MEC RESOURCES LIMITED — Interim / Quarterly Report 2011

Feb 13, 2011

MEC RESOURCES LTD ACN 113 900 020

Appendix 4D Half Year Financial Report For the half year ended 31 December 2010

Contents

MEC Resources Ltd and its controlled entities

Page Number

Directors’ Report ....................................................................................................................................... 1 Auditor Independence Declaration ..................................................................................................... 3 Directors’ Declaration .............................................................................................................................. 4 Condensed Consolidated Statement of Comprehensive Income ................................................. 5 Condensed Consolidated Statement of Position ............................................................................... 6 Condensed Consolidated Statement of Changes in Equity ............................................................ 7 Condensed Consolidated Cash Flow Statement ............................................................................... 8 Notes to the Financial Statements ......................................................................................................... 9 Independent Auditor’s Review Report ............................................................................................... 17 Appendix 4D ............................................................................................................................................ 19

Company Information

Directors

H Goh – Non-Executive Chairman D L Breeze – Executive Director K O Yap – Non-Executive Director C T Lim – Non-Executive Director D Ambrosini – Executive Director

Auditor

Deloitte Touche Tohmatsu Woodside Plaza Level 14, 240 St Georges Terrace PERTH WA 6000

Company Secretary

Deborah Ambrosini

Registered Office

14 View Street NORTH PERTH WA 6006

Share Registry

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153

Australian Stock Exchange Listing

Principal Business Address

14 View Street NORTH PERTH WA 6006 Telephone: (08) 9328 8400 Facsimile: (08) 9328 8733 Website: www.mecresources.com.au E-mail: admin@mecresources.com.au

Australian Stock Exchange Limited (Home Exchange: Perth, Western Australia) ASX Code: MMR

Australian Business Number

44 113 900 020

MEC Resources Ltd and its controlled entities

Directors’ Report (continued)

The directors of MEC Resources Ltd (“ MEC Resources ”) submit herewith the financial report for the half year ended 31 December 2010. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

Directors

The names of the directors of the company during or since the end of the period are: H Goh

D L Breeze

K O Yap C T Lim D Ambrosini

Review of Operations

• Operating loss for the entity after tax for the half-year ended 31 December 2010 was $2,067,740 (2009: $361,784).

• MEC Resources successfully completed an Entitlement offer on 13 October 2010 which raised in excess of $6M. The offer closed oversubscribed.

• MEC Resources made two placements to sophisticated investors during the half year with a total of $4,775,000 being raised.

• MEC Resources investee Advent Energy Ltd (“ Advent Energy ”) commenced its drilling operations of the New Seaclem-1 well in PEP 11 on December 9th. The New Seaclem 1 well was designed to target the Great White and Marlin prospects in the shallow Cainozoic geological sediments in the Offshore Sydney Basin.

• MEC Resources increased its holding in BPH Energy Ltd (formerly BPH Corporate Ltd) (“ BPH ”) by sub underwriting BPH’s entitlement issue and placement. A total of $5,700,000 was invested into BPH through these commitments. MEC Resources currently holds 26.85% of BPH and BPH is now an associate of MEC Resources for reporting purposes.

• MEC Resources investee Advent Energy, in conjunction with international corporate advisors Pareto, successfully closed its book build during the year placing a total of 11,920,000 shares at an issue price of A$1.25 per share. Equity placements under the book build were made to BPH and an Asian based hydrocarbons group.

• On 7 September 2010 MEC Resources sold 3M shares in Advent Energy to BPH at 50c per share. MEC Resources was issued 18.75M ordinary shares in BPH as consideration for this sale.

Subsequent Events

Other than referred in note 10 of these financial accounts there have not been any matters or circumstance that have arisen since the end of the period, that have significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

1

Directors’ Report (continued) MEC Resources Ltd and its controlled entities

Dividends

The Directors recommend that no dividend be paid in respect of the current period and no dividends have been paid or declared since the commencement of the period.

