Melbana Energy to become oil producer following Cuban project approval

Investors have flooded into the stock of Melbana Energy (ASX: MAY) after news that its Cuban oil development plans are set to go ahead.

Melbana’s share price jumped more than 60% at one point after the company announced it is set to become a producer for the first time, following approval for the Block 9 Amistad field development.

The onshore oil development is set to produce first oil in early 2025 from the Block 9 production sharing contract, where Melbana is the operator and a 30% interest holder.

First export trial

“It’s been a busy few months getting everything organised to meet our goal of exporting our first trial cargo of oil by the end of this year,” executive chair Andrew Purcell said.

“Production from the existing completion in Unit 1B from the Alameda-2 well was recently brought back online to further refine our logistics, storage and processing arrangements, as well as to build some more inventory.”

“Remediation of this completion is planned for November, the objective of which is to restore the well’s initial production rate of 1,235 barrels per day.”

“Offtake arrangements with a major international oil trader are also in an advanced stage of negotiation.”

Unit 1B development

Approval has now been received for the next stage of the Unit 1B development.

This includes budget approval by its project partner Sonangol – the national oil company of Angola – for the remediation of the existing Unit 1B completion and the installation of two additional production wells.

Construction of new pads for production well drilling is planned to commence around November.

Mr Purcell said studies into the results of the technically impacted Alameda-3 appraisal well are continuing, with the company already planning for the remediation of the deeper reservoirs once the Unit 1B results can be incorporated.

New production wells

“Our focus, however, remains on the development of new production wells in the shallower Unit 1B reservoir,” Mr Purcell added.

The company is aiming to increase the rate of production from the current 46 million barrels of contingent resource as quickly as possible.

“We’re looking forward to reaching this important company milestone – transitioning from being an explorer to becoming a producer.”