Melbana Energy Provides Quarterly Activities Summary

Source: www.gulfoilandgas.com 1/29/2021, Location: South America

Melbana Energy Limited (MAY) (“Melbana”) provides the following summary in relation to its activities during the quarter ended 31 December 2020.

Cuba - Block 9 (Melbana 30%, Operator)

During the quarter ending 31 December 2020, Melbana reached the following milestones in relation to its Cuban Block 9 drilling program:

- Civil works for well pad constructions, roads and other related facilities in preparation for the commencement of drilling of the Alameda-1 well are now more than half completed and projected to be completed off the critical path. The contractors performing these works under Melbana’s supervision have been instructed to spend some time improving the roads of the local community, in fulfilment of undertakings that were made as part of the land access agreements.

- The Company elected to enhance the near finalised drilling contract to accommodate possible changes to the operational environment that may result from the COVID-19 pandemic. The work plan is now more robust in the face of possible travel or border restrictions that may occur during the drilling program.

- Award of the contracts for the long lead items (tubulars, well pads, liners etc.) were withheld to align with the completion of this upgraded contract and work plan. Tenders from the main preferred suppliers have been refreshed and are in good standing for execution at the Company’s election.

- The work program and budget for the two well drilling program has received all partner and regulatory approvals. Timing and amount of proposed cash calls in support of the projected expenditure profile for the drilling of these two wells has similarly received all necessary approvals.

- Land access agreement for the second well, Zapato-1, has been received. Civil works will commence there immediately following the completion of works at Alameda-1. - Senior members of Melbana’s project management team are expected to start arriving in Cuba before the end of Q1 2021 to supplement the Company’s local staff and contractors who have been managing operations to date. Cuban work visas have been received for relevant personnel.

- All airports in Cuba opened but with the caveat that all incoming travellers must present a negative COVID-19 PCR test taken less than 72hrs before arrival. There has been an increase in the number of people testing positive for COVID-19 in Cuba in recent months, possibly in part due to the increased arrivals in the country due to the tourists and expatriate Cubans arriving for the holiday season. This has not materially impacted preparations for the commencement of drilling operations. Field operations are maintaining a high level of discipline in following procedures to minimise the occurrence or spread of any infection.

Australia - WA-488-P (Beehive Prospect), WA-544-P, NT/P87 (Melbana 100%) The Company announced1 that it has been awarded two additional petroleum exploration permits offshore northern Australia on a 100% basis. Application was made for these permit areas under the Australian Government’s 2019 Offshore Petroleum Exploration Acreage Release. The location of the permits, designated as WA-544-P and NT/P87, are adjacent to Melbana’s existing WA-488-P permit area that contains the giant Beehive Prospect and have been awarded for an initial 6-year period.

It is a condition of WA-488-P to drill an exploration well before the end of this year. A data room has been established to facilitate investigations by parties that have expressed interest in this opportunity and the additional running room afforded by the additional adjacent blocks recently awarded to Melbana. Several parties are advanced in their assessment of this opportunity and it is hoped these discussions may result in an opportunity to test this exciting prospect.

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 received 4,001,1742 shares in Byron Energy Limited (ASX: BYE), pursuant to the in-specie distribution conducted by Metgasco Limited (ASX: MEL). Melbana’s holding in Metgasco was unchanged at 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 and complementary to Melbana’s areas of technical and operational expertise.

Melbana ended the quarter with a cash balance of $6.873 million.

Payments of $183 thousand to related parties and their associates, as outlined in Section 6 of the accompanying Appendix 5B, relates to payment of directors’ fees.


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