Ann: Block 9 Operations Update, page-343

Cheer up.


1. Probability of Success for Amistad-2 Producing Over 1,000 bopd

Geological and Historical Context:

• Previous Well Performance: The Amistad-2 well targets the Unit 1B reservoir in the Amistad Structure, which has demonstrated strong production potential. The nearby Alameda-2 appraisal well, drilled in 2023, achieved a stabilized flow rate of 1,235 bopd during initial testing, with only ~20% of the net pay zone perforated. This suggests that Unit 1B has high fracture density, excellent permeability, and porosity, supporting the potential for robust production rates. The oil is lighter (19° API) and less viscous (30 cP) than other units, which enhances flow characteristics and commercial value.

• Reservoir Characteristics: Independent estimates indicate 46 million barrels of Contingent Resource (2C, best estimate) in Unit 1B, with a high-confidence 1C resource of 16 million barrels. The Amistad-2 well is designed to intersect the entire Unit 1B pay interval and numerous fracture sets, located 800 meters from and 200 meters updip of Alameda-2, which could improve productivity by accessing a structurally higher position in the reservoir.

• Formation Damage Mitigation: Melbana has identified formation damage in Alameda-2 and Alameda-3 due to drilling fluid issues (e.g., high mud weight, prolonged exposure). To address this, Amistad-2 will use a tailored Reservoir Drilling Fluid (RDF) to minimize damage, and the well design has been simplified (e.g., potential open-hole completion with a 7” slotted liner as contingency). These optimizations increase the likelihood of achieving higher flow rates compared to previous wells.

• Horizontal Drilling Potential: Melbana notes that horizontal drilling in similar Cuban reservoirs can triple flow rates compared to vertical wells. While Amistad-2 is planned as a directional well (not explicitly horizontal), future development could leverage this technique to boost production if initial results are promising.

Technical Factors:

• Well Design and Execution: Amistad-2 incorporates lessons from Alameda-2 and Alameda-3, including improved drilling fluids and a trajectory optimized for fracture zones. The use of existing 2D seismic control ensures targeting of high-confidence resources, with plans for 3D seismic in 2025 to further refine future wells.

• Production Testing Insights: Alameda-2’s flow test produced over 1,000 barrels during testing, with no formation water observed, indicating a clean oil reservoir. The planned workover of Alameda-2 in February 2025 aims to restore its initial 1,235 bopd rate by addressing near-wellbore damage, providing a benchmark for Amistad-2’s potential.

Risks and Uncertainties:

• Geological Variability: While Unit 1B has proven productive, localized variations in fracture density or reservoir quality could affect Amistad-2’s performance. The updip position reduces this risk but doesn’t eliminate it.

• Operational Challenges: Past wells experienced formation damage, and while the RDF is designed to mitigate this, its effectiveness in Amistad-2 is untested. Any drilling or completion issues could reduce output.

• Regulatory and Logistical Risks: Cuba’s operating environment, including regulatory approvals and infrastructure constraints, could impact well performance or export efficiency, though Melbana reports progress in securing permits and equipment.

Probability Estimate:

• Given Alameda-2’s 1,235 bopd from a partially perforated interval, the geological similarities, and Amistad-2’s optimized design, there is a high likelihood (70–85%) that Amistad-2 will produce over 1,000 bopd, assuming successful execution and minimal formation damage. This estimate is qualitative, as no specific geological chance of success (GCoS) or probabilistic production models are publicly available for Amistad-2. The upper end of this range assumes the RDF and well design fully mitigate past issues, while the lower end accounts for potential reservoir or operational variability. If horizontal drilling is later applied, rates could exceed 3,000 bopd, but this is speculative for Amistad-2 itself.