of this report that is likely to impinge upon the basis of our assessment of expenditure incurred to date.

b) Cash Assets

One of the components of the Proposed Transaction is the subscription for 20,000,000 shares. MEC can satisfy the subscription amount by a cash payment and/or the deduction of all loan funds owing by Advent. We have treated this as an additional liability (refer 7.2.1 below).

c) Investments

This has been increased by the value of the 65,701,240 ordinary shares to be issued by Advent in respect of the Proposed Transaction, calculated in accordance with Section 7.3 of this Report.

No adjustment has been made in respect of any potential capital gains tax payable in respect of the Proposed Transaction as assets are carried at cost. However adjustment has been made to impair the carrying value of the Investment as referred to in Section 7.3.

This has resulted in a net asset backing per share of $0.069, as calculated below:

7.2.1 MEC RESOURCES LTD AND CONTROLLED ENTITIES

Adjusted Balance Sheet as at 31 December 2007 Post Proposed Transaction

	Reported 31.12.07 $ Proposed Transaction $ Notes Pro Forma 31.12.07 $
Current Assets Cash and Cash Equivalents Receivables & other debtors Total Current Assets Non-Current Assets Property, Plant & Equipment Exploration expenditure Investments – Advent Energy – Central Petroleum – PEP11 Capitalised Costs Loan – Advent Energy Loan - other Total Non-Current Assets	2,816,925 102,728 (614) (851) i i 2,816,311 101,877
	2,919,653 (1,465) 2,918,188
	7,519 62,365 159,199 1,513,921 659,305 126,931 40,698 - - 2,623,681 (1,513,921) (659,305) - - i, ii, iii ii i 7,519 62,365 2,782,880 - - 126,931 40,698
	2,569,938 450,455 3,020,393

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	*MEC Resources Ltd* *Independent Expert's Report*
	*Page 13* Reported 31.12.07 $ Proposed Transaction $ Notes Pro Forma 31.12.07 $
Total Assets Current Liabilities Payables Subscription for Advent Shares Total Current Liabilities Non-Current Liabilities Loan accounts Total Non-Current Liabilities Total Liabilities Net Assets Total number of shares on issue Net asset backing per share
	5,489,591 448,990 5,938,581
	248,316 - (8,377) 1,000,000 i iii 239,939 1,000,000
	248,316 991,623 1,239,939
	24,744 (6,186) 18,558
	24,744 (6,186) 18,558
	273,060 985,437 1,258,497
	5,216,531 (536,447) 4,680,084
	67,957,742 67,957,742 0.077 0.069

NB The adjusted Balance Sheet comprises the audited consolidated balance sheet at 31 December 2007, as adjusted for the Proposed Transaction, comprising:
(i) MEC sells its shares in its subsidiary Asset Energy Ltd to Advent and in return receives 13,201,240 Advent shares at a deemed issue price of $0.05 per share, a total of $660,062. $659,305 comprises the capitalised costs in Asset Energy Ltd.
(ii) This represents the sale of MEC’s shares in Central Petroleum to Advent for which Advent agreed to issue 32,500,000 shares to MEC at a deemed issue price of $0.05 per share, a total of $1,625,000.
(iii) This represents the subscription for 20 million Advent shares at an issue price of $0.05 per share, a total of $1 million. Under the Subscription Agreement, MEC is entitled to satisfy the Subscription Amount by a cash payment and/or the deduction of all loan funds owing by Advent Energy to MEC. The carrying value of this investment has been impaired to reflect Advent’s net asset backing (refer section 7.31 below).
7.3 Estimated value of Advent consideration

As referred to in Section 3 of this Report, the consideration for the Proposed Transaction comprises the issue of 65,701,240 fully paid ordinary shares in the issued capital of Advent at a deemed issue price of five (5) cents.

For the purposes of estimating the likely value of the Advent shares to be issued, we have reviewed Advent’s Balance Sheet as at 31 December 2007 and adjusted for the impact of the acquisition of the Asset Energy Shares, the Central Petroleum Shares and the related issue of shares as consideration, together with the subscription by MEC for 20 million shares in Advent.

We note that Advent’s principal assets prior to the Proposed Transaction comprise Exploration and Development expenditure. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

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As referred to in Advent’s 30 June 2007 Annual Report, it “has assembled a range of hydrocarbon permits with a focus on near term production opportunities with pre-existing infrastructure and exploration upside. Advent is undertaking development activities on the tenement package. Its objective is to supply electrical power generation, gas and diesel markets by developing and value-adding to its oil and gas resources. Advent Energy is actively seeking further oil and gas permits to include in its portfolio and after completing negotiations will seek a listing of its securities, either directly or indirectly, on the ASX”.

