Melbana Energy Limited (MAY.AX) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to today's webinar. My name is Alex Paull from Investor Stream, and I'll be your host today. This morning, we have Melbana Energy Executive Chairman, Andrew Purcell, who's going to be providing us with an update on the drilling program for its 2 high-impact exploration wells in onshore Cuba in its Block 9 contract area, those being Alameda-1 and Zapato-1. Following the presentation, Andrew will be available to address any questions you may have. We will attempt to get through as many questions as time permits. [Operator Instructions] You would have seen in the chat of -- you've also got an opportunity to download a copy of the presentation by navigating to the handouts pane in the control panel. And I understand the presentation is lodged on the ASX. And if it's not up there, it will be up there very shortly. Finally, a copy of the webinar will be available on Melbana's social media platforms later today. But for now, I'd like to throw it over to Andrew, who's going to kick things off for us. Andrew, the floor is yours.

Thanks very much, Alex, and thank you, everyone, for your time this morning. I've put together a couple of updated slides that I think people are probably most interested in hearing about. But the rest of the material that we can talk to, depending on where the questions go, are in the document that was released to ASX a short while ago, which hopefully you can see. On the front page is a picture of drilling as of a day or so ago. The guys are up and going, and the drill bit's turning. And rate of penetration has been very good thus far. But why don't we -- page forward, please, Alex, standard disclaimer. Thank you. The corporate overview, I think probably everyone on this call knows who the personalities are. The drilling operations update slide here. I've put together a few slides with regards to the update. We've, Monday morning, kicked off. The rig started working, and it has been running continuously since with a few pauses. Typically, when you erect these machines and you start them running after transporting and putting them in place, there's a process called a shakedown, typical of any mechanical equipment where things start to lock in place or maybe strain a bit. And that caused a few delays here and there. But generally, we've been very pleased with the performance of the rig. And it's a very experienced crew. I mean, not only are the supervisors that we have at Melbana responsible for all the drilling operation, who have worked for many major oil companies in the region and around the world over many decades. But the Sherritt crew, who are actual guys on the rig and know the rig, work like clockwork. They've drilled hundreds of wells together in Cuba over the decade, some of them. And so they know what they're doing and need very, very little in the way of instruction. Our job is just to keep the materials to them, the fuel supplies, the fluids, the casing. As you can see on the bottom right there, it's all laid out, current casing ready for loading up onto the rig. We've had a good flow of deliveries into Cuba over the last month or 2. We had another big arrival on the weekend -- well, not us, Schlumberger, who's one of the subcontractors that we're using for this drilling program. They had 14 containers arrive in the port of Mariel on Saturday, I think it was. That's the principal port we're using just to the west of Havana and the best operational port available for -- in our opinion, for this sort of work on the North Coast. So the shipping has been a real challenge. It has been one of the things that have stretched our imagination and problem-solving skills the most over the last couple of months. It's not a particular issue with Cuba. The world's shipping and logistics chains are incredibly strained at the moment, as I'm sure you've -- many of you have read elsewhere. And shipping frequencies are unreliable, and they get changed and bumped to the better payer. And containers particularly are in short supply around the world. And one of the big hubs for us in the Caribbean is the Port of Cartagena in Colombia. And it's just a zoo down there by all accounts. The containers are backed up for miles, and the loading and unloading of ships is taking longer than expected. But we've allowed for that. We've had a few sleepless nights. But things, as they say in the theater, have been right on the night. Stuff has arrived in the nick of time in some cases, but we had contingencies in place. And we're good now. We're good -- the last major shipment we have is some more casing arriving next week, but we're not going to require that casing. The current projection is for many weeks yet. So things are proceeding as well as we could have expected at this stage. Perhaps next slide then please, Alex. We know we concluded an entitlements offer recently for this drilling program. So that was an underwritten rights offer, entitlements offer. It had good shareholder participation and with many of our shareholders applying for additional shares under the facility, which we allocated before putting anything to the sub-underwriters. So the money that was raised has been raised in full because of that underwriting from Canaccord. It is earmarked for meeting our remaining obligations for this 2-well drilling program in Cuba. As we're running now, a lot of the money is being spent already to get to this point in purchasing inventory and equipment. But we're on budget as things stand at the moment. And the monies that we raised have got a contingency built in for the remainder of the drilling program. So we're well funded to meet the remainder of our share of obligations for this drilling program now. The options that were attached to the offer, they have been listed on the ASX with ticker MAYO. So they're exercisable at $0.035 for a year up to 10 September '22 of next year. So the idea behind that is if we have a success in Cuba, then that would be a way -- or