It’s my pleasure to present the 2023 Annual Report for Melbana Energy Limited, which marked another exciting period of development for our worldclass portfolio of oil & gas assets. Operations during the reporting period focussed on advancing our understanding of our Block 9 contract area in Cuba and our offshore permit areas in Australia. Highlights included completing our second exploration well in Cuba, Zapato-1, advancing our assessment of our offshore permit areas in Australia and commencing the Alameda-2 appraisal well in Cuba. Zapato-1 successfully reached its planned total depth after a longer than planned drilling program, primarily due to some challenging down hole conditions. Although it was disappointing to not reach the target formation, we gained valuable operational experience and increased our knowledge of the subsurface. These data have allowed us to review our geological models and improve our work practices. Following completion of Zapato-1, efforts turned to preparing for the commencement Associates Consultants Ltd. of Canada, estimated may contain 5.0 billion barrels of oil in place. Their best estimate was that 267 million barrels of this may be recoverable, a number they arrived at by applying average Cuban recovery rates. Typical Cuban production is from the upper sheet and is therefore typically heavy, leading to lower than average recovery rates. If our exploration thesis is correct that the oil gets lighter with depth, our actual recovery rates should be higher which could lead to an upward revision of the above recoverable resource estimate. The current two well appraisal program is designed to give us all the data we and our independent experts needs to better understand the production characteristics of these reservoirs in order to make this assessment. Following the end of the reporting period, the first result from the Alameda-2 appraisal well that gave support to this thesis was obtained when the oil freely recovered at surface from Unit 1B of the Amistad Formation was shown to be considerably lighter and of lower viscosity than what is typically encountered in Cuba. That it flowed at a rate much higher than previous vertical wells in Cuba at this depth gave us sufficient information to declare a discovery – something that received wide media attention in Cuba and generated renewed excitement among our management team, our technical leads and project development partners. Your Company is now positioned with a broader range of short-term production options to complement the ongoing appraisal program at Block 9. As a result, we have commenced the new financial year with a sound framework for both commercial production pathways and longer-term exploration at Block 9. As clearly stated to the Melbana investor base, the Company’s Board and management team continue to maintain high conviction in the project’s long-term potential, and our efforts over the past 12 months have further enforced that view. of the Alameda-2 appraisal well, which started drilling late in the reporting period. The purpose of this year’s appraisal program (Alameda-2 will be followed by Alameda-3) is to undertake detailed analysis of the three geologically independent oil-bearing Formations encountered by our Alameda-1 exploration well; designated Amistad, Alameda and Marti, respectively. All three of these Formations demonstrated a working hydrocarbon system with moveable oil often accompanied by high formation pressures that our independent resources certifier, McDaniel & 4 Melbana Energy Limited Annual Report 2023 Chairman’s Letter
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