Analyses of performance of hundreds of wells in the region indicate that the flow rates observed in Unit 1B are around the high case rates expected for a shallow vertical well and are closer to the average of a shallow horizontal well through this Formation. These upper formations in Cuba are typically drilled close to horizontal with the goal of intersecting the dominant fracture systems at an optimal angle which can result in flow rates around three times that achieved by vertical wells. Logged Net Pay for the entire Amistad Formation has been increased from 109 metres to 346 metres TVD – further increasing to 615 metres when the highly fractured limestones are incorporated (45% of the gross interval). The Unit 1B section was completed for future production, whilst Units 1A and 3 (also productive) were suspended for potential future development and production. After analysing all options for re-entering the Alameda-1 well and undertaking a risk / reward assessment, the decision was made to plug and abandon Alameda-1 as per the original plan. Abandonment of Alameda-1 was underway during the preparation of the Annual Report, with casing removal and final cementing of the well bore completed during September 2023. Once abandonment operations were completed the rig was put on standby on the Alameda pad to enable essential maintenance and equipment upgrades to be undertaken in preparation for The objective of the second exploration well of the two well program (designated Zapato-1) was to test whether the Zapato structure, identified by studying gravity and magnetic data sets, could be the source of the very light oil (50 – 64.5° API) present in the historic Motembo oil field. The well successfully reached planned total depth of 3,150 metres measured depth but did not reach the target formation given the greater than expected thickness of the ophiolitic sequence that existed above it. Activity post reporting period Alameda-2 was spudded in June 2023 and reached total depth of 1975m on 31 July 2023. This well was focused on logging, coring and flow testing the Amistad 1A, 1B, 2 & 3 units. Unit 1A recovered 11.7° API oil with 3,783 cP viscosity at surface from a 63 metre MD interval starting from 445 metres MD. Flow rates at surface were not established but 40 barrels of oil flowed unassisted to surface (through a 32/64” choke), exceeding expectations. Unit 3 was intercepted 200 metres up dip and 500 metres to the south of where Alameda-1 intercepted it. Moveable oil of a similar quality to Unit 1A was confirmed and testing indicated the potential to flow at about 750 bopd. The DST run on the pre-drill prognosed Unit 2 did not demonstrate moveable hydrocarbons to surface at the location tested. The Unit 1B recovered 18.7° API oil with 30 cP viscosity at surface from a 70 metre TVD perforated section – less than 20% of the total Net Pay for Unit 1B (when incorporating fractures). This is a higher API (thus lighter) and considerably lower viscosity than oil commonly produced in Cuba. Such an improvement in oil quality is an important factor for the value of this oil, as is the lack of sulphur normally present in Cuban production but absent here. Stabilised unassisted flow to surface was measured at 1,235 barrels of oil per day over 12 hours on a 36/64” choke, peaking at 1,903 barrels of oil per day. drilling the deeper Alameda-3 well. During this standby period deliveries of all necessary inventory and equipment will be made to site to enable spud of Alameda-3 in November 2023. Alameda-3 will test the lower two geologically independent oil-bearing Formations intercepted by Alameda-1 – designated Alameda and Marti, respectively. The goal of the well is to prove up the nearly 179 million barrels of best estimate prospective resource certified for these lower Formations. Ahead of the commencement of drilling of Alameda-3, the Company is working on plans to take advantage of the opportunity to obtain early production from the Amistad Formation Unit 1B reservoir given the excellent results obtained in Alameda-2. Obtaining early oil production data will also provide the Company with important information on reservoir management, transport, and sales processes for finalisation of next year’s field development work plan and budget. To date 1,500 barrels of initial test production has been trucked to a nearby oil storage facility which also acts as the custody transfer sales point. Melbana is currently working through the work programme and budget process with the Joint Venture and the Cuban regulator. Going forward Melbana aims to drill as many wells as possible and as quickly as possible to unlock the massive potential of this truly world class discovery. Operating Review continued 10 Melbana Energy Limited Annual Report 2023
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