Melbana Energy Limited has provided an update on progress made towards the drilling of its two high impact exploration wells onshore Cuba in its Block 9 contract area (Block 9 PSC).
Melbana has a 30 per cent interest in the 236 million barrels of Prospective Resource (Best Estimate) [1] being tested in this drilling program projected to start in March 2021.
Site Preparations
Preparation of the well site for Alameda-1 has completed its third week.
Following the completion of an aerial photographic survey of the undisturbed sites for the two well pads that are to be built, a survey was undertaken at the first well site to mark the location of the well pad and access roads.
Camp facilities were then constructed and crews and machinery arrived on site and commenced work in early October.
Melbana advises that construction of the roads and the well pad for Alameda-1 have been slower than expected due to heavy rains but are forecast to be completed by the end of the year.
Construction of the roads and well pad for the second well, Zapato-1, is planned to commence immediately thereafter.
Funding
Melbana has now received its Past Costs for Block 9 [2], approximately A$5.7 million, in accordance with the terms of the Farm-in Agreement [3].
These funds have been allocated to Melbana’s net 15 per cent share of the cost of drilling operations in Block 9.
Melbana has also received into the JV account monies called from its partner to meet anticipated spending requirements for the rest of 2020.
Project Timeline
A tender for the supply of tubulars, casings etc. was completed late last month.
Recommendations made by Melbana, as Operator, based on the findings from this process were then approved by the committee representing the joint venture parties and then subsequently submitted to the administration committee for Block 9.
Upon receipt of this committee’s approval, contracts will be entered into for the supply of these materials.
According to Melbana, the manufacture and supply of some of these items lie on the critical path to the commencement of drilling operations. Subject to an order being placed this month and the accuracy of quoted delivery lead times, drilling operations are forecast to commence in March 2021.
Following the long lead items, the company notes that the next order of business will be the execution of contracts with drilling and other service providers. Melbana would prefer to have these agreements completed this year.
It further notes that a final draft of the drilling contract has been completed and is now being circulated amongst relevant stakeholders for their approval prior to signing.
Draft agreements have been provided to potential service providers and their commercial proposals are currently being analysed.
Last week, Cuba began relaxing coronavirus restrictions, allowing shops and government offices to open and welcoming locals and tourists at airports across the island (except for Havana). Several Asian and European countries have now resumed flights to Cuba.
The wearing of face masks and social distancing remain mandatory, although authorities no longer isolate those who have been in contact with suspected cases of COVID-19.
Given the assumptions and developments summarised above, Melbana details that plans are being made for senior members of their Project Management Team to start arriving in Cuba before the end of the year, with the rest of the team projected to arrive, as required, during Q1 2021.
Melbana is in the process of developing a contingency plan that should allow drilling operations to continue should coronavirus restrictions be reinstated over the course of next year.
Melbana Energy’s Executive Chairman, Andrew Purcell, said: “Activity towards the commencement of drilling operations is now fully underway and we look forward to providing regular updates as milestones are reached. We have an experienced project team eager to deliver this project on time and within budget and look forward to finally testing these exciting prospects.”
[1] Prospective Resources Cautionary Statement – The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) related 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. All quoted volumes have been taken from Independent Expert McDaniel & Associates Competent Persons Report, released to ASX on 7 August 2018, as adjusted by Melbana for area relinquishment. Melbana is not aware of any new information or data that materially affects the information included in that announcement and that all the material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed.
[2] See Melbana’ s ASX announcement dated 22 October 2020
[3] See Melbana’s ASX announcement dated 27 May 2020
