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Melbana Energy (ASX:MAY) has been vindicated in its recent efforts to pivot its focus to WA’s North West Shelf (NWS), at least, after it reported on Wednesday that its Cuba-based Amistad-2 oil well came up a duster – seeing shares plummet -50% and the share price enter penny stock territory.
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The company drilled to 2,000m depth but recovered no oil, which appears to have been the last straw for many shareholders in the nanocap company that’s got nearly 4B shares on issue. The well will be plugged and abandoned.
“The testing of Amistad-2 is disappointing given the well was updip of known oil, but this can occur in the early-stage appraisal and development of new oilfields,” MAY EC Andrew Purcell said. One has to admire the resilience of born optimists.
But it wasn’t enough. Investors have long been losing patience with Melbana, which is perhaps best exemplified by the fact the stock price’s -50% decline Wednesday was driven by no more than $400K shares trading hands.
MAY’s existence in Cuba, despite maiden production this year (of not-too-great volumes), has long been beset by what appears to be a curse upon the company.
Equipment failures, geotechnical mishaps, long wait times for replacement parts and presumably the difficulties of operating day-to-day in a country under heavy Western sanctions (with an ongoing economic and power infrastructure crisis driving citizens to leave the country) have all compounded to repeatedly complicate the company’s best wishes to become an oil producer. In Cuba.
Still, MAY isn’t giving up. The next part of the course? 2D Seismic. Given how difficult it would be for MAY to crack into the NWS offshore WA, let alone fund the costs of drilling in AUD, perhaps it’s not the worst strategy.
MAY last traded at 0.8cps.
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