ALAMEDA-
3 (“A3”) -
MARTIIn the next few weeks (whether it is one day or month month does not change the fundamentals) Melbana will spud Alameda-3 (“A3”). The current drill contract is for two wells back-to-back (refer company announcement of 23rd March 2023). The first well (A2, the shallow well into the Amistad upper sheets) has been completed, and as expected the oil quality and pressures are in line with other Cuban shallow fields. API was 11.5 in the shallow section (Unit 1), and is expected to remain relatively constant throughout the upper sheets. Final oil quality from U3, and DST results from U2 are expected to be published in the coming days/weeks. A major uplift in resource estimates will be the likely outcome from A2, with the company currently examining the commerciality of those upper sheets. The company will no doubt add clarity to that over the coming days and weeks.
The second of these two wells (A3) will target the Marti structure which has been observed during the previous drilling of Alameda-1 (2022), and before that Marti-5 (1988). Indications are that the target zone in Marti is high pressure, as has been observed by the company and by the independent assessor, McDaniels. Oil quality is markedly higher than the upper sheets, and has previously been observed as being in the range of API 22.0 to 24.0. Expectations for A3 are in line with this.
Below please find an extract of announcements relating to Alameda-3. These are not exhaustive but are good points of reference for the upcoming drill:
24th February 2022:
“High down hole pressures encountered lend confidence to reservoir being adequately charged to support unassisted oil recovery”.
9th March 2022:
”Drilling of the 6” hole section progressed to 3,769 mMD when it paused after encountering a high pressure zone resulting in an influx of hydrocarbons into the wellbore and subsequent strong oil shows on the shakers”.
7th April 2022:
”The presence of extensive natural fractures demonstrated by subsequent logging runs across the deeper intervals now supports the use of a more optimistic porosity cut-off for net pay calculations.”
1st August 2022:
“McDaniel’s combined estimates for this Marti reservoir are 1.5 billion barrels of oil originally in place (OOIP) and a Prospective Resource of 95 million barrels of oil - a significant increase to the pre-drill assessment of 72 million barrels of oil1,3, particularly given that the base of the Marti reservoir may not have been encountered.”
1st August 2022:
McDaniels: ”The Marti structure was initially encountered in 1988 by the Marti-5 well which recovered 24° API oil from a normally pressured section. Alameda-1 has now drilled the same section offset by about one kilometre to the south and also encountered oil but in a high pressure interval. Therefore, the Marti objective is divided into Unit-1, the normally pressured section intersected by Marti-5, and Unit 2, the high-pressure section intersected by Alameda-1. The two units appear to be separated by a fault identified on seismic data”.
22nd February 2023 (Investor Webinar Presentation):
Note that this commentary is not a technical analysis of the stock, nor does it take into account the highly emotive actions of traders and punters. Simply the facts. That said, the current market capitalisation appears to be a gross underestimate of the existing valuations of Melbana, as conducted by Evolution Capital and others. In my opinion, share price uplift will occur once the full results of A2 are published (particularly quality and pressure confirmations for Units 3 and 2), once the company adds clarity regarding the commerciality of the Amistad formations (I shall resist the temptation to enter into that discussion here), and the spudding of A3 (and associated announcements and noise that will no doubt result from that event). With luck all three things will occur within the next few weeks, thus the deep discount the market is now offering on Melbana stock presents an excellent opportunity to buy into a non-wildcat opportunity. Certainly worth a few hours of your reading time if you are sitting on the sidelines at the moment.
Best of luck to all holders and best wishes to the company and it’s contractors for the A3 drill. May the oils be good and the pressure high.
Best regards
Kit.
(20min delay)