Quarterly Activities Summary - Period Ended 30 September 2020

Source: www.gulfoilandgas.com 10/30/2020, Location: South America

Cuba - Block 9 PSC
• Regulatory approval for entry of Melbana’s joint venture partner into the Block 9 Production Sharing Contract formally received, thus satisfying the last remaining Condition Precedent of the Farm-In Agreement
• Melbana has a 30% participating interest (15% working interest) in Block 9 PSC and is operator for the two well drilling program
• Survey of first well site commenced. Contractors mobilising to commence field works
• Tenders for the supply of tubulars and other long lead items completed and approved
• Payments totalling $2.4 million received towards repayment of Past Costs (balance of ~$5 million owing received subsequent to quarter end)

Australia – WA-488-P (Beehive) – 100%
• Farm-out process continues. Interested parties conducting due diligence
• Prospective Resource 416 million barrels of oil equivalent (Best Estimate)1, an increase of 7% following new volumetric analysis using 3D seismic

Corporate
• Cash balance of $2.513 million at end of quarter
1 Prospective Resources Cautionary Statement - The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) related to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Future exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. All quoted volumes have been taken from Independent Expert McDaniel & Associates Competent Persons Report, released to ASX on 7 August 2018, as adjusted by Melbana for area relinquishment. Melbana is not aware of any new information or data that materially affects the information included in that announcement and that all the material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed.

MELBOURNE, AUSTRALIA (30 Oct 2020)
Melbana Energy Limited (“Melbana” or the “Company”) provides the following summary in relation to its activities during the quarter ended 30 September 2020.

Cuba - Block 9 (Melbana 30%, Operator)
During the quarter ending 30 September 2020, Melbana reached the following milestones in relation to its Cuban Block 9 drilling program:
• Formal regulatory approval received for the entry of Sonangol into the Block 9 Production Sharing Contract. As a result, all Conditions Precedent of the Farm-In Agreement1 were satisfied and Sonangol received a 70% participating interest (85% working interest) of the costs of the 2 well drilling program (Melbana as operator)
• International tenders for services and materials completed, award recommendations made to joint venture partners
• Contracts entered into for recording baseline environmental conditions, establishment of survey points, execution of civil works and provision of camp facilities for the construction of the well pads and related infrastructure
• Preparatory works for the construction of the well pad for Alameda-1 commenced
• Melbana received payments of $2.4 million towards its Past Costs of ~$5.0 million during the quarter with the balance being received after the quarter’s end Drilling of Alameda-1 is expected to commence in mid Q1 2021 but remains dependent on long lead items being deliver on schedule and the continued relaxation of COVID-19 management practices currently in place in Cuba.

Existing Melbana personnel in Cuba, supplemented by experienced local personnel seconded from the proposed drilling contractor, have been engaged to supervise these works and to assist with their being conducted as efficiently as possible. It is expected senior members of the project management team will start to arrive in country towards the end of 2020.

The targets of the first well, Alameda-1, have a total Prospective Resource of 141 million barrels of oil (Best Estimate)1
. Zapato-1, the second well, has a Prospective Resource of 95 million barrels of oil (Best Estimate)1
. These estimates have been independently assessed.

Australia - WA-488-P (Beehive Prospect, Melbana 100%)
The Company reviewed its volumetric analysis of the Beehive Prospect based on the results of a comprehensive assessment of the Beehive 3D seismic data acquired that strongly validated the presence of hydrocarbons within the Beehive prospect. This resulted in an announced2 7% increase of Best Estimate Prospective Resource to 416 million barrels of oil equivalent (BOE) compared to the assessment conducted in 2018 by independent reserves expert McDaniel & Associates based on the pre-existing 2D seismic data.

The Company continues to engage closely with a number of interested parties who are now conducting their own analysis using the materials provided in the data room and raw data from the 3D seismic acquired, with guidance and support of Melbana’s technical team.

The Beehive prospect is a Carboniferous age carbonate build up with 400 metres of mapped vertical relief. It is located close to existing infrastructure and may be drilled by a jack up rig given it lies in only 40 metres of water. It has been independently assessed to contain a Prospective Resource of 400 million BOE (Best Estimate) and 1.6 billion BOE (High Estimate). Beehive is analogous to the giant Tengiz Field in the Caspian Sea, also a Carboniferous age carbonate build up. The Tengiz Field has estimated recoverable reserves of between six and nine billion barrels of oil.

Corporate
During the quarter the Company participated in the share placement and share purchase plan undertaken by Metgasco Limited (ASX: MEL) at 2.5 cents per share, investing approximately $175,000 to acquire about 7 million shares (plus one attaching option for every three shares acquired at a strike of 5 cents per share, subject to their issue being approved by Metgasco’s shareholders in general meeting). Melbana’s holding in Metgasco was 20.0% at the end of the quarter.

The Company continues to explore new business opportunities. Gaining exposure to projects with production or appraised discoveries is considered desirable by the board, subject to their acquisition being possible within Melbana’s existing cash resources.

Following the quarter’s end, travel restrictions to and within Cuba have eased considerably.Melbana ended the quarter with a cash balance of A$2.513 million.

Payments to related parties and their associates, as outlined in Section 6 of the accompanying Appendix 5B, relates to director fees paid for the quarter.


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