Aug. 15 (UPI) -- Proceeds from an effort to raise new capital will be used primarily to start planning for a drilling program in Cuba next year, Melbana Energy announced.
The company, which has headquarters in Australia, is one of the few with an established footprint in Cuba. Though a placement and entitlement offer, Melbana said it could raise as much as $6 million to finance operations at the island nation.
"Net proceeds from the placement and entitlement offer will be used primarily to allow the company to undertake the necessary initial preparations for the planned Cuba drilling program in 2018 on the company's 100 percent owned onshore Block 9 production sharing contract, but excluding drilling itself," it said in its announcement.
Block 9 could yield about 637 million barrels of oil for Melbana. Its two primary drilling targets -- Alameda-1 and Zapato -- combine for an exploration of 200 million barrels.
In a recent presentation, Melbana said the low-lying land for Block 9 made it a promising prospect and there are "multiple" drilling rigs already in operation. In its placement announcement, the company said Alameda is the target of at least three drilling objectives.
The company estimated its drilling campaign for 2018 would cost about $30 million at the high end. On the placement offer, it said there was "strong support" from existing shareholders and new investors.
As of March 31, the company had about $2.7 million in cash on hand.
Melbana has personnel on the ground in Cuba working to engage consultant firms there on the future potential.