The principal achievement of the year was the advancement of our understanding of Block 9. Results from Amistad-2, together with new 2D seismic and LiDAR data, significantly improved our geological model and informed a revised view of where future drilling should be focused. While that technical progress was encouraging, the year was ultimately defined by two events outside the Company’s control: the failure of our joint operation partner to meet its funding commitments and the subsequent U.S. designation of CUPET, our contractual counterparty in Cuba. Together, these events resulted in the Block 9 project being placed on care and maintenance. Although Amistad-2 did not recover oil on flow test, the well substantially improved our understanding of the reservoir and the broader field. It intersected 169 metres of highly porous net reservoir and provided critical subsurface data that enabled us to develop a more refined geological model. Our revised interpretation suggests that the well encountered a breached forelimb structure from which hydrocarbons had migrated, explaining the absence of oil production despite excellent reservoir quality. Importantly, the low-cost seismic acquisition techniques developed by the Company proved highly effective and will play a central role in future well planning. Encouragingly, Amistad-1 again flowed oil naturally to surface when reopened, reinforcing the attractiveness of a future production well from Pad 1. Our joint operation partner’s failure to meet its funding obligations required us to demobilise personnel and equipment to preserve our remaining cash. When the partner did not cure the default within the permitted period they were deemed to have withdrawn from the joint operation, resulting in their 70% participating interest being scheduled for assignment to Melbana, subject to regulatory approval. After the reporting period ended, we received $14.5 million from our former partner. This amount was substantially less than the sum owed and was accounted for in accordance with the joint operating agreement. The balance remains an obligation of our former partner, and we intend to continue pursuing its recovery in full. In June 2026, the U.S. designated CUPET pursuant to an earlier Executive Order of the U.S. President. Neither Melbana nor any of its subsidiaries was designated. This development created immediate operational and commercial challenges for the Company. We therefore suspended direct financial, technical and administrative support relating to our contractual obligations to CUPET. Our focus since that time has been to understand the implications of the designation and identify pathways that may allow development activities to resume while remaining fully compliant with applicable laws and regulations. The Company recorded a loss for the year of $50.2 million, including an impairment charge of $35.7 million against the carrying value of Block 9 and a $10.7 million write-down of inventory. These accounting adjustments do not alter our technical assessment of the hydrocarbons discovered at Block 9 or the long-term potential of the project. Cash on hand at 30 June 2026 was $0.47 million, subsequently supplemented by the $14.5 million noted above. Although Block 9 remained our primary focus, we continued to preserve value across our Australian portfolio through a disciplined capital management approach. Our strategy remains to progress these assets through partnerships and other structures that minimise capital demands on Melbana while retaining exposure to future upside. Finally, I would like to recognise the professionalism and commitment of our employees during a year of considerable uncertainty. The circumstances we faced required difficult decisions, including a reduction in the size of our workforce. Those decisions were not taken lightly, and I remain grateful for the dedication shown by everyone who contributed to the Company during this period. I would also like to acknowledge our team in Cuba, who have navigated particularly challenging circumstances with resilience and professionalism. To our shareholders, 2026 was unquestionably disappointing. However, while circumstances beyond our control interrupted the progress of Block 9, they did not diminish the technical significance of the oil discovery we have made or the value of the knowledge gained during the year. Our priority remains to preserve and ultimately realise that value. We thank you for your continued patience and support as we work towards that objective. Andrew Purcell Executive Chairman 03 Melbana Energy Limited Annual Report 2026
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