hopefully, the share price would respond accordingly, as I'm sure we're all hoping, but that would be a way for the company to raise additional funds at that time without -- at a significant premium to the current raising price, which may provide the additional funds that would be required in the event of a discovery to do the next stage of work that we would want to consider for an appraisal of the discovery or perhaps more exploration in the block. I think that's a -- it's a bit premature for us. We're putting together plans at the moment as to what would happen in the event of a discovery, what we would do next. Yes, the obvious answer is we would put a discovery into flow test immediately to see how it's performing, the reservoir is performing. It depends where the discovery is, too, of course, in the Alameda-1 well. And maybe it's easier for me to talk to the slides where we show that imagery. Alex, if we go on a bit more just on the timing of the wells, just a summary for people who are looking at this afresh or wondering what Melbana has got ahead of it. In summary, we've got these 2 main opportunities before us, the Cuban drilling program that I was just talking about. That's now -- that's started. 236 million barrels of oil is what we're going for a prospective best estimate resource, where 30% of that at Melbana. So it's a very significant play, particularly for a company our size. But then next year, we've got -- expectations are a well being drilled offshore Northern Australia, the Beehive prospect. That's a massive, massive prospect. We're very excited to have a very substantial U.S. Fortune 500 company that's purchased that permit drilling that well. We believe next year, they're certainly working with their ears pinned back at the moment on their environmentals and permitting and the rig selection to be able to do that. But we'll have a very significant interest in a discovery there with a royalty payment if that were to be successful. But we have nothing more to pay for that well with a purely royalty interest and contingent cash payments coming our way if it's successful. So the next page, please, Alex, will give a runway of the timing of these opportunities for Melbana over the next year. I've put a little red line there in September 2021, if you look at the date chart. That's where we are now, and we will run this 2-well program through Cuba probably until about first -- end of first quarter next year is the projected run rate. We then may have a little bit of news in the middle of the year. We have a small royalty interest in a well that Santos is drilling up in the Ashmore Cartier region in Australia. Again, nothing for us to spend there. It's purely a royalty interest if they're successful. Not at the same scale as Cuba or our Beehive prospect, but it's another opportunity for us to have a bit of an interest in the success. And then the EOG drilling program on Beehive is currently, we are informed, working to be done in the back half of next year. And so that gives us from now until the end of next year a pretty exciting runway of opportunities of very material scale in oil, we think, at least in the EOG Beehive prospect. And the options that you have received as part of the raising would expire in September of 2022. So that's -- there's a lot of optionality around the timing of that option expiry there, obviously, from the results of Cuba and the Santos well but probably occurring right on the cusp of the drilling of the Beehive well, too. Alex, if we go to the next page, and I'll just finish off on that point I was making earlier. In that top-left diagram for this first well, Alameda, that we're drilling in Cuba at the moment, we have 3 targets there. And I was mentioning what our development scenarios may be in the event of the discovery. Well, the main game with Alameda is there's the bottom target, the Alameda prospect as it's labeled there on the top-left chart. And that's the one that had good previous recoveries of a much lighter crude than is typical in Cuba. But there's 2 targets on the way down, the U1 and the N target. Now if we find something in either of those 2 secondary prospects on the way to the main game, well, we're going to just keep going with the rig that we have in place and its capabilities. And the costs will just keep going down to the final target. And if the final target is a success, that's -- and we have more than one success, then it's a high-class problem. But if it's a bottom target where we have the success as we hope, well, then that goes on to production testing. And if you look at the oil, if it flows at a commercially justifiable manner, we can start putting that oil into the market very quickly where we are in Cuba. Initially, probably, we would just truck the oil to the nearest port in Matanzas, the deepwater port, an oil terminal. And in time, we would put in more permanent ways of distributing that oil. There's a pipeline nearby. There's a rail line nearby. They're all options. But in that discovery scenario with an Alameda discovery, using that revenue, we would then -- it's a huge block, Block 9. There's prospectivity all way along. It's the next step for the partners, and we would decide can we do appraisal wells under the discovery or do we maybe acquire some seismic using the revenue we generated from the wells to acquire some seismic to better understand these features where we've had the discovery. But if U1 and N were to be the success, then we'll take a step back and go back up and perforate the wells at that point and do the flow testing on them. So lots of scenarios starting to form, part of our weekly management meetings with our partners now that the guys on the ground have got the keys and the drilling. I think that's probably a good and brief introduction to where we are today, and I would be happy to talk more on any particular point that anybody had some questions on. And if I might just pause here for a moment, Alex, to see if there's anything I should address more particularly.

