Melbana Energy to lock in farm-in partner ahead of Cuban oil drilling

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By Danica Cullinane - 
Melbana Energy ASX MAY Alameda-1 exploration well Cuban oil drilling

Melbana has received all remaining key regulatory approvals for the Alameda-1 exploration well.


Junior oil explorer Melbana Energy (ASX: MAY) has been given the green light by Cuban regulators to drill its Alameda-1 exploration well on the country’s north coast and is just waiting on a secured farm-in deal before deciding on a spud date.

The Australia-based company today announced it has received all remaining key regulatory approvals for the well, which will be the first of a two-well program planned onshore Block 9.

A drilling operations permit will be issued for Alameda-1 upon Melbana notifying Cuba’s Office of National Mineral Resources of the drilling rig to be contracted and the drilling timing window. This is the final administrative permit required for drilling to proceed.

Melbana ran an international tender earlier this year and is now proceeding commercial negotiations with the selected drilling contractor, with two available starting dates having been nominated in December 2018 or April 2019.

Although, the company is waiting to lock in a farm-in deal with a project partner before deciding on starting dates.

Melbana chief executive Robert Zammit said the aim was to have a preliminary farm-out agreement with its preferred partner this quarter.

“Civil works design to build the Alameda-1 drilling rig pad has been optimised and a decision on when to commence construction will be made once a partner has been selected,” he said.

Block 9 drilling prospects

The Alameda-1 well is the highest ranked exploration target in Block 9, targeting 141 million barrels of recoverable oil on a best estimate basis.

The Alameda prospect is a large structure located in the western part of the onshore block, which also contains Cuba’s first discovered oilfield, Motembo.

Alameda-1 is expected to take around 80 days to drill to a total measured depth of 4000m and is expected to penetrate three exploration objectives: the primary Alameda objective as well as the shallower N and Amistad objectives.

The second well in the planned drilling program will test the Zapato prospect, located in the central portion of Block 9.

This proposed well is designed to test a Lower Sheet closure in close proximity to the shallower Motembo light oilfield.

“Regulatory approvals for the drilling of the Zapato-1 exploration well have also been advanced,” Zammit said.

Santa Cruz oil recovery project

Located about 150km west of Block 9, on the northern coast of Cuba, is the shallow-water Santa Cruz field, which has been producing oil since its 2004 discovery.

In March, Melbana announced it had made a deal with the country’s national oil company Cubapetroleo to study and assess the potential to increase production at the oilfield.

In the update today, Melbana said it has completed its initial technical assessment of the opportunity and there was sufficient encouragement to support the company proceeding to the next stage of negotiating a long-term binding agreement with Cubapetroleo.

“We are also 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,” Zammit said.

Australian operations

Beehive, located in the northern tip of the WA-488-P permit off Western Australia’s coast, is potentially the largest undrilled hydrocarbon prospect in Australia.

It has been independently assessed to contain a best-estimate recoverable prospective resource of 388 million barrels of oil equivalent.

Earlier this month, Australia’s offshore petroleum regulator granted approval of Melbana’s application to suspend the deadline for completion of the current permit year’s work program to support the potential drilling of this maiden exploration well.

Oil and gas majors Total and Santos have an option (exercisable together or individually) to acquire a direct 80% participating interest in WA-488-P by fully funding the costs to drill this first well in the permit.