Material Risks Risk Management Approach Cuba Country Risks The Company’s main operations currently are in Cuba. As a result, Melbana is exposed to the political, economic, environmental and other risks and uncertainties associated with operating there. Cuba remains subject to sanctions imposed by the United States which have been reinforced under the current Trump administration, and while they remain in place, access to equipment and personnel of United States origin in support of operations in Cuba is restricted. These sanctions also restrict access to the project financing, banking and insurance markets of the United States and may also impact the Company’s ability to sell and transport abroad to the United States any oil discovered there. The Company cannot guarantee that the Cuban Government will maintain its current policies toward the oil and gas sector, foreign investment, profit repatriation or international oil trade, and changes could adversely affect the Company’s operations or ownership interests. The United States is the only country that maintains sanctions against Cuba, and these only apply to people and corporations subject to the laws of the United States. The Company is domiciled in Australia and is therefore not subject these sanctions. Australia does not have sanctions against Cuba. To ensure it does not fall within the scope of the United States’ sanctions against Cuba, the Company has structured its international banking, operations and insurance relationships in countries other than the United States. These countries also afford the Company an avenue to sell and transport any oil that will be produced in the future. In relation to its Cuban operations, the Company also does not transact with United States persons, source or use prohibited goods originating or manufactured in the United States or conduct any transaction in United States Dollars. The Company monitors the country risk of operating in Cuba and keeps appraised of the status of the United States’ Cuba sanctions. Sanctions and Counterparty Designation Risk Counterparties relevant to the Company’s Cuban operations including state-owned entities with which the Company must deal in order to conduct those operations, have been designated by the United States as Specially Designated Nationals. Although the Company is not a United States person, dealings with designated entities may expose the Company and its officers to the risk of designation, to restrictions to access international banking, insurance, equipment and technical services, and to reluctance on the part of counterparties, financiers and service providers to transact with the Company. Any transaction involving a United States person, United States-origin goods or services, or the United States financial system requires authorisation from the United States Office of Foreign Assets Control. There is no assurance that an application for a licence or other authorisation will be granted, granted within a timeframe that supports the Company’s plans, or granted on the scope sought. Changes to the sanctions program are outside the Company’s control and may occur without notice. The Company has completed and documented sanctions screening across the counterparties relevant to its operations and repeats that screening periodically and before entering into new agreements. It engages appropriately qualified advisers, structures its banking, insurance and procurement outside the United States financial system and does not deal in United States Dollars in connection with its Cuban operations. Where a proposed transaction requires authorisation by the United States, the Company has applied and will continue to pursue the necessary licence and does not proceed with relevant activity until authorisation is obtained. The Board is briefed on material developments in the sanctions program and their implications for the Company’s plans, funding and asset carrying values. 37 Melbana Energy Limited Annual Report 2026
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