Cuba Block9 is not NUOG target27 Dec 2019 17:34
Published: Wednesday, December 25, 2019
Australia-based Melbana Energy has signed an agreement to divest a large stake in a Cuban onshore oil patch, shrinking the company’s exposure to the Caribbean’s second-largest energy-producing market.
According to the farm-in agreement, Angolan state oil company Sonangol will pay Melbana US$5mn to cover the latter’s expenses so far at block 9 PSC, and fund 85% of the costs related to finishing drilling already underway at the Alameda and Zapato high-potential sites.
In turn, Sonangol will gain a 70% stake at the block 9 site, with Melbana’s share decreasing to 30%. Sonangol will also have the option to assume operational control at the site once drilling the exploratory wells finishes.
“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,” Melbana chairman Andrew Purcell said in a press release.
“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,” he added.
Melbana says its presence in Cuba as providing it “a strong early mover advantage.”
In addition to its home market of Australia, Melbana has had a footprint in Cuba since 2015, winning 100% participating interest in both the Santa Cruz and Block 9 PSC in the wake of the island’s landmark foreign investment law.
The productive Santa Cruz site is just offshore northern Cuba, about 45km east of Havana.
Sonangol entered the Cuban oil market at about the same time as Melbana, and as an established operator in Cuban energy exploration and production is qualified to contract with state oil firm Cupet. That should expedite its takeover of exploration at block 9.
Last year, block 9’s total resources were estimated at 15.7Bb, with prospective recoverable resources of 718Mb.
Still, Cuba only averages output of about 45,000b/d of oil, meeting about half the island’s domestic demand.
Eight months ago, Melbana nixed a farmout agreement with AGMI, a Chinese oil and mining conglomerate, to pursue more active discussions with potential partners interested in block 9.
The block is about 75km from the deep-water Varadero port, which has an oil terminal, and sealed roads connect the site to Havana.
Spanning 2,380km2, the block includes the Alameda, Zapato and Piedra prospective well sites.
Block 9 counts several productive fields in its territory, including the oldest oil field in Cuba, but production at the site has been delayed this year.
Meanwhile, in recent weeks Cupet concluded its roadshow for investors as it looks to complete its first licensing round. Qualification of bids is expected to take place from January-May, while bid evaluation and license awards are announced in July
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