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These days it’s getting harder and harder to be a true believer in Melbana Energy (ASX:MAY), one of the very few companies on the ASX operating in Cuba at all, let alone exploring for resources there.
That’s not because the company became a producer back in September – in fact, that was some of the most hotly watched and discussed news on HotCopper at the time.
It has more to do with one-year returns being down 61%; an economic crisis in Cuba threatening its power grid country-wide (the grid collapsed entirely last year,) and, the exodus of its citizens to the U.S. remains at record high levels.
In short, these problems have all outweighed the company’s progress in becoming an oil producer in the small island nation historically misaligned with the U.S.
The company could now be in for more pain – though, the HotCopper community, usually watchful of geopolitical affairs, has been quiet. It’s also strange because Melbana commands one of the busiest and most regularly updated threads on the boards when it comes to explorers.
The bad news is this: Only days after Biden declared the U.S. would no longer consider Cuba a terrorist state, Trump 2.0 has kicked in, and now Cuba is a terrorist state again.
What does that mean for Melbana Energy? Not much right now, but it’s not hard to war game in one’s head how it could play out.
With Cuba’s economy in serious trouble (as well as its power grid), it could have tapped the U.S. for assistance. But based on historical ties (and the communism thing), Trump’s obviously not willing to bury any hatchets in a way that makes it easy for Cuba.
And that means Cuba will be cut off from American Exceptionalism when it comes to tapping large American companies listed on Wall Street for assistance, as well as from any support Washington could provide.
That means Melbana – illiquid on Tuesday – will likely continue to operate in a struggling Cuban economy. Still, shares were up 3% on Tuesday. Just don’t look at how little turnover moved the price.
MAY last traded at 2.8cps.
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