MGIBPCS believes that the most appropriate method for valuing the issued shares in Advent is the asset-based approach, having regard to the early stage of its exploration and development expenditure. The most common form of asset based approach is the Net Realisable Value method. The resultant net realisable assets of the Company can then be expressed in terms of a value per share.

In determining the net realisable value of these exploration assets, we have considered available information regarding its key projects and, in particular, the valuation report prepared by Burgan Energy Pty Ltd in respect of the company’s Petroleum Exploration Permit (PEP) 11 (‘Project’ or ‘the Permit’) located offshore Sydney Basin, New South Wales, Australia. This Report is included as Annexure 2 of the Explanatory Statement. We note the Report’s concluding paragraph referred to in section 7.2(a) above.

We further note that Strike Oil, the operator of the Exploration Permit EP325 (in which Advent holds an 8.3% interest) has submitted the following report to ASX.

“The final report of the front end engineering design study for supplying gas from the Rivoli gasfield (Strike Oil Wl: 44.5%) to the Department of Defence’s communications station located north of Exmouth, was submitted during the quarter. Subject to a suitable gas supply agreement being reached, approval by the Department of Defence for the project is expected to be sought by June 2008, with first gas delivery anticipated in late 2009”.

7.3.1 Impairment of Advent Shares

The assets the subject of the Proposed Transaction have been valued at the amounts referred to in Section 7.3 except to the extent of the impairment in respect of the shares acquired in Advent , as referred to below:

Advent , as referred to below:
		$
Advent Net Assets as at 31 December 2007 (refer 7.32 below)		3,466,303
		-------------
Total number of shares held by MEC	65,701,240
Total number of Advent shares on issue	81,836,240
% of Advent held by MEC	80.28%
Interest in Advent’s Net Assets		2,782,880
Cost of investment in Advent:
Balance at 31.12.07	159,199
Add Proposed Transaction investment	3,280,000
	-------------
		3,439,199
		-------------
Impairment		656,319
		-------------

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7.3.2 ADVENT ENERGY LTD

Adjusted Balance Sheet as at 31 December 2007 Post Proposed Transaction

.2 ADVENT ENERGY LTD Adjusted Balance Sheet as at 31	December 2007 Post Proposed Transaction
	Reported 31.12.07 $ Proposed Transactions $ Notes Pro Forma 31.12.07 $
Current Assets Cash and Cash Equivalents Receivables & other debtors Subscription Receivable Total Current Assets Non-Current Assets Investments – Central Petroleum – PEP11 Capitalised Costs Other Total Non-Current Assets Total Assets Current Liabilities Payables Provisions - other Total Current Liabilities Non-Current Liabilities Loan accounts Total Non-Current Liabilities Total Liabilities Net Assets Total number of shares on issue Net asset backing per share	59,580 2,104 - 614 851 1,000,000 i i iii 60,194 2,955 1,000,000
	61,684 1,001,465 1,063,149
	- 48,337 958,788 1,513,921 659,305 - ii i 1,513,921 707,642 958,788
	1,007,125 2,173,226 3,180,351
	1,068,809 3,174,691 4,243,500
	74,341 81,844 8,377 i 82,718 81,844
	156,185 8,377 164,562
	606,449 6,186 612,635
	606,449 6,186 612,635
	762,634 14,563 777,197
	306,175 3,160,128 3,466,303
	19,102,000 81,836,240 0.016 0.042

NB The adjusted Balance Sheet comprises the unaudited consolidated balance sheet at 31 December 2007, as adjusted for:
(i) The purchase of Asset Energy Ltd from MEC for which Advent in return issues 13,201,240 shares at a deemed issue price of $0.05 per share to MEC, a total of $660,062.
(ii) This represents the purchase of MEC’s shares in Central Petroleum for which Advent in return agrees to issue 32,500,000 shares to MEC at a deemed issue price of $0.05 per share, a total of $1,625,000. This amount has been included at the market value at 31.12.07 being $1,513,921 – refer 7.33 below.
(iii) This represents the issue of 20 million Advent shares at an issue price of $0.05 per share, a total of $1 million. Under the Subscription Agreement, MEC will be entitled to satisfy the Subscription Amount by a cash payment and/or the deduction of all loan funds owing by Advent Energy to MEC.