Yes. Andrew, just we have had quite a swathe of questions come through already. And we'll probably save a few of them for the end. But I guess one that's come through is, can you comment on the potential impact of COVID on operations?

Well, it's been something that's weighed very heavily on our minds with respect to operational planning, of course. It has got the potential to interfere. Borders closed, quarantines, but we've put in place a lot of contingency around this. And we have isolation for our crews before they are admitted onto the well site. We have a doctor on site administering antigen tests and then PCR tests if they show positive. And Cuba itself has got a pretty dynamic quarantine system and also vaccination program. They've had -- the numbers have been high-ish. But as of late, they're starting to really go the other way as the vaccine starts to get well distributed in the population. So it's something that still has got the potential to be a disruptor for our program, absolutely. But I think our contingencies are as good as can be expected for managing that risk.

Thanks, Andrew. We'll probably deal with 2 more questions, and then I'll let you continue with the presentation. Can you just talk through the reporting process as this drill program unfolds?

Well, what we have is -- our target depth for Alameda was -- we planned it to be up to 4,000 meters. So depending on the rate of penetration that we get, we're thinking that the drilling to that total depth is going to be somewhere in the order of 10 to 12 weeks. We are probably going to initially just give drilling updates, unless we have some good news, of course, in which case, we'll announce immediately as we must and want to. But otherwise, if it's just routine drilling, then we'll provide updates to the market, we're thinking at this stage, every other week with data on the rate of progress and how things are going operationally. That's the current plan, but that's subject to change.

And how long is the program likely to take for the first well?

Well, 10 to 12 weeks is our current projection. But we had to make a lot of estimates based on the types of formations we're going to be drilling through and their rates of penetration. So as I said, we've started. We've got a couple of days of data under our belt, that's very good, the rates at which we're going at the moment, but there will be different formations soon. And we'll have to wait and average it out and update those estimates as we go. But there's 3 targets. If it's 12 weeks for the drilling program as we estimate, and those 3 targets are pretty much equidistant, let's say, then maybe we would expect to be into the first formation early next month, early October and then, similarly, into the end formation a month after that and then the Alameda formation sometime in early December. That's the expectation.

Thanks, Andrew. We've still got plenty of questions to go through, so we'll probably leave them to the end of the presentation if you want to continue.

Okay. I really think the questions are probably going to be more relevant for people in the presentation, Alex. So the rest of it's material that's on the website and that people have had a chance to look at. And we can go to those pages particularly if someone asks a question in that direction. So why don't we continue with the questions?