Auditor’s Independence

The directors received a declaration of independence from the auditor. This is included in the financial report on page 3.

Signed in accordance with a resolution of the directors.

On behalf of the Directors

==> picture [132 x 56] intentionally omitted <==

D L Breeze Executive Director PERTH, 11 February 2011

2

==> picture [130 x 25] intentionally omitted <==

Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

The Board of Directors MEC Resources Ltd 14 View Street NORTH PERTH WA 6006

DX: 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (8) 9365 7001 www.deloitte.com.au

11 February 2011

Dear Board Members

MEC Resources Ltd

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of MEC Resources Ltd.

As lead audit partner for the half year review of the financial statements of MEC Resources Ltd for the financial period ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

==> picture [221 x 37] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

Chris Nicoloff Partner Chartered Accountants

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

3

MEC Resources Ltd and its controlled entities

Directors’ Declaration

In accordance with a resolution of the directors of MEC Resources Ltd, I state that:

In the opinion of the directors:

1. The financial statements and notes of the consolidated entity, as set out on pages 5 to 16 are in accordance with the Corporations Act 2001:

2. a) Comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

3. b) give a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date.

4. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

==> picture [132 x 55] intentionally omitted <==

D L Breeze Executive Director PERTH, 11 February 2011

4

Condensed Consolidated Statement of Comprehensive Income

for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

Note Revenue Revenue from ordinary activities 4 Other (losses)/gains 4 Administration expenses Consulting and legal expenses Management services expense Employee Benefits expense Share of gains and losses in associate Interest expense Insurance expenditure Other expenses Traveling expense Loss before income tax Income tax expense Loss from continuing operations Other Comprehensive Income Total Comprehensive Income for the period Loss attributable to non-controlling interest Loss attributable to members of the parent entity Total Comprehensive Income attributable to non- controlling interest Total Comprehensive Income attributable to parent Earnings Per Share - Basic and Diluted (cents per share)	Consolidated 31 December 2010 $ 31 December 2009 $ 385,605 39,586 (1,483,442) 808,699 (281,824) (176,571) (806,313) (402,362) (173,520) (173,520) (735,589) (279,607) (201,809) - (100,786) - (25,261) (15,460) (206,207) (169,389) (228,912) (48,242)
	(3,858,058) (416,866) - -
	(3,858,058) (416,866) - -
	(3,858,058) (416,866)
	(1,790,318) (55,082)
	(2,067,740) (361,784)
	(1,790,318) (55,082)
	(2,067,740) (361,784)
	(1.16) (0.31)

The accompanying notes form part of these financial statements.

5

Condensed Consolidated Statement of Financial Position as at 31 December 2010

MEC Resources Ltd and its controlled entities

Note Current Assets Cash and cash equivalents 5 Trade receivables Financial assets 11 Other current assets Total Current Assets Non-Current Assets Other non-current assets Evaluation and exploration costs 12 Investments in associates 9 Financial Assets 11 Property, plant & equipment Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Financial Liabilities Short-term provisions Total Current Liabilities Total Liabilities Net Assets Equity Issued Capital 6 Reserve Accumulated losses Non Controlling Interests Total Equity

Consolidated 31 December 2010 $ 30 June 2010 $

14,617,490 17,360,848 1,759,431 406,618 40,698 1,241,199 9,691,578 903,106 26,109,197 19,911,771 22,673 22,673 26,176,751 5,209,226 9,514,956 - 433,762 2,158,475 5,313 5,163 36,153,455 7,395,537 62,262,652 27,307,308 10,060,692 2,924,245 2,069,310 369,086 108,413 102,298 12,238,415 3,395,629 12,238,415 3,395,629 50,024,237 23,911,679 24,920,661 11,808,203 751,265 293,107 (9,650,731) (7,582,991) 34,003,042 19,393,360 50,024,237 23,911,679

The accompanying notes form part of these financial statements.

