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Melbana Provides Update on Cuba Block 9 Drilling Program

Source: 7/8/2020, Location: South America

Melbana Energy Limited has received its first payment from Sonangol in the amount of EUR425,000, pursuant to the Farm-in Agreement executed last month. This payment is an advance against Melbana’s Past Costs for Block 9 PSC of ~AUD5 million, the balance of which becomes payable following Sonangol’s interest in Block 9 PSC being formally recognised by CUPET – the National Oil Company of Cuba. CUPET has informally advised this transaction has been approved and is working towards completing formal documentation.

Melbana, as Operator, is advanced in its planning to drill two wells in Block 9, onshore Cuba. It expects to soon a) confirm design details of the drilling program, b) formally engage its preferred drilling contractor and service providers, c) order long lead items and, d) establish an in-country project management team (some members of which will be personnel from Sonangol experienced in drilling operations). Once these tasks have been completed, application will be made for approval to commence drilling the first well. This is largely procedural to confirm that a) all necessary permits have been received, b) the operator is ready to commence drilling and, c) the drilling equipment is within the parameters approved in the environmental and other related permits.

Drilling operations are currently forecast to commence in Q4 2020, subject to currently unknown timing and movement implications due to COVID-19 management practices that Cuba and other relevant countries may continue to employ in the months ahead. Certain inventory and equipment will be needed to be imported into Cuba but shipping schedules have been reportedly relatively unaffected by quarantine measures. Personnel, Melbana’s and those of the drilling contractor and other service providers, are already largely present in Cuba and therefore not significantly affected by restrictions on international travel. Senior members of the project management team will need to travel to Cuba prior to the commencement of drilling operations, however, and it is currently not known when this will possible or what protocols will need to be followed. A contingency has been built into the drilling program to allow for this uncertainty.

CUPET has agreed that this drilling program would satisfy the minimum work commitments for Block 9 PSC for both the current and subsequent exploration sub-periods.

Construction of the well pad for the first well, Alameda-1, is expected to commence before the end of next month.

Melbana Energy’s Executive Chairman, Andrew Purcell, said:

“We appreciate the commitment Sonangol continues to show towards this drilling program and for making this initial payment ahead of formal completion of the agreements between us. This flexibility demonstrates that we are both keen to test the significant potential offered by Block 9 as soon as possible”

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