Sounds great. So I guess the underwriter had a large number of shares placed with them, you mentioned that in one of the previous slides, 143 million of the 356 million on offer. Can you just confirm if the underwriter has been able to place these shares and if any remaining to be placed?

Yes. The offer was fully underwritten by the underwriter who, in turn, had, well, an excess of commitments from sub-underwriters. So all of those shares were placed to institutions immediately at the closing of the offer.

And also, based on the ASX advice, the MAYO options held, including, #1, HSBC with 118 million, plus #5, HSBC with 18 million, does this mean that HSBC has become the major shareholder in Melbana? And how might this affect operations and decisions in the future?

No. These are options. So they're not a shareholder yet because they hold options. They have to exercise their options to become a shareholder. And those holdings of HSBC, they're nominee accounts. They're not the actual holder of the options. They'd be holding those options on behalf of another party. And they're different nominee accounts, those 2 HSBC accounts. So you shouldn't aggregate them when looking at the significance of that position there.

Thank you. And can you just give me a little bit more detail on historical wells in Cuba that you've referenced in the deck -- in a recent deck?

Yes. Well, the slide that's perhaps still on your screen that you can look at, the Marti-2 and Marti-5 wells that were drilled 20-odd years ago, they were drilled by the Cuban national oil company as wildcats. In those days, they had no seismic. They had no gravity. They just went out there, and they stuck some holes in the ground knowing, at that time, there was evidence of oil, of course. The Motembo oil field has been in that part of Cuba where we -- in our Block 9 for 150-odd years. The -- a favorite anecdote of mine that somebody in Cuba once told me was that the tar from that Motembo oil field was used to pave the streets of Manhattan back in the late 1800s. So oil has been evident. Spanish galleons used to use the tar to coat their ships in the port of Havana from these fields. So it's a prolific hydrocarbon zone. But what's the source? And that's -- these wildcats tag something, and it was on trend from a very large discovery just adjacent to us called the Varadero oil field, which is an 11 billion-barrel oil field. It was drilled and discovered on a gravity high, and we similarly have done this work. And we've got the same gravity highs. So these offset wells are very good data points for us. But they're a data point that when we take it with the gravity, with the seismic, with the stratigraphy, when we look at the -- in total, what the prospectivity is and the justification for it, it's one important element of the thinking that designed our thinking as to where we would put these wells that we're now drilling.

And just on the wells, Andrew, are the well depths different between Alameda-1 and Zapato-1?

Yes. A little bit. Alameda-1 is a bit deeper. As I said earlier, it will probably go down to about 4,000 meters. We're allowing it to go to 4,000 meters. The crest of it is much shallower than that, but we don't want to be out if we're wrong. Whereas the Zapata well, which is the next slide, if perhaps you want to just go forward one, Alex, the Zapata well is a much shallower crest, we think, but a massive, massive -- it's 1,000 meters vertical relief-ish, an enormous gravity anomaly. And indeed, very closely offset with that Motembo oil field that I was referencing before, which produced an extraordinarily light crude for Cuba. But what's the kitchen? Where is it? Where did it come from? Nobody knows. And the previous offset wells in the case of Motembo, as you can see there, the Itabo, Bolanos and Guadal, we can see from our analysis were all too shallow to hit what could have been the sources. So that's the reasoning behind the second well.

Now can you just provide some detail on the 4 zones that you're testing?

Well, we've spoken about the N, U and Alameda from the first well. And these formations that we have here in Cuba are called fractured carbonates. They're very gentle formations. You don't want to go in with a heavily overpressured drilling mud. And treat it gently and it will respond well is the advice we've had from Sherritt and from CUPET in dealing with these formations. So our guys know exactly how to treat these formations. And the fourth target, the Zapato target, the second well, which I've just spoken about briefly, is we have a -- no offset well. We have these volcanics immediately underneath the oil field. These ophiolites as they're called, they're not a source -- the purple in that diagram, they're not a source of hydrocarbons. So this oil is migrated from somewhere below and probably deeper below. A lot of the oil in Cuba that is being produced currently comes at sort of the depths of where those volcanics are, 1,000 to 2,000 meters. And they're -- so they're less cooked hydrocarbons. So they're heavier. They flow naturally unassisted. But they're heavier, lower API. For us, the thing that really caught our attention when looking at all the prospects was this oil in Motembo was -- topped in the 60s API, an extraordinarily light crude. So our thesis is that something is coming from somewhere deeper and migrating up. And so it's got a better chance at those depths to be cooked out properly. And as you looked at those 2 leads, the Zapato and A2, well, the balance of those 2 proximate to where the oil has presented itself, we think the Zapato was the better option to go for in the first case.

