Australian oil explorer Melbana Energy has signed agreement with Anhui Modestinner Energy, a subsidiary of Chinese major Anhui Guangda Mining Investment to conduct drilling operations in exploration well Alameda1 in northern Cuba.
Alameda is highest ranking exploration target in block 9, and holds a structural proximity to the largest oil field in Cuba, Varadero field, which is nearly 35 km away. Block 9 is one the most underexplored onshore acreage covers around 2,380 Sq. Km. Three wells are planned to be drilled in this key location.
This is a recent development after a letter of intent was formulated in October last year mutually by both parties. The farm-out agreement is legally binding on both parties. Anhui Modestinner is an international equipment and oilfield service provider. Melbana CEO Robert Zammit, believes the prospects are high for Alameda1 exploration, Alameda and Zapato drills will come with zero cost to company.
The terms of the farm-out agreement state that Anhui will fund all costs of block 9 production, including the three wells. The two wells at Zapato and Alameda will be drilled by November 2019 and the third by July 2020. Anhui will provide all necessary guarantees to the Australian oil explorer along with 12.5% profit sharing. Melbana will cover back costs of $3.5 million for Block 9. The conditions of the agreement includes securing Chinese and Cuban regulatory approvals.
Melbana in December 2018 signed a long term binding contract to share any enhanced production from Santa Cruz oil field with CubaPetrolio. The Santa Cruz field has a potential of 100 million barrels of recoverable oil. The field is offshore, just 28 Miles away from Havana. The Beehive prospect along with Alameda exploration will significantly improve Melbana’s growth prospects.
According to preliminary reports from USEIA, Cuba is heavily dependent on imports with imports of 1, 72,000 barrels per day and domestic production of about 50,000 barrels per day. The area offers significant potential as it was left unexplored by the American 60-year embargo during cold war. In 2016, Cuban oil assets were estimated at 124 million barrels. With Melbana drills the country is set to harness the immense underexploited oil and gas potential which will help reduce its imports.