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7.3.3 Investment in Central Petroleum

MEC’s investment in Central Petroleum (CTP) was revalued at 31 December 2007 to $1,513,921 at which time CTP shares were trading at 18.5 cents. Since that time the share price has fluctuated between 13.5 cents (26 March 2008) and 23 cents (11 April 2008)). In the week ended 16 May 2008 the trading range has been between 16 cents and 20 cents. We have therefore included the investment at the 31 December 2007 valuation.

7.3.4 Advent Corporate Overview

As Advent is an investee company of MEC, full details of its projects have been regularly provided to ASX under MEC’s continuous disclosure requirements.

Advent’s Board of Directors

This comprises Mr Hock Goh, Seng Yap and Mr David Breeze, all of whom are directors of MEC and hence are well known to the non-associated shareholders. In particular, Mr Hock Goh is Chairman of MEC and Mr David Breeze is Executive Director of MEC.

8. ASSESSMENT AS TO FAIRNESS AND REASONABLENESS

8.1 Assessment as to Fairness

As noted in Section 5 of this Report, an offer is considered "fair" if the value of the consideration being offered is equal to, or greater than, the value of the securities that are the subject of the offer. MGIBPCS's assessment as to the fairness of the Proposed Transaction is set out below:

MGIBPCS	valuation	of MEC	MGIBPCS valuation of
share prior	to the	Proposed	MEC share after completion
Transaction			oftheProposedTransaction
	$0.077		$0.069

After consideration of the above, the Proposed Transaction is considered to be not fair to the non-associated shareholders of MEC as the preferred value of a share after completion of the Proposed Transaction is not higher than the current value of an MEC share.

8.2 Assessment as to Reasonableness

ASIC Regulatory Guide 111 states that an offer is reasonable if it is fair. However, under this criterion the offer consideration is less than the assessed value, hence the offer is not fair and therefore is not automatically considered to be reasonable.

There are a number of other relevant factors to be considered in assessing the reasonableness of the Proposed Transaction. These factors are set out below as advantages and disadvantages.

MEC Resources Ltd Independent Expert's Report

Page 17

Advantages

the Proposed Transaction will give MEC control of Advent Energy as a special purpose vehicle which can raise funds, without the restrictions of the pooled development fund status of MEC Resources;
Pursuant to the Proposed Transaction MEC will hold in excess of 80% of Advent’s share capital and hence MEC retains control of the projects and assets the subject of the proposed transaction;
Advent is considered by MEC to possess the requisite ability to properly manage and exploit the projects the subject of the Proposed Transaction, together with its other assets;
Advent is well known to MEC, having been an investee company of MEC. Hence MEC is very familiar with Advent’s projects and prospects, details of which have been included in MEC’s continuous disclosure obligations since its initial investment in the company;
Despite the fact that Advent is not currently listed on ASX, having regard to the nature and composition of the assets, the present composition of the Advent Board and the buoyant share price of the mining sector as a whole, a future listing on ASX is possible. In addition Advent’s the key assets are potentially in a readily disposable form;
The transaction has already been approved by Advent’s shareholders; and
If the Proposed Transaction is not approved, it is likely that MEC will need to address its status as a pooled development fund in order to fully develop the assets held in its subsidiary and investee companies and, if it does so, it will need to secure alternative funding in order to develop its other prospective mineral assets, which is likely to necessitate further dilution of existing shareholders’ interests in the company.

Disadvantages

The Proposed Transaction results in two of MEC's prospective projects being disposed of and a significant reduction in its cash reserves, thus reducing MEC’s ability to exploit these and other alternative projects.
The shares in Advent that MEC has acquired are not presently listed on ASX and hence the marketability of it investment in Advent is relatively illiquid.
Advent’s substantial portfolio of ‘early stage’ exploration permits will require access to substantial capital to identify and develop these assets.

In our opinion, on balance, the advantages of approving the Proposed Transaction are greater than the disadvantages. These advantages arise both as a result of implementing the Proposed Transaction and of avoiding the disadvantages that may arise as a result of not implementing the Proposed Transaction. Accordingly, in our opinion, the Proposed Transaction is reasonable to the non-associated shareholders of MEC.

8.3 Conclusion

Based on the valuation of an MEC share and on the above assessment, MGIBPCS is of the opinion that the Proposed Transaction is not fair but reasonable to the nonassociated shareholders of MEC.