So Andrew, what's the mob and demob time line between the 2 wells?

2 weeks, we've allowed. The guys have got a pretty slick operation. They know their equipment. I don't think -- there's only 20 kilometers between the 2 wells. So I don't think 2 weeks it will be necessary, famous last words. But just watching what they did in getting the camp and the rig erected at Alameda, yes, it was pretty impressive. But we're allowing 2 weeks.

Yes. You mentioned some of the other participants in the drill program. I think Schlumberger was one of the participants that you mentioned. How did the participants in this drill program materialize? And can you give us some background of them? Do they have a history operating in Cuba?

Yes. We had to -- as part of the conditions of our PSC, we had to run an international tender for all the contractors that were involved in this program and then assess and rank them and make the necessary selection. So look, the 2 principal contractors that we selected are Sherritt, as I've already spoken about. Sherritt, Canadian-listed oil and gas company and nickel company that's been in country for decades drilling oil and gas wells and mining nickel. So it's very well established and very experienced from an operational, regulatory, financial point of view in Cuba. The other one, Schlumberger, is, well, well known to everyone in the oil industry. It's a massive international, multinational oil field services group. And they also have had decades of experience operating in and performing in Cuba. And so yes, we take great comfort from reliance on such 2 capable experienced firms with great logistics chains, problem-solving abilities and resources that can be called in as and when they need it. The other contractors are necessary ones for any drilling program but of less scale and significance like the mud loggers and the samplers, the field geologists and the cement providers and the fuel providers, et cetera. So they're all locals, of course, to try and keep the logistics chains as simple as possible.

So just shifting tack a little bit, when is work expected to commence on 488-P? And do you have any regular dialogue with the partner in that regard?

Sure. Well, I think maybe if you go a page forward, Alex, I think maybe the next slide, from memory, might have something on that for -- as in that one, thank you. Yes. No, we're in constant dialogue with EOG, and they have been -- it's obviously a great joy working with a big American oil company. They want things done yesterday, and that's the way we like to work as well. So it's been a good working relationship. That program is going through the regulatory approval stages at a very satisfactory pace, and we would imagine -- that hasn't stopped them. We've had a lot of meetings arranged between EOG and the necessary Australian regulators and government departments, and that's all been well received. Having a company of this size enter Australia is a real boon for the Australian energy industry. I mean, I used to -- at the time we were announcing this transaction, we were keen to point out that EOG was twice the size of Woodside, otherwise Australia's biggest oil company. But that's changed, hasn't it, with Woodside doing its corporate deals. So -- but it gives you an idea of the scale of the entrant -- of this entrant and their capabilities. They have a lot of experience in shallow water offshore drilling. They have -- I might get the number a bit wrong, but it was -- in one of the presentations they gave to the government here, it was -- they have 20, 26 shallow water rigs offshore around Trinidad that they've been operating for a number of decades. So very capable, very experienced people. And even though the permitting is -- and the licensing transfer is in train through the corridors of regulatory power in Australia, how do they stop them? They've appointed their environmental advisers. They're doing their rig selection work between their other people, movement, planning. They want this thing drilled. So that's very exciting for us. It's very exciting for the regulators, too. This prospect is a new type of play for Australia. But these isolated carbonate buildups, which is what the Beehive is, hasn't been tested in Australia. But where it has been tested around the world, where that has worked, it has worked big. And that's the reason for the dotted line around the high estimate that I put there on the prospective resource. It's very difficult. It's got a very funny-shaped distribution, a very big tail. And so the best estimate that the independent consultants put on this was 416 million barrels of oil equivalent. But if it works, it could be over 1 billion barrels of oil. So I think that's what got the attention of a company of the size of EOG. For a country entry, this is big enough. And if it's successful, it would underwrite all the effort and expense to do a country entry.

