Sign up Australia
Proactive Investors - Run By Investors For Investors

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.”

View full MAY profile View Profile

Melbana Energy Ltd Timeline

Newswire
August 17 2016

Related Articles

oil and gas operations
August 02 2018
The agreement includes up to US$35mln in costs regarding the development of Aminex’s remaining 25% interest in the Ruvuma PSA, which would include the Ntorya project
oil and gas operations
April 18 2018
Falcon's shale project is now clear to advance now that a ban on fracking has been lifted in Australia's Northern Territory.
Gas flare
August 24 2018
Decentralised power supply is the way forward for Africa believes VIctoria's Kevin Foo

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use