Results for the year The Consolidated Entity recorded a net loss after tax of $50,220,823 for the financial year ended 30 June 2026 (2025: net loss after tax of $4,151,446). The result primarily reflects the costs associated with maintaining Melbana’s corporate operations, together with significant non-cash charges recognised during the year. The principal drivers of the loss were the write-down of Block 9 inventory of $10,765,842 and the impairment of the Block 9 exploration and evaluation asset of $35,739,556. Excluding these items, the underlying net loss for the year was $3,715,425, which included approximately $210,000 of redundancy costs. The underlying result reflects the reduced cost base of the Group and is expected to result in a materially lower annual expenditure run rate going forward. During the year, the Consolidated Entity recorded net operating cash outflows of $3,987,479 (2025: $3,623,620), with the increase from the prior year primarily attributable to lower recoveries of project costs following the suspension of Block 9 operations part way through the year. Net investing cash outflows were $6,765,015 (2025: $3,796,677), reflecting lower cash receipts from Sonangol due to delays in the recovery of amounts funded by the Company on behalf of its joint venture partner. Net financing cash inflows were $6,535,580 (2025: nil), reflecting the net proceeds of the August 2025 placement. The successful exploration, appraisal and commercialisation of hydrocarbon resources within the Consolidated Entity’s Cuban and Australian permits, together with the development, commercialisation or sale of its methanol and LNG projects, has the potential to generate significant value for shareholders through either the establishment of profitable operations or the realisation of value through asset divestments. As the Consolidated Entity continues to advance its exploration and appraisal activities in its Cuban and Australian acreage, and progress development opportunities across its broader project portfolio, funding requirements are expected to be met through a combination of asset sales, equity capital raisings, farm-out transactions, joint development arrangements and other strategic partnering opportunities. Review of financial position The Consolidated Enitity’s net assets decreased to $11,751,654 at 30 June 2026 (30 June 2025: 55,926,331). The decrease was primarily attributable to the net loss after tax of $50,220,823 for the year (2025: $4,151,446), which was driven by the impairment of Block 9 exploration and evaluation asset of $35,739,556 and the write -down of associated Block 9 inventories of $10,765,842, comprising drilling supplies, materials and crude oil inventory. Excluding non-cash charges, the underlying result primarily reflects the corporate and administrative costs of maintaining the Group’s operations. The impairment charges reduced both carrying value of the Group’s asset base and its net asset position at year end. The Consolidated Entity’s net current assets position at 30 June 2026 was $7,824,820 (30 June 2025: $6,726,659), representing an excess of current assets over current liabilities. Cash balances at 30 June 2026 were $472,504 (2025: 5,115,674). Corporate The Consolidated Entity’s strategy is to maximise shareholder value from its existing portfolio while continuing to assess quality exploration, development and producing opportunities, value accretive projects and potential corporate transactions. At balance date, the Consolidated Entity did not have sufficient cash reserves to fund its forecast corporate costs or any future exploration and development activities. As discussed in Note 2, this position, together with the Consolidated Entity’s dependence on securing further funding, give rise to a material uncertainty that may cast significant doubt on its ability to continue as a going concern. Subsequent to the balance date, the Consolidated entity received $14.5 million in partial settlement of outstanding amounts due to it. This receipt strengthened it liquidity position and provided funding for its near-term corporate requirements; however, additional funding will be required before it can commit to future exploration or development expenditure. Regulatory uncertainty also remains elevated due to the continuing breadth and evolving application of United States sanctions relating to Cuba, including the designation of CUPET, the Consolidated Entity’s contractual counterparty under the Block 9 Production Sharing Contract, as a Specially Designated National. This designation may restrict or delay access to banking and payment channels and affect the willingness of financiers, suppliers, contractors and other counterparties to support the Consolidated Entity’s activities. The Consolidated Entity continues to monitor developments and obtain appropriate legal advice; however, the ultimate effect on its ability and timing to resume operations and undertake further investment cannot presently be determined. The Consolidated Entity had discussions with the United States Department of the Treasury’s Office of Foreign Assets Control for the Cuban project. Discussions with potential external financiers remain ongoing, and the Consolidated entity continues to evaluate a range of funding and transaction structures. However, there can be no certainty that sufficient funding will be secured within the required timeframe or acceptable terms. If sufficient funding cannot be secured, the Consolidated Entity may need to defer or reduce its planned activities, pursue asset sales or other corporate transactions, or consider the surrender of permits. 21 Melbana Energy Limited Annual Report 2026
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