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Melbana Energy Provides Quarterly Activities Summary for the Period Ended 30 June 2020

Source: www.gulfoilandgas.com 7/28/2020, Location: South America

Melbana Energy Limited provides the following summary in relation to its activities during the quarter ended 30 June 2020.

Cuba - Block 9 (Melbana 100%)

During the quarter, Melbana entered executed a Farm-in Agreement (FIA) with Sonangol with respect to its Block 9 Production Sharing Contract onshore Cuba.

The FIA details the commercial arrangement and responsibilities for the drilling of two exploration wells in Block 9, which include:

1. Sonangol funding 85% of all costs associated with the drilling of Melbana’s two highest ranked and high impact targets (Alameda-1 and Zapato-1)

2. Sonangol receiving a 70% participating interest in Block 9 PSC

3. Melbana retaining a 30% participating interest in Block 9 PSC

4. Sonangol paying approximately $5 million to Melbana to cover its expenditure on Block 9 to date

5. Melbana remaining operator for the two well drilling program

The FIA defined certain conditions precedent requiring satisfaction before the FIA becomes effective, all of which have now been completed other than the formal receipt of Cuban regulatory approval for the registration of Sonangol’s interest in Block 9 PSC. Melbana has been advised by the Cuban regulator that this approval has been granted and is in the process of being formally documented.

Melbana also made considerable progress during the quarter towards finalising well designs and identifying preferred providers of the necessary inventory. Preparations for the construction of the required well pads and related infrastructure advanced as well, work on which is expected to commence in the current quarter.

Melbana’s proposed two well drilling program for Block 9 would test four separate targets totalling 236 million barrels (best estimate) of prospective resource, the best of which is estimated to have a 32% chance of success1.

1 Prospective Resources Cautionary Statement - The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Future exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. Estimates of prospective resource for each target have been estimated using the Probabilistic Method. The aggregation of the prospective resource for multiple targets has been prepared using the arithmetic method. All quoted volumes taken from Independent Expert McDaniel & Associates Competent Persons Report 30 June 2018, as adjusted by Melbana for areas voluntarily released.

Cuba - Santa Cruz Incremental Oil Recovery Project - (Melbana 100%)

No material progress was made during the quarter with regards to the granting to Melbana of a Production Sharing Contract for the Santa Cruz oil field. The Company remains ready to allocate the necessary resources to advancing this project once approval is received from the Cuban regulators.

The Santa Cruz oilfield, discovered mid last decade, has been studied by Melbana during its initial study period resulting in the Company and CUPET entering into a binding agreement in December 2018.

Australia - WA-488-P Beehive Prospect (Melbana 100%)

During the quarter, Melbana’s application for a 12 month suspension of the work program conditions in respect of Permit Year 3 (and a corresponding 12 month suspension of the permit term) was granted by the National Offshore Petroleum Titles Administrator. Melbana now has until 21 December 2021 to drill an exploration well in WA-488-P, the work commitment for the current permit year).

Several parties have entered into confidentiality agreements with Melbana to receive a detailed presentation on the Beehive prospect and access to the work that has been done on it to date. Those parties are now conducting their own analysis using the materials provided in the data room, with guidance and support of Melbana’s technical team. 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 388 million BOE (best estimate) and 1.6 billion BOE (high estimate)1.

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.

1 Prospective Resources Cautionary Statement - The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Future exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. Estimates of prospective resource for each target have been estimated using the Probabilistic Method. The aggregation of the prospective resource for multiple targets has been prepared using the arithmetic method. All quoted volumes taken from Independent Expert McDaniel & Associates Competent Persons Report 30 June 2018, as adjusted by Melbana for areas voluntarily released.

Corporate

During the quarter, Melbana nominated two directors to the board of Metgasco Limited (ASX: MEL) – a company in which it holds a 27.8% interest. Metgasco did not respond to these nominations. Melbana requested that Metgasco convene a meeting of its shareholders to consider these nominations and was unsuccessful in having its nominees appointed.

Melbana ended the quarter with a cash balance of A$1.78 million.

* Melbana’s farm-in partner has agreed, subject to satisfaction of certain conditions, to acquire a 70% interest in Block 9 PSC in consideration for agreeing to make certain payments to and on behalf of the Company related to the two well drilling program planned for Block 9 in Q4 2020.

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