Melbana Resources Limited (ASX:MAY), a 30% interest holder and Operator of Block 9 PSC onshore Cuba, is making significant strides in oil exploration, highlighted by the upcoming launch of drilling operations for the Alameda-3 appraisal well and the initiation of early production in Amistad reservoir’s Unit 1B, driven by exceptional flow rates and oil quality results.
Figure 1: Casing delivery for Alameda-3
The Alameda-3 Appraisal Well
One of the Company’s major milestones is the upcoming spud of the Alameda-3 appraisal well, scheduled for November 2023. This is a pivotal moment for Melbana Energy as it marks a critical step towards appraising the oil previously encountered in the deeper Alameda and Marti Formations, which are known to be highly prospective targets within Block 9.
Melbana Energy’s Executive Chairman Andrew Purcell said following the success of Alameda-2, the Company looks to spud Alameda-3.
“We are delighted to confirm plans to spud Alameda-3 in the near term to appraise the oil we previously encountered in the deeper Alameda and Marti Formations,” he said.
“As we have consistently stated, these remain our most prospective targets within Block 9.”
Early Production from Unit 1B in Alameda-2
Prior to Alameda-3’s spud in November, Melbana Energy has set its sights on early production from Unit 1B in the Amistad reservoir of the Alameda-2 appraisal well.
The decision to initiate early production is driven by the exceptional results in Unit 1B, where stabilised flow rates of approximately 1,235 barrels of oil per day significantly surpass the Cuban vertical well average.
Additionally, the quality of oil produced from Unit 1B is noteworthy, boasting an API gravity of 19° and a viscosity of 30 cP, which surpasses the usual standards for Cuban production.
Notably, the produced oil lacks the typical sulfur content responsible for price discounts, enhancing its market value.
Figure 2: Alameda-2 Completion
Potential for Horizontal Drilling
The impressive flow rates from Unit 1B are indicative of the reservoir’s potential, with analysis of regional well performance suggesting that these rates align with the high-end expectations for shallow vertical wells in Cuba.
Importantly, they are also in proximity to the average rates of shallow horizontal wells within this formation. Horizontal drilling in these reservoirs typically triples the flow rate, suggesting significant growth potential for production.
Melbana Energy has received high-quality well logs from the appraisal program, which will aid in planning potential future horizontal wells, with these horizontal wells aiming to capitalise on the reservoir’s potential and intersect dominant fracture systems at optimal angles.
The Importance of Early Production Data
Alameda-3 represents a critical step forward in Melbana Energy’s exploration efforts within Block 9, with this well designed to test the lower two geologically independent oil-bearing Formations, Alameda and Marti. Both Formations, as previously encountered in Alameda-1, have shown signs of movable hydrocarbons and substantial formation pressure.
Obtaining early production data from Unit 1B is instrumental for Melbana Energy, influencing the finalisation of field development plans and budgets for 2024 by providing vital insights into reservoir management, transport, and sales processes.
To date, the Company has already trucked 1,500 barrels of initial test production to a nearby oil storage facility, which also serves as the custody transfer sales point.
As preparations for Alameda-3 continue, the Company is working diligently to make the most of the early production opportunity presented by the promising results in Unit 1B of Alameda-2.
MAY’s Australian Stock Exchange-listed share price is currently trading at 7.4 cents (2:00pm UTC+ 8 hours).