logo-loader
EnergyOil & Gas
Melbana Energy Ltd

Melbana Energy signs farmout deal with Chinese firm for its Cuban oil asset

To fully fund the drilling of three high-impact prospects at no additional cost to Melbana shareholders.

oil barrels
Prospective resource of 718 million barrels of oil equivalent

Melbana Energy Ltd (ASX:MAY) has signed a letter of intent (LOI) with Anhui Guangda Mining Investment Co Ltd (AGMI) with respect to its Block 9 Production Sharing Contract (PSC) in Cuba.

AGMI is a Chinese company providing oilfield services and equipment both in China and internationally, with assets in excess of US$1 billion, oil production of 6,000 barrels/day and over 1000 employees.

The terms of the LOI state that AGMI will fully fund the drilling of a minimum of three exploration wells in Block 9, one on each of Melbana’s three highest ranked and high impact targets (Alameda, Zapato and Piedra) prior to July 2020, with two exploration wells to be drilled prior to November 2019.

Block 9 map showing location of key drilling targets

Melbana chief executive officer Robert Zammit said: “We are very pleased to have agreed LOI terms for the Block 9 farmout with AGMI where the minimum commitment to fully fund the drilling of our three preferred high impact prospects occurs at no further cost to Melbana shareholders.

“As AGMI proceeds with further activity in the block, Melbana will also be fully carried for all further activity and costs, including any appraisal, development, production costs and bank guarantee obligations while earning a 12.5% share of the profit oil under the Block 9 PSC and recovering its back costs of approximately US$3.5 million in the event of a commercial development.”

READ: Melbana Energy secures $3.5 million for Cuba oil assets

The farmout follows from the recently released prospective resource assessment of Block 9 by independent expert McDaniel & Associates Consultants, who have significant Cuban experience certifying reserves for Sherritt International (TSE:S).

McDaniel’s assessment identified a best estimate oil in place of 15.7 billion barrels and prospective resources of 718 million barrels of oil equivalent from three prospects and 16 leads.

 

Zammit added: “AGMI is prepared to commit significant resources to complete a drilling and development program in Cuba and has substantial experience operating onshore in multiple jurisdictions.

“We have a mutual understanding of the opportunity that Block 9 provides for significant oil discoveries and we look forward to finalizing a binding agreement late in the current quarter.”

Quick facts: Melbana Energy Ltd

Price: $0.01

Market: ASX
Market Cap: $20.66 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

'May only be a matter of time' before Uranium price recovery with...

Mining Capital's Alastair Ford discusses the planned slow down in production from Kazatomprom (LON:KAP). The miner's looking to cut output from its Kazakh mines by around 20% through to 2021. He says that extends the timeframe of its previous production curtailment by a further year, and...

1 day ago

3 min read