6

Condensed Consolidated Statement of Changes in Equity for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

Consolidated Balance at 1 July 2009 Loss attributable to members of the consolidated entity Other comprehensive income Total comprehensive income Shares issued during the financial period Options exercised during the financial period Options issued during the financial period Balance at the half year ended 31 December 2010 Balance at 1 July 2010 Loss attributable to members of the consolidated entity Other comprehensive income Total comprehensive income Shares issued during the financial period Options exercised during the financial period Options issued during the financial period Capital raising costs incurred Balance at the half year ended 31 December 2010	Ordinary Share Capital $ Accumulated losses $ Options $ Total attributable to owners S Non- Controlling Interest $ Total Equity $
	8,412,535 (4,677,981) 219,953 3,954,507 186,423 4,140,930 - (361,784) - (361,784) (55,082) (416,866) - - - - - -
	(361,784) (361,784) (55,082) (416,866) 2,708,000 - - 2,708,000 77,623 2,785,623 345,379 - - 345,379 - 345,379 - - 42,357 42,357 - 42,357
	11,465,914 (5,039,765) 262,310 6,688,459 209,024 6,897,423
	11,808,203 (7,582,991) 293,107 4,518,319 19,393,360 23,911,679 - (2,067,740) - (2,067,740) (1,790,318) (3,858,058) - - - - - -
	- (2,067,740) - (2,067,740) (1,790,318) (3,858,058) 10,984,715 - - 10,984,715 16,400,000 27,384,715 2,434,743 - - 2,434,743 - 2,434,743 - - 458,158 458,158 - 458,158 (307,000) - - (307,000) - (307,000)
	24,920,661 (9,650,731) 751,265 16,021,195 34,003,042 50,024,237

The accompanying notes form part of these financial statements.

7

Condensed Consolidated Statement of Cash Flows for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

Note Cash Flows From Operating Activities Receipts from customers Payments to suppliers and employees Interest received Net cash used in operating activities Cash Flows From Investing Activities Payment for Property, Plant and Equipment Amounts loaned from/(to) other entities Payment for investments Deferred exploration costs Net cash used in investing activities Cash Flows From Financing Activities Proceeds from share issue Net cash provided by financing activities Net increase (decrease) in Cash Held Cash At the Beginning Of The Period Cash At The End Of The Period 5	Consolidated 31 December 2010 $ 31 December 2009 $
	423,600 - (524,646) (1,187,323) 258,496 39,586
	157,450 (1,147,737)
	(1,628) - 3,995,279 (58,012) (6,632,135) (1,895,522) (25,861,418) -
	(28,499,902) (1,953,534)
	25,599,094 3,071,002
	25,599,094 3,071,002
	(2,743,358) (30,269) 17,360,848 1,480,629 14,617,490 1,450,360

The accompanying notes form part of these financial statements

8

Notes to the Financial Statements for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

1. CORPORATE INFORMATION

The financial report of MEC Resources Ltd (the company) and its controlled entities for the half-year ended 31 December 2010 was authorised for issue in accordance with a resolution of the directors on11 February 2011.

MEC Resources Ltd is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The half-year financial report does not include all of the notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half-year financial report should be read in conjunction with the Annual Financial Report of MEC Resources Ltd as at 30 June 2010.

It is also recommended that the half-year financial report be considered together with any public announcements made by MEC Resources Ltd and its controlled entities during the half-year ended 31 December 2010 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(a) Basis of Preparation

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting, compliance with AASB 134 ensures compliance with International Financial Reporting Standards IAS 34 Interim Financial Reporting.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

Reporting Basis and Conventions

The half-year report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

(b) Significant Accounting Policies

The half-year consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2010, except for the impact of the standards interpretations below in Note 2(c). The accounting policies are consistent with Australian Accounting Standards and with International Reporting Standards.

9

Notes to the Financial Statements for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

(c) New Standards and Interpretations

(a) Changes in Accounting Policies and Disclosures

The consolidated entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to their operations and are effective for the current financial reporting period.

