- Melbana Energy (MAY) has received final payments from Sonangol to complete the terms of its farm-in agreement for the Block 9 oil project in Cuba
- Payments totalling around $13.2 million will cover Melbana’s past costs, as well as the exploration expenditure required under the terms of the farm-in agreement
- Sonangol will take a 70 per cent stake in the project, while Melbana will maintain responsibility for the drilling program
- Drilling preparations began in late September for two final wells aimed at testing Block 9’s total prospective resource of 236 million barrels of oil
- With the final payments from Sonangol, Melbana is now fully funded to progress the drilling program and order long-lead items for the project
- Melbana Energy closed Thursday’s session 25 per cent higher at 1.5 cents
Melbana Energy (MAY) has received final payments from Sonangol to complete the terms of its farm-in agreement for the Block 9 oil project in Cuba.
The payments, totalling around $13.2 million, will cover Melbana’s past costs as well as the exploration expenditure required under the terms of the farm-in agreement.
Block 9
The terms of the Block 9 Production Sharing Contract (PSC) have now been satisfied.
Melbana has received around $5.7 million for its past costs, and a further $7.5 million for exploration expenditure.
Sonangol will take a 70 per cent stake in the project, with Melbana controlling the remaining 30 per cent, as well as taking responsibility for the drilling program.
Under the agreed terms of the joint venture, Sonangol will pay for 85 per cent of exploration costs.
The recovery of the past costs will fund Melbana’s 15 per cent share of exploration costs, providing the company a low-cost opportunity to exploit a substantial resource.
Outlook
Drilling preparations began in late September for two final wells aimed at testing Block 9’s total prospective resource of 236 million barrels of oil.
Two wells have been drilled previously and successfully intercepted and flowed higher quality hydrocarbons than those typically found in Cuba.
In the meantime, construction of the first well pad and associated civil works continues. Melbana will soon release a more detailed operational update in due course.
With the final payments from Sonangol, Melbana is now fully funded to progress the drilling program and to order long-lead items for the project.
Melbana Energy closed Thursday’s session 25 per cent higher at 1.5 cents.