Melbana Energy Limited (ASX: MAY) has taken a significant step forward in its Cuban oil development plans, announcing the mobilisation of drilling equipment for the Amistad-2 production well at its Block 9 PSC operation. The move comes after months of logistical challenges and represents a crucial milestone in the Company’s journey toward becoming an oil producer.
The Australian oil and gas explorer, which holds a 30% operating interest in the 2,344 square kilometre Block 9 concession alongside partner Sonangol’s 70% stake, expects drilling to commence in mid-September 2025 with results anticipated by mid-October.
Amistad-2 well trajectory designed to intercept fractures near the crestal axis of a localised anticline
Overcoming Cuban Operational Challenges
The path to Amistad-2 hasn’t been straightforward. Cuba has faced significant energy infrastructure challenges, including widespread power outages that affected the country’s industrial operations. These disruptions forced Melbana’s preferred drilling rig to be redirected for gas well drilling to support electricity generation.
Executive Chairman Andrew Purcell addressed the delays directly: “It’s been an impatient few months for everyone invested in the success of our Cuban operations. The delays to our work program, which have not been within our control, are now behind us and field activity is recommencing.”
The Company investigated alternative drilling options but ultimately decided to proceed with their original rig choice, prioritising successful execution over speed. This decision reflects the critical importance of the Amistad-2 well, which represents the first dedicated production well in their development program.
Strategic Well Design and Targeting
Amistad-2 will be drilled to a total depth of 1,125 metres measured depth, specifically targeting the Unit 1B formation that has already demonstrated strong production characteristics at the nearby Alameda-2 well. The geological target sits approximately 850 metres southwest and 200 metres up-dip from Alameda-2, positioned near the crestal-axis of a localised anticline with interpreted significant fracturing.
The well design incorporates lessons learned from previous drilling campaigns, including the implementation of a Reservoir Drilling Fluid (RDF) system to minimise formation damage. This technical advancement addresses issues observed during earlier extended production testing and should enhance well performance.
Completed drilling pad infrastructure demonstrates advanced site preparation
Building Oil Inventory Ahead of First Export
One of the most encouraging aspects of Melbana’s operations is the steady production from Alameda-2, which has contributed to an inventory of more than 30,000 barrels of oil. This inventory build-up positions the Company well for its planned first trial export before the end of 2025.
The Company initially postponed its first export due to port issues and unfavourable shipping economics for smaller cargoes. However, with conditions normalising and inventory growing, Melbana Energy is now better positioned to fill larger vessels and achieve improved unit economics.
“Oil inventory continues to build given the steady production from the Alameda-2 well. Economics improve as volume increases,” Purcell explained. “We therefore want to see what additional production Amistad-2 can deliver before exporting our first cargo.”
Recent Capital Raising Strengthens Financial Position
To support its expanded operational activities, Melbana completed a $7.0 million placement on the same day as announcing the drill rig mobilisation. This funding ensures the Company remains adequately provisioned for its forward work program, including the costs associated with recent delays.
The capital raising demonstrates continued investor confidence in the project’s potential, particularly given the Company’s proximity to first oil production and revenue generation.
Amistad-3 Preparations Advance
While Amistad-2 takes centre stage, preparations for the Amistad-3 production well are also progressing well. All permits have been received and civil works completed, with the well planned for 1,625 metres total depth and designed to intercept approximately 1,000 metres of the productive Unit 1B formation.
This systematic approach to well development reflects Melbana’s strategy of establishing multiple production sources to build sustainable oil output from the Block 9 concession.
Amistad-3 geological cross-section showing extended reservoir intercept potential
Market Performance and Investor Outlook
Melbana Energy shares have reflected the challenging operational environment, with the stock trading at approximately $0.024 per share as of August 2025. The Company maintains a market capitalisation of around $80.88 million with 3.37 billion shares on issue.
Despite recent volatility, the imminent drilling campaign and growing oil inventory represent potential catalysts for renewed investor interest. The Company’s 52-week trading range of $0.018 to $0.041 demonstrates both the challenges and opportunities ahead.
Strategic Location and Infrastructure Advantages
Block 9’s location on Cuba’s north coast, approximately 140 kilometres east of Havana, provides significant logistical advantages. The project sits along trend with the multi-billion barrel Varadero oil field, demonstrating the area’s proven hydrocarbon system.
Energy sector developments in Cuba have highlighted the strategic importance of domestic oil production, particularly given the country’s ongoing energy challenges and reduced fuel imports from traditional suppliers.
Future Development Pipeline
Beyond Amistad-2 and Amistad-3, Melbana has identified 15 additional drill pad locations using existing 2D seismic data. Each pad is permitted for at least two wells, providing a substantial development runway to support sustained production growth.
The Company plans to bring smaller, fit-for-purpose drilling rigs to Cuba for its 2026 field development program, which would provide greater operational control and flexibility while reducing costs.
Cuba Energy Summit and Industry Recognition
Demonstrating its commitment to Cuban energy development, Melbana and partner Sonangol are co-hosting the Cuba Energy Summit 2025 from 13-15 October in Madrid. The summit aims to highlight investment opportunities in Cuba’s upstream oil and gas and renewable energy sectors to international participants.
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Investment Considerations
For investors, Melbana represents a unique opportunity to gain exposure to Cuban oil development through an Australian-listed entity. The Company’s progress toward first oil production, growing inventory, and systematic approach to field development position it well for potential value creation.
However, investors should consider the operational complexities of working in Cuba, including infrastructure challenges and geopolitical factors that can impact project timelines.
The successful execution of Amistad-2 drilling and achievement of first oil exports will be critical milestones in validating Melbana’s Cuban strategy and unlocking further development opportunities across its substantial Block 9 concession.
