Cuba – Block 9 PSC

Cuba Block 9 - World Class Exploration Acreage

Melbana Energy was awarded a 100% participating interest in the Block 9 Production Sharing Contract (Block 9 PSC) on 3^rd September 2015 and in May 2020, Melbana agreed to transfer a 70% interest in Block 9 to Sonangol (the National Oil Company of Angola) in consideration for it funding 85% of two exploration wells there.

Melbana Energy, as Operator, had a 30% interest in this two well exploration drilling program that commenced in September 2021 and concluded in October 2022.  The wells targeted four separate targets with a combined 235 million barrels of prospective resource (best estimate).

The Block 9 PSC covers 2,344km² onshore on the north coast of Cuba, 140 km east of Havana in a proven hydrocarbon system and along trend with the multi-billion-barrel Varadero oil field.

Independent reserves and resources certifier, McDaniel & Associates, prepared an original Competent Persons Report (30 June 2018) that estimated the following resources for Block 9:

• Oil in Place:                ~15.7 billion barrels (best estimate)
• Prospective resource:  676 million barrels (best estimate).

In 2022, Melbana drilled the Alameda-1 well to a total depth of 3,916mMD (April 2022).  The well intersected moveable oil in three independent reservoirs for total net pay zone of 278 m TVD with strong oil shows flowing to surface.

Ultimately, high formation pressures at depth resulted in the well being suspended pending testing and appraisal wells.

Reserves and Resources

In August 2022, Melbana announced a new independent assessment of the reservoirs encountered by the Alameda-1 exploration well.  This assessment estimated the total resource for the three structures encountered whilst drilling the Alameda-1 well (Amistad, Alameda and Marti) at:

• 6.4 billion barrels of OOIP and
• 362 million barrels of Prospective Resource¹.

Appraisal Drilling

In 2024, Melbana completed a two well appraisal program was designed to collect more information on the oil quality in these formations, their production and geological characteristics and the capabilities of the oil processing facilities and related oil storage and logistics.

ALAMEDA-2 (first appraisal well and also called Amistad-1)

This well had the objective of testing the different sections (called Units 1, 2 and 3) of the Amistad (shallowest) structure.

Highlights included:

• Successfully reached target total depth on time and on budget;
• Unit 1 shown to comprise two different productive units, Unit 1A and Unit 1B;
• Unit 1A: 12° API oil recovered at surface without assistance;
• Unit 1B: 19.8° API low (<3%) sulphur oil recovered at surface without assistance at a controlled rate of 1,235 BOPD;
• Unit 2: No oil encountered at the tested location;
• Unit 3: 16.9° API oil unable to be recovered at surface without assistance, implied flow rate of 750 BOPD;
• Unit 1B: Completed as a production well then shut in to allow for drilling of the Alameda-3 appraisal well. Subsequently put on extended production to better understand reservoir performance and capability of surface operations. Restarted flow of 300 BOPD suggested reservoir damage;
• Net Pay for the Amistad structure calculated to be 346 metres TVD (615 metres TVD when natural fracturing incorporated);
• Updated independent estimates of resource volumes:
  • Unit 1A: 32 million barrels of Prospective Resource
  • Unit 1B: 46 million barrels of Contingent Resource

                    90 million barrels of Prospective Resource

ALAMEDA-3 (second appraisal well) had the objective of testing the two deeper reservoirs (called Alameda and Marti):

Highlights included:

• Successfully reached target total depth but neither on time nor budget due to operational and drilling issues;
• Management of these issues resulted in down hole conditions unlikely to be conducive to optimum reservoir performance;
• Neither reservoir successfully flowed oil to surface, despite being minimally offset to Alameda-1 trajectory where extensive accumulations of energetic and moveable hydrocarbons were encountered;
• Cores and high-quality logs were obtained, indicating highly fractured reservoir; and
• The well was suspended whilst studies were undertaken to determine possible causes of unexpected results and to formulate reservoir workover strategies; and,
• The studies concluded that the formation was damaged by long residence time / chemical impact of high weight mud.  

Development Plans

The first of the next seven new well pads were approved for construction in late 2024.   Each of the pads will be permitted for two production wells.  Work is underway to construct the first of these wells. 

 A revised Basis of Well Design (BOWD) concept for the upcoming development wells incorporates learnings from Alameda-2 and Alameda-3 regarding mud weight, drilling and completion techniques to minimise costs and formation damage whilst maximising flow rates by intercepting the entire net pay zone at optimal orientation.

 Prior to the drilling of the next production wells, Alameda-2 was re-entered to remedy near-wellbore formation damage that was identified in Unit-1B via comparison with results from the original Drill Stem Test (DST) and Extended Production Test.

 The goal of the workover program is to return the well to the superior rates observed in the initial DST (stabilised flow rate of 1,235 barrels of oil per day) achieved from perforations cover only about 20% of the net pay zone. 

 Key steps in the workover program include using a service rig (available in country) to pull the completion, add perforation intervals in the upper and lower Unit 1B and undertake an acid wash and squeeze before re-running the completion.

Commercialisation

Melbana’s engineering and commercial teams are working hard to develop and optimise their plans for the export of oil produced from the Block 9 PSC.

The plan is to truck crude to receiving pits connected to oil storage tanks at the Matanzas Supertanker port which has multiple oil storage tank options before being exported to market.

Melbana is in the final stages of formalising a joint marketing and sales agreement with all Block 9 stakeholders to export 100% of production.

Negotiations with major international commodity traders interested in purchasing the 19.8° API and 2.7% sulphur Unit 1B crude are also at an advanced stage.

Melbana continued its discussions with several potential new partners and credit providers who have demonstrated interest in participating in the development of Block 9.