Now coming into the drill program on Block 9, why are the shares tracking at $0.02?

Yes. Indeed, why? Traders have their own reason. Investors have their own reasons. In my experience, I'd say it's not a typical aid in any entitlements offer or equity raise that the price at which you raise equity is the price where the share price tracks it under the course of the raising. It particularly is compounded in the case when you have equity being issued with options. Sometimes it's a common trading strategy or a hedging strategy to recover the costs of the investment by selling the shares and hanging on to the options as they hedge against the success. Look, there's a million reasons. But people should remember that the volumes have been quite strong since the close of the offer, even heading into the close of the offer. So people are getting themselves positioned as per their own portfolio and their own expectations. For every seller, there's always a buyer. And I think -- whether our share price is $0.019 or $0.021 or plus or minus, what we're all in this for is the success case. And in the success case, we would hope that this would deliver a very material improvement in our share price to our shareholders.

Now just back on the drilling program, when do you expect or estimate for the first target to be intercepted?

Probably early to mid next month.

Fantastic. So -- and just around -- you talked about the old Marti-2 and Marti-5 wellheads. What's the significance of oil at the surface around the old Marti-5 wellhead? And similarly, is there any significance to the visible oil spill at surface around the old Marti-2 wellhead?

Well, it's no longer like that. But back then in -- whenever it was taken, I think it was 2003 those photos were taken, obviously, it was evidence of somebody not suspending the wells properly. And what's the significance of it? Well, oil is there. And that's one of the reasons of why we selected to drill where we're going to drill in Block 9. The first well, Alameda-1, is twinning those previous discoveries. Now from a purely scientific point of view or an explanation of what's going on under the surface in Cuba, I think our geologists and the Board had a number of robust discussions as to what was the most interesting well from a scientific point of view to start with in Cuba. But being an ex banker, the resources, I sort of liked what I think is -- and as did my Board, as did our partners. We signed off on it. Starting with a well that has the best chance of success is what you want to do in a drilling program. So that's why we started with Alameda. And the significance of those oil seeps are a bit of comfort in contribution to the thesis that what we're targeting is indeed a source of the hydrocarbons we want to find there.

Now shifting back to the Australian assets, has the company developed any leads in the new Australian Block WA-544-P or NT/P87?

Yes. We're working hard on that at the moment. No, we haven't finished our assessment work. We've done the seismic reprocessing. We've commissioned the seismic reprocessing in those blocks. That's well advanced. We hope to have that work completed and our assessment done of it probably first quarter -- in the first quarter of next year. The idea is that we would like -- if we have to find prospects of interest in those 2 areas, which we think we will, that is a nice running room for EOG or indeed for any other partner that may want to come in on the back of the Beehive story, knowing there's a well being drilled there next year and that similar prospects may exist over the fence. So we've got all that work done and out there and looking for a partner prior to the Beehive prospect being drilled next year.

So I guess broadly speaking now, Andrew, now that you're drilling, can you just give us a bit of a feel for what the strategy is? And has anything changed over the past 6 months that's made you to manage your management strategy? And how does the next 6 months look for Melbana?

