Results for the year The net profit after tax of the Consolidated Entity for the financial year was $3,259,760 (2023: net loss after tax of $1,001,999). The profit for the year was mainly due to the reimbursement from the joint operating partner to the Company for cost overruns incurred on past wells due to administrative delays to the program by the joint operating partner of $6,856,227. During the year, the Consolidated Entity incurred net operating cash outflows of $3,670,961 (2023: outflows of $3,126,076) net investing cash outflows of $18,666,009 (2023: outflows of $13,363,748) and net financing cash inflows of $nil (2023: inflows of $15,766,348). The successful drilling and commercialisation of any oil and gas discoveries in Cuban and Australian exploration permits and/or the development/sale of the Consolidated Entity’s methanol and LNG Projects could ultimately lead to the establishment of a profitable business or result in a profit to the Company if an asset sale occurs. While the Consolidated Entity is in the exploration/appraisal stage of drilling for hydrocarbons in its offshore Australian exploration permit and overseas acreage and in the project development phase for its other offshore Australian interests, funding will be provided by asset sales, equity capital raised from the issue of new shares and/or farm out or joint development arrangements with other companies. Review of financial position The net assets increased by $2,938,574 to $55,931,168 at 30 June 2024 (30 June 2023: $52,992,594). During the year, the Consolidated Entity capitalised $26,044,200 (2023: $8,140,867) on exploration, mainly in relation to Block 9 in Cuba. The main driver of the Consolidated Entity’s financial condition is the Profit after tax earned of $3,259,760 (2023: Loss of $1,001,999). The working capital position as at 30 June 2024 of the Consolidated Entity results in an excess of current assets over current liabilities of $10,910,423 (30 June 2023: $33,859,932). The cash balances, including term deposits, as at 30 June 2024 were $12,322,890 (2023: $34,976,625). Corporate The Consolidated Entity’s future prospects are centred on its ability to secure quality exploration, development and producing opportunities and seeking to maximise the value to shareholders of its current portfolio, identifying and securing additional value-accretive projects, and/or undertaking a corporate transaction. Funding for the coming Financial Year is sufficient to meet the Company’s forecast corporate costs, however additional funding is required to meet the field development and other work program commitments. Discussions with several potential new partners who have demonstrated interest in participating in the development of Block 9 are currently underway as well as potential purchasers of the oil expected to be produced and sufficiently advanced that the Consolidated Entity expects to progress with the planned field development activities successfully. In the event that the Consolidated Entity cannot meet its share of work program commitments through funding structures currently being negotiated, the Consolidated Entity may look to raise additional funding through a capital raise. An unsuccessful capital raise may require permits to be surrendered or to potential asset sales. Significant changes in the state of affairs On 4 July 2023 the Company reported its maiden estimate of Prospective Resources for the Hudson Prospect a carbonate build up located in licence areas WA-544-P and NT/P87 (Melbana 100%). The Company’s internal estimates are that there is a Prospective Resource of either 466 billion cubic feet (Bcf) of gas or 90 million barrels of oil (unrisked best estimate recoverable, 100%). On 4 August 2023, during the drilling of the Alameda-2 appraisal well, the Company reported an increase in Logged Net Pay for Amistad Units 1A, 1B reservoirs to 243m (from 84m previously). On 15 August 2023, the Company further reported results from Alameda-2 that moveable oil was observed in the Amistad Unit 3 reservoir indicating potential to flow at about 750 barrels of oil per day, with total Net Pay for the Amistad interval estimated to be 346 metres TVD, increasing to 615 metres TVD when natural fracturing was incorporated. On 28 August 2023, the Company announced that during testing of the Amistad Unit 1B in the Alameda-2 well, a peak flow rate of 1,903 barrels of oil per day was achieved, with a stabilised average flow rate of 1,235 barrels of oil per day. The oil was significantly lighter (19° API) and lower viscosity (30 cP) oil compared to other units in the Amistad reservoir. On 11 September 2023, the Company announced the issuance of 17,031,840 performance rights as part of the staff Long Term Incentive (LTI) scheme. Directors’ Report continued 20 Melbana Energy Limited Annual Report 2024
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