MEO Australia has reiterated its opposition to a takeover bid by Mosman Oil & Gas, labelling the bid as “highly conditional, opportunistic and uncertain.”

The takeover bid, made late last year, would see Mosman offer one of its shares for every 10 MEO shares currently held.

With only 1.1 per cent of MEO shareholders having accepted the deal, Mosman’s offer has now been extended until 8 May.

MEO Australia said in a letter to shareholders that it believed Mosman’s ability to continue as a going concern was uncertain.

“Your directors consider it misleading for Mosman in its correspondence to equate accepting the Mosman offer with obtaining shares in a growing company, while implying that rejection of the Mosman offer is a decision with risk of ‘additional losses,’” the company said.

“Mosman appears to have a funding shortfall for its own commitments, as evidenced by its own auditor noting that at 31 December 2014 Mosman had only $1.06 million of working capital surplus,” MEO added.

The company also suggested that Mosman may issue more of its shares before September, a move which would dilute the shareholding of any MEO investors who wished to participate in the offer.

For its part, Mosman said the offer represented a 27% premium to its initial value at the time the bidder’s statement was lodged, due to the performance of its own shares.

It added that there were no guarantees that MEO’s planned strategy of securing joint venture partners for its exploration program would succeed, saying that this uncertainty should be an added impetus for MEO shareholders to accept the offer.

MEO announced in March that an international exploration company would farm-in to its WA 488 P permit off the coast of WA, after its board approved an option to take a 30% participating interest.

That deal would give the farminee, which MEO will not name until a farm-in agreement is concluded, the right to increase its interest by 10% if it procures full funding for a 3D seismic survey over the Beehive prospect on the permit area.

Procuring the full funding of an eventual well on the Beehive prospect would see the farminee secure an additional 40% stake in the permit.

MEO chief executive Peter Stickland said the company aimed to farm down its interest in the block in order to drill it at minimal cost.

“MEO continues to engage with a number of other parties who are also evaluating WA 488 P and additional parties can be accommodated in the permit by the current agreement,” he said.