Well, we've amended our strategy almost on a daily basis over the last 6 months with regards to Cuba and COVID and logistics challenges. But no, the big picture is, let's get these wells drilled. And over the next 6 months, we're going to know whether the effort in Cuba has been worth it. And if it is, then it's a great time to be finding oil. The oil price is in a great spot. The fundamentals of the oil market, notwithstanding all the externalities of major suppliers turning taps on and off and global frictions and industrial capacities going up or down, even with all of that noise, the demand for oil looking forward, according to the -- both the Intergovernmental Panel on Climate Change and the U.S. Energy Department, is only going to go up from now until 2050. So you have a lot of demand for oil in the future. You have very little investment continuing to go on in its discovery to replace existing reserves because the world has shifted. The world is heading towards a different energy future. And that means in our position, in our belief, there's a mismatch between supply and demand, which is underwriting the price of oil for many, many years to come, certainly in the period of time frame that everyone on this call cares about. And as a result, we hope if we can find something now, we've got a good oil price environment. And that's going to generate good margins, which will underwrite us, making a much better study or a much more extensive hydrocarbon system even within Block 9, let alone all of Cuba, that we can generate a new and significant source proximate to major markets for the long-term value of Cuba within our company.

So what are the plans, if any, for the Santa Cruz prospect in Cuba?

It's been on our to-do list. And unfortunately, we haven't wanted to get to it yet because of the focus on this work. This has been what our partners paid for. This is what our shareholders have wanted us to do. Santa Cruz is a nice project to have up our sleeve in Cuba because it's a much quicker route to getting into production by doing some workovers and some end-of-life work. But it's the typical Cuban light and heavier crude. And it's not of the significant volume that these opportunities are. So it's a parallel project for us. Now that this is underway, we can start to pay more attention to Santa Cruz.

And I guess in a similar vein, are there any other drilling prospects in Block 9?

There's many. I mean, we've got a couple of dozen of them. These are our -- amongst our highest rated few that we're drilling at the moment. We certainly know which ones we'd like to tackle next. But as I said, it will depend on where we find oil and how much we find as to what we do next. The work streams will be dictated by that because I think everybody, partners, shareholders, regulators, everyone is very keen to see oil production as a priority. And so once we've established that, if we can, that will dictate what we prioritize as the next step.

Thanks, Andrew. Now from a regulatory standpoint, how is Cuba placed? And do you anticipate any hurdles now that you've commenced drilling?

From a regulatory -- from a jurisdictional point of view, it's a very competent black letter law jurisdiction. We've had nothing but good experiences dealing with the Cuban regulators and the clarity of their permitting and laws. Our interest in the contract -- the production sharing contract we have with the national oil company is actually encompassed in national law. It's taken by their parliament and brought into national law. So we have a lot of protections for our investment. And look, I've operated in a number of emerging markets around the world in my years and in a lot of developed markets, too, might I say. And I find them all very difficult now to do resource projects, whether it's energy, whether it's mining. Because of the uncertainty of the regulatory process with the social license, with the environmental concerns, it makes that a moving target for knowing the time frame over which things can be developed often and, therefore, the costs. Cuba has been somewhat methodically slow in getting from A to B. If you need that permit, it's going to take you 10 months. And it takes you 10 months, but it shouldn't have. But it's a reliable 10 months. We've never had an issue getting a permit. We're doing everything to Western standards, of course, as we should and must as an Australian company. So all of the environmentals, all of the land access agreements, all of the drilling permits, it's all very clear. And it's all very easy to follow. And it all happens like clockwork. So I find it a very good jurisdiction to be operating.

Thanks, Andrew. We've only got a couple more questions, and then we'll call it there. But like I said, just a couple more to get through. Can you just help us understand the geology of some of the targets that you're testing in this program? And what are the chances of success from your perspective?

