Shares in Melbana Energy Ltd (ASX:MAY) soared into the green today and finished 13% higher at 12.75 cents apiece. At one point, Melbana was trading as high as 14.74 cents during the session.
Investors are reacting positively after a company announcement regarding an update on its drilling operations in Cuba. Let's take a closer look at what was released today.
Melbana is pushing ahead in Cuba
The company provided a drilling update on the Block 9 'production sharing contract' area in onshore Cuba.
The Cuba Block 9 contract area covers 2,380km2 onshore on the north coast of Cuba. According to Melbana, it is located within "a proven hydrocarbon system and along trend with the multi-billion barrel Varadero oil field".
Melbana advised it paused drilling on the 6-inch hole section when it encountered a "high-pressure zone resulting in an influx of hydrocarbons into the wellbore and subsequent strong oil shows on the shakers".
As such drilling will now push ahead full steam as oil is being fed through the choke and mud degasser and then being flared.
"Drilling ahead will continue once the mud system has been weighted up to approximately 1.88sg – the weight necessary to maintain well control while drilling ahead", the company noted.
Speaking on the announcement, Melbana Energy executive chair Andrew Purcell said:
This well continues to have plenty to say to us and we're enjoying hearing it. This strong showing, once again, of energetic hydrocarbons gives our geoscientists more to think about when considering what this may mean for
our understanding of the subsurface and the resource potential of Block 9.
What else could be at play?
The results announced today build on momentum in the hydrocarbons sector as oil prices surge to multi-year highs.
Brent Crude futures – of which more than 90% of oil contracts are priced off – nearly touched US$131 per barrel on Wednesday as the supply shock from US-imposed sanctions on Russian oil ripple through commodity markets.
It has now risen around 93% in the past year and is up 43% in the past month. The momentum has been positive for Melbana with its share price climbing more than 100% at the same time.
In fact, the Melbana Energy share price and the price of oil and oil futures tends to move remarkably similar seeing as the company is a price taker, meaning its shares will fluctuate alongside volatility in commodities.
Melbana Energy share price snapshot
In the last 12 months, the Melbana share price has soared more than 526%, with a 490% gain this year to date.
In the last month alone, shares have more than doubled and are up 51% during the past week of trading.
