Investors in Cuba-focused Melbana Energy were happy today on news the company had received all key regulatory approvals for the Alameda-1 exploration well – the first of the two well programme it has planned for Block 9 on Cuba’s north coast.
The stock climbed 0.4c or 20% to hit an intraday high of 2.4c with 11.7 million shares changing hands by 12:30pm AEST on news the Office of National Mineral Resources will issue the Drilling Operations Permit for the Alameda-1 exploration well once Melbana notifies it of the drilling rig to be contracted and the drilling timing window.
The Drilling Operations Permit is the final administrative permit required for drilling to proceed.
Block 9 lies in a proven hydrocarbon system containing the Motembo field, the first oil field discovered in Cuba.
Multiple producing fields lie within close proximity of Block 9 including the Majaguillar and San Anton fields immediately adjacent to it and the multi-billion barrel Varadero oil field further west.
The Alameda Prospect is currently the highest ranked exploration target in Block 9. Alameda is a large structure located in the western part of Block 9 and is in a similar structural position to the Varadero field, the largest oil field in Cuba, approximately 35km away.
I am pleased that our Havana and Melbourne based drilling team has reached this important regulatory milestone for the drilling of the Alameda-1 exploration well, which is currently our highest ranked exploration target in Block 9,” Melbana’s chief executive officer Robert Zammit commented.
“Civil works design to build the Alameda-1 drilling rig pad has been optimized and a decision on when to commence construction will be made once a partner has been selected. Our objective is to have a preliminary farmout agreement with our preferred partner this quarter.”
Mr Zammit said regulatory and environmental approvals for the drilling of the Zapato-1 exploration well had also been advanced.
“Drilling rig commercial negotiations are proceeding with the contractor selected from the international tender Melbana ran earlier in the year,” he said.
A drilling rig has been nominated by the contractor with two available starting dates in December 2018 or April 2019.
A decision on starting dates and when to begin drilling pad civil work is dependent on selection of a preferred partner and completion of a farm-in agreement.
In regards to the company’s Santa Cruz incremental oil recovery project, Melbana has completed its initial technical assessment of the opportunity.
Melbana advised the assessment gave them sufficient encouragement to support Melbana proceeding to the next stage of negotiating a long-term binding agreement with Cuba’s national oil company Cubapetroleo.
“We are making good progress on the Santa Cruz opportunity, tabling in recent meetings in Cuba our proposed operational footprint and work program, consistent with our target of completing a final long-term agreement in the fourth quarter of this year,” Mr Zammit said.
Shares in Melbana were trading at 2.2c.