Well, I'm not a geologist. And I think my fellow directors who are experienced geologists would be horrified if I put a chance of success [ sample ] at this. The chance of success in our Cuban drilling programs are determined independently by an expert called McDaniels & Associates out of Canada, who have a lot of experience in Cuba because of Sherritt. So they've put a geological chance of success on the Alameda prospect, for example, of 32%. Now on average, oil and gas exploration is a very risky business. And the global average, in my experience of some of the materials I've seen and read, the global average chance of success of an oil and gas well is in the low teens, 12%, 14%, something like that. So we've got something considerably higher than that and in no small part due to those previous discoveries, which if they had been better documented at the time, maybe we'd be talking about appraisal wells now instead of exploration wells. But they weren't. And so they're exploration wells because of that data uncertainty. But the types of formations are -- they're just classic traps, as you saw from those large formations that provide that barrier to the migration of oils that we are targeting. So anything more than that is going to take me out of my pay grade from a geological understanding basis, and I don't want to have to ask -- answer hard questions from my fellow directors.

Fair enough. Now we did talk briefly about the reporting process as the drill program unfolds. Are there any restrictions to releasing mud logs and core samples, which the Cuban regulators have? Or is Melbana able to report sampling results independently?

Yes. No, we haven't been told that we can't report anything. We'll make the necessary announcements that we believe are consistent with our continuous disclosure obligations and are relevant to the market in their assessment of how we're going. So we're keen to share our knowledge and information as it's gathered, when it's gathered on a frequency that makes sense.

Thanks, Andrew. And just one final question, unless there's -- I mean, last opportunity to send through your questions, guys. But the last question that we've received, has there been any interest recently in the Tassie Shoals project? And is this still a serious prospect for development?

I like to leave that in my top drawer because, look, it's a long history. And I know there would be many shareholders still in this company who invested for that project all those years ago. And the reason it didn't get to completion all those years ago is still the reason that it's sitting on the shelf. Now is that -- it needs a gas supply. And look, it's got all of its environmental permits to proceed. It's -- they're valid until 2050, which is an extraordinary and rare thing. Where does the gas supply come from? Well, there's a lot of moving pieces happening there in Northern Australia with Santos electing the Barossa field to backfill Darwin LNG. And now Santos and it sounds like ENI, too, at the Evans Shoal field are looking to bring that gas onto the beach at Darwin and strip out the CO2 and then pump it back up on the Bayu-Undan pipeline to sequester the CO2 up in Timor-Leste. There's a lot of moving pieces again, and it's one I do keep an eye on. I do have conversations with the relevant players in the region, most recently at the APPEA conference in Perth a few months ago. We had some good chats on this, but the delivery of the project is out of our hands. But the piece that we need, I continue to have conversations about. So I rank it as a low priority for Melbana in the immediate future of what we have on our plate and what would deliver the most value for shareholders in the near term. But as an option, as a cheap option sitting in our drawer that maybe one day gets pulled out and surprises everybody, definitely has some value.

Thanks, Andrew. Now that's all the time we have today. Thank you all for joining me. And well, hang on, we've just -- sorry. We've just had one of our attendees, Andrew, who just joined late. Can you just confirm that there will be weekly updates on the -- during the drilling of Alameda-1? And how regular will those updates be?

Well, we did say earlier that at this stage, I'm expecting to put out updates by month -- or biweekly, I mean, twice a week, 2 weekly -- I mean, 2 weekly. At this stage, as we're going through the early stages of the drilling, and then we'll reassess as it gets -- obviously, unless there's something more interesting that occurs, in which case we'll announce it as is appropriate.

Fantastic. So like I said, Andrew, that's all the time we have today. Thank you all for joining me. I'd also like to thank Andrew for presenting and taking the time to answer some questions. We certainly got through a fast way to the questions. So thank you very much for that. As I mentioned before, a recording of the webinar will be on Melbana's social media platforms later today. Andrew, before I let you go, do you have any final comments to leave with us today?

No. Just thank you very much for everyone's time and listening to our story and the support. And we're very, very keen to deliver for our loyal shareholders and partners. So watch this space, fingers crossed.

Fantastic. Now I'll reiterate that if you were late or if, for whatever reason, you know an investor that may have missed the webinar, there will be a replay available on Melbana's social media platforms later today. Andrew, thanks very much for joining me. That wraps it up here, everyone. Thank you very much, and have a great day.