MEC Resources Ltd Independent Expert's Report Page 18

9. SOURCES OF INFORMATION

In making our assessment as to whether the Proposed Transaction is fair and reasonable to the nonassociated shareholders of MEC, we have reviewed relevant published available information and other unpublished information of the Company which is relevant in the circumstances. In addition, we have held discussions with the Company's directors and management. Information we have received includes, but is not limited to the following:

MEC's annual report for the year ended 30 June 2007 and Half Yearly Report to 31 December 2007;
Advent’s annual report for the year ended 30 June 2007 and Unaudited Financial Statements to 31 December 2007;
Independent Geological Report prepared by Burgan Energy Pty Ltd dated 10 December 2007 (refer Annexure 2);
Recent ASX announcements lodged by the Company;
Share Price data for MEC and CTP;
Asset Energy Share Sale Agreement;
Central Petroleum Share Sale Agreement;
Subscription Agreement; and
Draft Notice of Meeting and Explanatory Statement this Report will accompany.

AI assistant

MEC RESOURCES LIMITED — AGM Information 2008

65353_rns_2008-05-29_103e4263-1565-4d4e-8f1d-02a0e7915a0a.pdf

MEC RESOURCES LTD ACN 113 900 020

NOTICE OF GENERAL MEETING

CO NTENTS PAG E

VENUE

YOUR VOTE IS IMPORTANT

VOTING IN PERSON

VOTING BY PROXY

Proxy Forms received later than this time will be invalid.

NO TICE OF GENERAL MEETING

AGENDA

1. RESOLUTION 1 – SALE OF SUBSTANTIAL ASSETS TO ADVENT ENERGY AND SUBSCRIPTION FOR SHARES

2. RESOLUTION 2 – ALLOTMENT AND ISSUE OF SHARES – CAPITAL RAISING

3. RESOLUTION 3 – ISSUE OF SHARES TO MR GOH HOCK

4. RESOLUTION 4 – ISSUE OF SHARES AND OPTIONS TO MR DING GUI MING

DATED: 22[ND] MAY 2008

BY ORDER OF THE BOARD

DAVID BREEZE EXECUTIVE DIRECTOR

Voting Exclusion Note:

EXPLANATORY STATEMENT

1. RESOLUTION 1 – SALE OF SUBSTANTIAL ASSETS AND SUBSCRIPTION FOR SHARES

1.1 General

1.2

Share Placement

1.3

Asset Energy Sale

1.4 Central Petroleum Sale

1.5 Background information

(a) Central Petroleum

(b)

1.6 Listing Rule 10.1

1.7

Independent Expert’s Report

1.8 Section 208 of the Corporations Act

1.9 Sections 217 to 227 of the Corporations Act

2. RESOLUTION 2 – ALLOTMENT AND ISSUE OF SHARES – CAPITAL RAISING

3. RESOLUTION 3 – ISSUE OF SHARES TO MR GOH HOCK

3.1 Background

3.2 Chapter 2E of the Corporations Act

3.3 ASX Listing Rule 10.11

4. RESOLUTION 4 – ISSUE OF SHARES AND OPTIONS TO MR DING GUI MING

4.1 Background

4.2

ASX Listing Rules

5. ENQUIRIES

6. ATTRIBUTION STATEMENTS

GLO SSARY

ANNEXURE A

PROXY FORM

GENERAL MEETING

Voting on Business of the General Meeting

OR

Instructions for Completing ‘Appointment of Proxy’ Form

Proxy forms received later than this time will be invalid.

BURGAN ENERGY PTY LTD

PEP 11, Offshore Sydney Basin, New South Wales, Australia

Introduction

Project history

Hydrocarbon Potential

Geology

Exploration Results

Future Exploration Drilling

Valuation

Summary

INDEPENDENT EXPERT’S REPORT

MEC RESOURCES LTD

16 MAY 2008

PRIVATE & CONFIDENTIAL

1. INTRODUCTION

2. SUMMARY OF OPINION

Yours sincerely

MGI BRIDGE PARTNERS CORPORATE SERVICES PTY LTD

MGI Bridge Partners Corporate Services Pty Ltd (“MGIBPCS’) FINANCIAL SERVICES GUIDE

Complaints

Financial Services Guide

Financial services we are licensed to provide

General Financial Product advice

Contact details

MEC RESOURCES LIMITED AGM Information 2008