Highlights:

Cuba - Block 9 PSC – 100%*

• Formal documentation with Melbana’s farm-in partner for the drilling of two exploration wells in Block 9 progressed
• Requests for quotations invited from drilling and other service providers for the two well drilling campaign in Block 9 planned to commence in Q4 2020
• Permitting for the two well campaign in good standing or proceeding according to schedule

Australia – WA-488-P (Beehive) – 100%

• Santos’ option to acquire an 80% interest in WA-488-P expired unexercised
• Discussions with prospective partners for the drilling of an exploration well in the Beehive prospect have commenced. All data pertaining to the 3D seismic acquisition, plus preliminary work on well planning and environmental permits provided in the data room
• Work commenced on reassessing volumetric assessment of Beehive and other possible plays in the permit area using the newly acquired 3D seismic survey

Corporate

• Melbana’s off-market takeover bid for 100% of the ordinary shares in Metgasco Limited (ASX: MEL) closed on 31 January 2020 with Melbana receiving acceptances from 27.8% of Metgasco’s shareholders
• Melbana’s Chairman assumed executive responsibilities
• Certain cost saving initiatives developed during the quarter became effective immediately following the quarter’s end

Melbana Energy provides the following summary in relation to its activities during the quarter ended 31 March 2020.

Cuba - Block 9 (Melbana 100%*)

During the quarter, Melbana progressed documentation that would formalise the entry of its farm-in partner into the Block 9 PSC. These included a Farm-in Agreement, a joint operating agreement and other related documentation pertaining to the application for necessary approvals from Cuban regulatory authorities.

Melbana has also invited drilling and other service providers to tender their interest in supporting the two well drilling program planned to commence in Block 9 in Q4 of 2020. All parties so invited have existing operations in Cuba and their equipment and personnel have been inspected and met by Melbana personnel.

Permitting related to the construction of well pads and the commencement of drilling have been refreshed or extended, as applicable, with any required remaining permits or agreements considered to be procedural or proceeding satisfactorily.

Melbana’s commitment under the Block 9 PSC is to commence drilling the first exploration well by 2 November 2020. Melbana is the operator for this drilling program and will meet 15% of its cost to retain a 30% beneficial interest.

Melbana’s proposed two well drilling program for Block 9 would test four separate targets totalling 236 million barrels (best estimate) of prospective resource, the best of which is estimated to have a 32% chance of success.

Cuba - Santa Cruz Incremental Oil Recovery Project - (Melbana 100%)

No material progress was made during the quarter with regards to the granting to Melbana of a Production Sharing Contract for the Santa Cruz oil field. The Company remains ready to allocate the necessary resources to advancing this project once approval is received from the Cuban regulators.

The Santa Cruz oilfield, discovered mid last decade, has been studied by Melbana during its initial study period resulting in the Company and CUPET entering into a binding agreement in December 2018.

Australia - WA-488-P Beehive Prospect (Melbana 100%)

During the quarter, Santos’ option to acquire an 80% interest in WA-488-P expired unexercised. Santos had previously advised that it would wish to farm out some of this interest to a third party before committing to the drilling of a well in the permit area. 

As a result, Melbana once again holds an unencumbered 100% interest in the permit and has begun a process to seek new partners wishing to participate in the drilling of an exploration well into the Beehive prospect. The data room has been enhanced by with the results of the 3D seismic survey and the additional work that was done on rig selection and well permitting. The work obligation for WA-488-P is the drilling of an exploration well by December 2020. 

Corporate

During the quarter, Melbana’s off-market takeover bid for 100% of the ordinary shares in Metgasco Limited closed. Melbana received acceptances from 27.8% of Metgasco’s shareholders.

Michael Sandy stepped down as Interim CEO of the Company and resumed his role as a Nonexecutive Director. Mr. Sandy also has assumed the role of Technical Director. The board wishes to express its thanks to Mr. Sandy for performing these roles.

Prior to the quarter end, the Company agreed certain cost reduction initiatives for implementation effective 1 April 2020 in response to the COVID-19 pandemic. These included some employees taking leave without pay, directors’ entitlements being reduced by 50% and repricing of certain agreements with service and professional advisors.

The Company ended the quarter with a cash balance of A$1.5 million. 

* Melbana’s farm-in partner has agreed, subject to satisfaction of certain conditions, to acquire a 70% interest in Block 9 PSC in consideration for agreeing to make certain payments to and on behalf of the Company related to the two well drilling program planned for Block 9 in Q4 2020

KeyFacts Energy: Melbana Energy Australia country profile