MEO Australia has advised its shareholders to stand their ground in the face of a revised offer in Mosman Oil and Gas’ unsolicited takeover attempt of the struggling Melbourne company.

Under the revised, all paper offer, Mosman is proposing a deal to MEO shareholders of one Mosman share for every 10 MEO shares - representing a substantial increase from the original one Mosman share tabled for 20 MEO shares.

John Barr, executive chairman of Mosman, described the deal in a statement as a, “good opportunity for shareholders of both Mosman and MEO.”

“The combined entity can fund exploration, preserve longer term assets and progress to production and cash flow,” Barr said.

MEO, which has hit cash flow turbulence in recent times, had not responded to Oil and Gas Investor Australia’s offer to comment at press time. It had advised shareholders to take no action until they receive an official recommendation from the MEO board for an offer that remains below MEO’s stock price in the market.

MEO’s share price has lost 75 per cent over the past five months and was trading at 2 cents today. Mosman was valued at 7.50 pence on the AIM-listed London exchange.

MEO’s portfolio of exploration, appraisal and development assets in Australasia and New Zealand include the Tassie Shoals development project that proposes, subject to securing a farm-in partner, the development of two 1.75 Mtpa methanol plants in tandem with a 3 Mtpa LNG facility. The project aims to tow the pre-fabricated and pre-commissioned plant to Tassie Shoal, 275km north-west of Darwin, where it would be grounded using sea water ballast.

Mosman’s pitch for MEO emerged after Neon Energy had last month rejected the former’s ‘merger of equals’ overtures to embrace a revised proportional takeover proposal from Perth-based Evoworld.

Neon’s board unanimously accepted Evoworld’s revised offer per share of 3.8cents - up 0.3cents per share from its earlier proposal for 30 per cent of the shares it did not already own - for half the interests held by Neon shareholders.

Neon shares had plummeted from 43 cents to 3.5 cents in a year, going into a virtual free-fall after the Cua Lo-1 exploration well offshore Vietnam was found to be uncommercial. The well had flowed gas, but poor reservoir deliverability and high carbon dioxide content conspired to kill development of the prospect.

Neon had become little more than a shell with $20 million in cash reserves when Evoworld, which had previously taken control of Emerald Oil and Gas and Indigo Resources, came calling, citing destruction of shareholder value as motivation.