Significant new and revised standards and interpretations effective for the current financial reporting period that are relevant to the consolidated entity are:

• AASB 2009-5: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Process;

• AASB 2009-8: Amendments to Australian Accounting Standards – Group Cash-settled Share-based Payment Transactions AASB 2.

• AASB 2009-10: Amendments to Australian Accounting Standards - Classification of Rights Issues

• AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project:

• Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments.

(b) Accounting Standards and Interpretations issued but not yet effective.

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the consolidated entity for the half year ending 31 December 2010. Management are in the process of assessing the impact of the adoption of these standards and interpretations on the consolidated entity.

(d) Investment in Associates

Associates are all entities over which the group has significant influence but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for in the parent entity financial statements using the cost method and in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost. The equity method of accounting recognises the group’s share of post-acquisition reserves of its associates.

The group’s share of its associates’ post-acquisition profits or losses is recognised in the profit or loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.

Dividends receivable from associates are recognised in the parent entity’s profit or loss, while in the consolidated financial statements they reduce the carrying amount of the investment.

When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

10

Notes to the Financial Statements for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

Unrealised gains on transactions between the group and its associates are eliminated to the extent of the group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group.

Any gain or loss encountered upon revaluation an associate is taken to equity.

3. SEGMENT INFORMATION

Identification of reportable segments

The group has identified its operating segments based on the internal reports that are reviewed and used by the chief executive officer and his management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The operating segments are identified by management based on their investment in exploration companies. Discrete financial information about each of these operating segments is reported to the chief executive officer and his management team on at least a monthly basis. Currently, management’s focus is on the exploration program of Advent Energy project PEP 11.

The Group operates predominantly in one industry, namely investments in the mining and resources. These activities are predominantly in Australia.

Accounting policies and inter-segment transactions

The accounting policies used by the Group in reporting segments are the same as those contained in note one to the accounts and in the prior period.

4. REVENUE, INCOME AND EXPENSES

Revenue Consulting Fees Interest revenue : other entities Total revenue	Consolidated 31 December 2010 $ 31 December 2009 $
	127,109 - 258,496 39,586
	385,605 39,586

11

Notes to the Financial Statements for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

Other gains and losses Unrealised (losses)/gains on financial investments Net Fair Value Gains on Foreign currency derivative 5. CASH AND CASH EQUIVALENTS For the purpose of the half-year condensed consolidated cash flow statement, cash and cash equivalents are comprised of the following: Cash at bank and in hand 6. CONTRIBUTED EQUITY Ordinary shares (i) Less :Capital Raising Costs	Consolidated 31 December 2010 $ 31 December 2009 $
	(140,083) 808,699 (1,343,359) -
	(1,483,442) 808,699
	Consolidated 31 December 2010 $ 31 December 2009 $
	14,617,490 1,450,360
	14,617,490 1,450,360
	Consolidated 31 December 2010 $ 30 June 2010 $
	25,960,810 12,541,352 (1,040,149) (733,149)
	24,920,661 11,808,203

12

Notes to the Financial Statements for the half year ended 31 December 2010 MEC Resources Ltd and its controlled entities

(i)Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Movement in ordinary shares on issue As at 1 July 2010 Issued 14 October 2010 as part of MEC Resources Ltd entitlements issue Placement to sophisticated investor on 8 October 2010 Payment of consultancy services Placement to sophisticated investor on 15 September 2010 Conversion of options Capital raising costs incurred Balance as at 31 December 2010	Number $
	118,149,377 11,808,203 12,035,762 6,017,881 500,000 275,000 488,491 191,833 12,857,143 4,500,000 11,767,377 2,434,744 - (307,000)
	155,798,150 24,920,661

7. Contingent Liabilities

Advent Energy has entered into a secured loan agreement with MEC Resources in November 2010. The principal amount of the loan is $1 million, with further advances of up to an additional $3 million payable at the MEC Resources’ discretion. The Loan is secured by a fixed and floating charge over Advent Energy’s present and future undertakings, assets and rights.

