Melbana Energy Limited provides the following update on its activities in relation to the Santa Cruz oil field - an area that has been in production since 2006 and which was initially estimated to have a resource of up to 100 million barrels of recoverable oil.

In March this year, Melbana secured the exclusive rights to assess the Santa Cruz oil field and negotiate a long term binding Incremental Oil Recovery (“IOR”) Production Sharing Contract (“PSC”) from the national oil company of Cuba, CubaPetroleo.

Melbana has completed its initial assessment, yielding a number of promising opportunities to enhance production from the designated area.

Melbana has now finalised a binding contract with CubaPetroleo, which is subject to standard Cuban regulatory approvals. This provides Melbana with a long term right to share in any enhanced production from the Santa Cruz oil field.

Under an IOR contract, additional production above an agreed base production rate is shared. In general, the commercial terms are consistent with exploration PSC terms, such as those that apply to Melbana’s Block 9 PSC, with provisions for cost recovery and sharing of profit oil.

The Santa Cruz IOR PSC is split into multiple phases, with an initial study period of desk-based technical work followed by an implementation phase. The initial study period phase will last a maximum of 8 months at which point Melbana may elect to proceed to the next implementation phase, which includes a minimum program of two side-track wells from existing well bores to new geological targets. To accelerate opportunities to enhance oil production as soon as possible, Melbana has already engaged a Canadian consultant with extensive Cuban IOR experience to identify possible debottlenecking opportunities.

Melbana Energy’s CEO, Robert Zammit, said:
“Securing the Santa Cruz IOR opportunity is a key plank in our strategy to become a producer in the near term.

I am pleased that we have identified potential opportunities to enhance production at Santa Cruz and that we have had CubaPetroleo’s support to complete our commercial negotiations promptly and lock in the opportunity. Our ability to identify the enhanced oil opportunities in Santa Cruz was greatly accelerated given our learnings from Block 9.

During our marketing activities for Block 9, we noted strong investor and industry interest for Santa Cruz, given its size and existing production. In due course, Melbana will likely seek to fund the field work required to increase oil production from Santa Cruz at the asset level.”