MEO Australia Ltd. has completed negotiations for 100% participating interest in a production-sharing contract (PSC) in the Republic of Cuba.

Detailed terms of the PSC have been agreed upon with the commercial division of Cuba Petróleo Union (CUPET), and final PSC documents have been initialed by MEO and CUPET. Official execution and award is subject to final regulatory approval.

MEO has been in discussions with CUPET since qualifying as an onshore and shallow-water operator in early 2013. Block 9 was MEO’s preferred entry block due to the confirmed presence of hydrocarbons and the close proximity to existing production and infrastructure. The geology of the block is analogous to petroleum systems in which MEO’s technical personnel have significant experience, a key factor that helped qualify MEO to apply for acreage in Cuba.

Block 9 covers about 2,380 sq km (919 sq miles) of predominantly low lying farmland on the north coast of Cuba about 130 km (81 miles) east of Havana. It has an existing petroleum exploration dataset of modern 2-D seismic and multiple wells. The block is close to the multibillion-barrel Varadero oil field and contains the Motembo Field, the first major Cuban oil field which was discovered in 1881.

The exploration phase of the PSC term is split into four sub-periods totaling 8.5 years with withdrawal options at the end of each sub-period. The negotiated work program includes a commitment to an initial 18-month exploration sub-period during which existing exploration data in the block will be evaluated and selected seismic reprocessed before electing whether to proceed with a subsequent 24-month exploration sub-period that includes acquisition of new 2-D seismic.

MEO has pursued this opportunity in collaboration with Petro Australis Ltd., an unlisted Australian company. In the event that MEO is awarded the PSC and Petro Australis qualifies for participation in Cuba, it has an option to secure up to a 40% participating interest in Block 9 by reimbursing its share of costs MEO has incurred to date.