Advent Energy has entered into a secured loan agreement with BPH in July 2010. The principal amount of the loan is $1 million, with further advances of up to an additional $3 million payable at the BPH’s discretion. The Loan is secured by a fixed and floating charge over Advent Energy’s present and future undertakings, assets and rights. An amount of $1.6 million has been drawn down at statement of financial position date.

8. Commitments

Capital Commitments

In order to maintain an interest in the exploration tenements in which the Company is involved, the Company is committed to meet the conditions under which the tenements were granted.

Capital expenditure forecasted for at the reporting date but not recognised as liabilities as follows:

	Consolidated	Consolidated
	31 December 2010 $	30 June 2010 $
Work Program Commitments – Exploration permits
Payable:
Withinone year	1,900,000	29,250,000
Greaterthanone year less than five years	-	900,000
Total	1,900,000	30,150,000

13

Notes to the Financial Statements for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

The EP 386 permit work commitment term concluded in April 2010. The permit is currently the subject of a renewal application by Advent Energy to the Department of Mines and Petroleum for a renewed term.

==> picture [486 x 72] intentionally omitted <==

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

31 Dec 30 June
Investments accounted for using the 2010 2010
$ $
equity method
Shares in Associates 9,514,956 -
----- End of picture text -----

9. Investments accounted for using the equity method

(a) Shares in associates

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.

Name of Entity	Country of	Ownership	Ownership	Interest
	Incorporation		%
		31 Dec	10	30 Jun 10
BPH Energy Ltd	Australia	26.85%		11.26%

MEC Resources increased its holding in BPH Energy Ltd (formerly BPH Corporate Ltd) by sub underwriting BPH’s entitlement issue and placement. A total of $5,700,000 was invested into BPH through these commitments. MEC Resources currently holds 26.85% of BPH and BPH is now an associate of MEC Resources for reporting purposes.

(b) Summarised financial information of associates

The results of its associates aggregated assets (including goodwill) and liabilities, including the group’s share of net assets and net loss for the period are as follows:

Ownership interest % 31 December 2010 BPH Energy Ltd 26.85	Total: Groups Share of Assets Liabilities Profits/Losses Revenues Net Assets Net Loss for the Period since becoming an associate 57,686,108 943,346 (809,220) 196,980 15,235,432 (201,809)
	57,686,108 943,346 (809,220) 196,980 15,235,432 (201,809)

10. Events after the Balance Date

MEC Resources investee company Advent Energy completed the drilling operations of New Seaclem 1 in early January 2011. Whilst no hydrocarbons were encountered at prognosed target horizons reservoir quality sandstones of considerable thickness were observed. Invaluable information was obtained from the drilling that will allow Advent to further assess the numerous prospects and leads within PEP 11. The outcome of the drilling operations are not considered to be by management, impairment triggers of capitalised exploration costs on the statement of financial position.

14

Notes to the Financial Statements for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

Consolidated 31 December 2010 $ 30 June 2010 $ 11. Financial Assets Current Derivative financial instruments - forward exchange contracts (a) - 1,116,346 Loan receivable 40,698 124,853 Total 40,698 1,241,199 Non current Fair Value through Profit and Loss Financial Assets Investment in Central Petroleum Ltd 363,851 503,934 Investment in BPH Energy Ltd - 1,584,630 Available for sale financial assets Investment in Molecular Discovery Systems Ltd 69,911 69,911 433,762 2,158,475 Forward exchange contracts - held for trading The group has entered into forward exchange contracts which are economic hedges but do not satisfy the requirements for hedge accounting.	Consolidated 31 December 2010 $ 30 June 2010 $ 11. Financial Assets Current Derivative financial instruments - forward exchange contracts (a) - 1,116,346 Loan receivable 40,698 124,853 Total 40,698 1,241,199 Non current Fair Value through Profit and Loss Financial Assets Investment in Central Petroleum Ltd 363,851 503,934 Investment in BPH Energy Ltd - 1,584,630 Available for sale financial assets Investment in Molecular Discovery Systems Ltd 69,911 69,911 433,762 2,158,475 Forward exchange contracts - held for trading The group has entered into forward exchange contracts which are economic hedges but do not satisfy the requirements for hedge accounting.		Consolidated 31 December 2010 $ 30 June 2010 $
12. Capitalised Exploration Costs Exploration expenditure capitalised Exploration and evaluation phases	Consolidated 31 December 2010 $ 30 June 2010 $
	26,176,751 5,209,226
	26,176,751 5,209,226

