Melbana secures farmout for Cuba Block 9
Melbana Energy Limited (ASX:MAY) has signed a binding Heads of Agreement (HOA) with Sonangol E.P. — the National Oil Company of Angola — for the acquisition of 70% Participating Interest in the onshore Cuba Block 9 Production Sharing Contract (Block 9 PSC).
The deal includes a firm commitment from Sonangol to drilling two exploration wells in Block 9.
Following the execution of a farmout agreement, satisfactory completion of confirmatory due diligence and receipt of all necessary regulatory approvals Sonangol will fund 85% of all costs associated with the completion of the drilling of Melbana’s two highest ranked and high impact targets (Alameda and Zapato) to earn a 70% participating interest in Block 9 PSC. The first well is expected to commence drilling in Q3 2020.
Sonangol will pay Melbana approximately A$5.0 million to cover its expenditure to date related to Block 9; and has the the option to assume operatorship of Block 9 PSC at the conclusion of this two well drilling program.
In order to maintain a 30% participating interest and remain as operator of the Block 9 PSC until it is concluded, Melbana will contribute 15% of the costs of the two well drilling program.
Last year Melbana conducted an international tender for rigs and services for this two wells program and has now begun the process of refreshing these tenders. Permits that have been previously awarded, including land access and environmental permits, have been kept in good standing and are in the process of being extended.
Preliminary findings from these activities have identified potentially suitable rigs and crews available for this drilling campaign next year and relevant service providers have expressed their interest and capacity.
Melbana Energy’s Chairman, Andrew Purcell, said, “As the National Oil Company for one of Africa’s largest producers, Sonangol has significant experience operating on and offshore and in the upstream, midstream and downstream sectors of the oil and gas business. Moreover, Sonangol is already qualified to enter into contracts with CUPET. This will assist with the timely receipt of the necessary regulatory approvals. We appreciate the opportunity to be the operator of this two well drilling program as this will allow us to monitor costs and seek to drive the agenda.
“Maintaining a 30% interest in this very prospective area is a great result for our company as it will give our shareholders a significant interest in any discovery that may be made. We are pleased with the increasing momentum building towards drilling several high impact exploration wells in Australia and Cuba. Together they are targeting over 600 million barrels of oil equivalent (prospective resource, best estimate), which is the scale of opportunity we have been working to deliver to our shareholders.”