Melbana Energy Limited (ASX:MAY) provided an update on its activities for the quarter ended 30 June 2026, highlighting developments across the Block 9 Production Sharing Contract (PSC) in Cuba. The company reported improved understanding of the subsurface through newly acquired seismic data, changes to the Block 9 joint operation structure and a review of future activities following regulatory and operational developments.

During the quarter, Melbana also implemented cost reduction initiatives due to lower activity levels and reported cash of approximately A$0.47 million at 30 June 2026. The company stated that its ability to continue activities depends on receiving additional funding, including recovery of amounts owed by its former joint operation partner or alternative funding arrangements.

New Seismic Data Improves Understanding of Block 9 Subsurface Structure

A key development during the quarter was the interpretation of newly acquired seismic data and analysis of information obtained during drilling of the Amistad-2 well.

Melbana stated that the results indicated the primary objective of Amistad-2 may not have been intersected due to subsurface misinterpretation. The company attributed this partly to limitations associated with legacy seismic data quality and possible errors in Acquisition design parameters.

Following integration of the new seismic information, Melbana created an updated subsurface model suggesting that Hydrocarbons previously identified through well data may have had a migration pathway towards the surface.

The company highlighted the value of additional seismic information and stated that future work programs would prioritise further seismic acquisition to improve geological understanding.

Joint Operation Partner Withdrawal Changes Block 9 Ownership Structure

During the quarter, Melbana’s joint operation partner Sonangol Pesquisa e Produção S.A. failed to cure its default position within the available timeframe.

As at 30 June 2026, Sonangol owed approximately A$34.8 million to the joint operation. Following the default, Melbana notified Sonangol that it was deemed to have withdrawn from Block 9 and that its 70% participating interest would transfer back to Melbana, subject to receipt of Cuban regulatory approvals.

The company stated that payments reportedly made by Sonangol towards the outstanding amount had not been received by Melbana as of the announcement date. Melbana is considering Options to recover the outstanding funds.

The potential transfer of Sonangol’s interest represents a significant change to the Block 9 PSC structure, although completion remains subject to regulatory approval.

CUPET Designation Leads to Suspension of Direct Support Activities

In June 2026, the U.S. Department of State designated CUPET, Melbana’s contractual counterparty in Block 9 PSC, as a Specially Designated National (SDN).

Following this designation, Melbana suspended all direct participation in financial, technical and administrative support for Block 9 PSC while undertaking a detailed review of the implications.

The company stated that neither Melbana nor any of its subsidiaries had been designated as an SDN under applicable U.S. sanctions programs administered by the Office of Foreign Assets Control.

Melbana noted that Block 9 operations had already ceased in late 2025 due to Sonangol’s non-payment of cash calls, and the company no longer had expatriate personnel or contractors operating in Cuba.

The company continues reviewing the situation, including obtaining external advice and engaging relevant Australian and U.S. government departments.

Updated Subsurface Model Creates Future Exploration Considerations

The updated interpretation of seismic and drilling data has provided Melbana with additional geological information regarding Block 9.

The company believes that the improved subsurface model may assist future exploration planning by providing a better understanding of reservoir structures, migration pathways and potential hydrocarbon accumulation areas.

The results from additional seismic acquisition are expected to play an important role in defining future exploration priorities.

However, further technical evaluation will be required before any conclusions can be drawn regarding future exploration outcomes.

Financial Position and Cost Management Measures

Melbana reported cash of approximately A$0.47 million at the end of the quarter.

The company recorded net cash used in Operating Activities of approximately A$0.8 million during the quarter, while exploration and evaluation expenditure totalled approximately A$0.6 million, reflecting the suspension of operations.

Given the lower level of activity, Melbana implemented cost reduction initiatives to preserve available capital.

The company stated that its future activities depend on additional funding, either through recovery of outstanding amounts owed by Sonangol or alternative funding sources.

Risks and Uncertainty Factors

Melbana’s Block 9 PSC remains subject to technical, regulatory, financial and operational uncertainties.

The potential transfer of Sonangol’s interest remains subject to Cuban regulatory approval, while recovery of the outstanding A$34.8 million remains uncertain.

The suspension of direct support activities following CUPET’s designation as an SDN may also affect future operations and requires ongoing review.

Exploration activities involve geological uncertainty, and additional seismic interpretation and future exploration work will be required to evaluate potential hydrocarbon opportunities.

The company’s ability to continue activities is also dependent on securing additional funding.

What to Watch Ahead

Investors may continue monitoring Melbana Energy’s progress across Block 9 and its broader corporate strategy.

Key areas of focus include:

  • Outcome of regulatory approval regarding Sonangol’s interest transfer.
  • Progress on recovery of outstanding amounts owed by Sonangol.
  • Further seismic acquisition and subsurface evaluation activities.
  • Developments following the CUPET-related review process.
  • Future funding arrangements and exploration plans.

Melbana Energy’s latest quarterly update highlights a period of operational and structural change across the Block 9 PSC. The company is focused on improving geological understanding through seismic interpretation, managing partner-related developments and assessing pathways to continue its exploration strategy.