	for hedge accounting.
		Consolidated
		31 December	30 June
		2010	2010
		$	$
12.	Capitalised Exploration Costs
	Exploration expenditure capitalised
	Exploration and evaluation phases	26,176,751	5,209,226
		26,176,751	5,209,226

15

Notes to the Financial Statements for the half year ended 31 December 2010

MEC Resources Ltd and its controlled entities

Reconciliation of movement during the year Opening balance at 1 July Capitalised expenditure – EP 325 Capitalised expenditure – PEP 11 Capitalised expenditure written off Balance at 30 June		Consolidated 31 December 2010 $ 30 June 2010 $ 5,209,226 2,617,507 2,075 8,383 20,965,450 2,583,336 - -
		26,176,751 5,209,226

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and sale of natural gas.

13. Related Party Disclosures

BPH Energy Ltd is now a related party, since becoming an associate of MEC Resources during the period.

A loan payable exists between MEC Resources and BPH of $2,449 (2009:$2,408). This amount is unsecured, non interest bearing and repayable on demand.

A loan payable exists between Advent Energy and BPH of $1,742,453 (2009:$nil) The loan is secured by a fixed and floating charge over Advent Energy’s present and future undertakings, assets and rights.

In December 2010, BPH converted $2,400,000 of its loan receivable from Advent Energy into ordinary shares of Advent Energy.

16

==> picture [130 x 25] intentionally omitted <==

Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

Independent Auditor’s Review Report to the Members of MEC Resources Ltd

DX: 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (8) 9365 7001 www.deloitte.com.au

We have reviewed the accompanying half-year financial report of MEC Resources Ltd, which comprises the condensed statement of financial position as at 31 December 2010, and the condensed statement of comprehensive income, the condensed statement of cash flows and the condensed statement of changes in equity for the half-year ended on that date, selected explanatory notes and, the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 4 to 16.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of MEC Resources Ltd, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Auditor’s Independence Declaration

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of MEC Resources Ltd, would be in the same terms if given to the directors as at the time of this auditor’s report.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

17

==> picture [92 x 18] intentionally omitted <==

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the halfyear financial report of MEC Resources Ltd is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

DELOITTE TOUCHE TOHMATSU

Chris Nicoloff Partner Chartered Accountants Perth, 11 February 2011

18

Appendix 4D Half year report Period ending 31 December 2010

Appendix 4D Half year report

MEC Resources Limited ACN 113 900 020 Half Year ended 31 December 2010 (corresponding period half year ended 31 December 2009)

Results for announcement to the market	$A'000	$A'000
Revenues from ordinary activities (Loss) from ordinary activities after tax attributable to members Net (loss) for the period attributable to members	Up 874% to 385 Up 472% to (2,067) Up 472% to (2,067)
Dividends (distributions)	Amount per security	Franked amount per security
Final dividend Interim dividend	Nil	Nil
Previous corresponding period	N/A	N/A
Other notes to the condensed financial statements
Ratios	Current period	Previous corresponding Period
Loss before tax / revenue Consolidated (loss) from ordinary activities before tax as a percentage of revenue	(536.88)%	(1.053)%
Loss after tax / equity interests Consolidated net (loss) from ordinary activities after tax attributable to members as a percentage of equity (similarly attributable) at the end ofthe period	(8.29)%	(3.13)%
NTA Backing	Current period	Previous corresponding Period
Net tangible asset backing per ordinary security	32.1 cps	5.8 cps

19