ASX: MAY - Melbana Energy and Sonangol enter Cuban oil partnership

Thursday, June 18, 2020 at 1:15:34 PM GMT+10:00


Melbana Energy Ltd is an Australian oil and gas exploration company that has been listed on the Australian Securities Exchange for over 20 years with the current Chairman, Andrew Purcell, leading the company since 2015.


Why is Melbana investable?


Talking to the investability of Melbana today, Purcell highlights the opportunity that the company presents to the investor community as they work towards drilling two wells in their Cuban oil project, starting at the end of this year. This particular zone is home to various other oil discoveries, giving the company a chance of success at “more than double what is usual in oil and gas exploration”.


“It is a beautiful project for people who for a bit of their portfolio want to take a bit of risk in order to get the large return.”

- Andrew Purcell, Executive Chairman, Melbana Energy Ltd


The Cuban regulatory framework


Purcell discusses the “opportunities and challenges” presented by working in the Communist nation of Cuba. Pointing to the foreign investment law that the country has in place as well as the long history of successful foreign oil projects in Cuba, he describes the regulatory framework in Cuba to be “straightforward” and even “less complicated” than working in developed economies. 


“It's a one stop shop… The National oil and gas company who is our partner is our regulator as well so everything goes through them, and they are a very competent organisation.”


Melbana’s partnership with Sonangol


Sonangol, the National Fuel Society of Angola, has partnered with Melbana on their Cuban Block 9 Oil project. This partnership will see Sonangol receive 70% interest from the project with Melbana remaining 30%, with the Angolan company funding 85% of the project and paying off previous capital Melbana has invested in the project to date. Melbana Energy will remain operator of the project, de risking the capital expenditure and providing the company with “firm control” over the project.


Social License to Operate


Melbana Energy’s presence in Cuba has a two tiered positive impact on the country both at local and national level. Locally, their presence means improvements to the roads and infrastructure as well as providing locals with job opportunities on the project. Nationally, though Cuba produces approximately 45,000 barrels of oil per day, the country needs double this level of production. Due to the US embargo, importing this gap presents challenges to the country. Therefore, should Melbana be successful in discovering oil, they will become a supply option for Cuba to assist in meeting the national demand. 


Melbana management team


The company management team is made up of a range of highly experienced professionals who have previously worked with both small and large oil companies prior to Melbana. With a geoscience team who previously ran Exxon Mobil’s New Ventures business to Melbana’s local representative in Cuba who ran the Exploration Division for the Cuban national oil and gas company, CUPET, and Purcell’s own experience in emerging markets from his previous career as a banker in Credit Suisse brings together complementary skills with a broad range of industry experience.


What's next for Melbana?


In the coming months, investors can expect to hear the drilling contractor announced and the engagement of further service contractors. A “firm timetable” will be mapped out for the project, with the aim to start by the year end. 


By: Velvet-Belle Templeman, Boardroom.Media

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