Prep work begins at oil drilling site in

Melbana, which has headquarters in Australia, has a production sharing contract with the Cuban energy company known as CUPET for the so-called Block 9 onshore basin. The Australian company said local contractors were working with its personnel to get the proposed Alameda-1 well location ready for future operations.

"The commencement of field survey work for Block 9 is a significant milestone in our preparation towards the drilling of up to two exploration wells in mid-2018 in our world-class Cuban acreage," CEO Peter Stickland said in a statement.

In a recent presentation, Melbana said the low-lying land for Block 9 made it a promising prospect. The company last year estimated its Cuban portfolio contains 637 million barrels of prospective recoverable reserves.

Melbana's drilling campaign for 2018 could cost about $30 million at the high end and it had about $2.7 million in cash on hand as of March 31. Though a placement and entitlement offer outlined earlier this month, the company said it could raise as much as $6 million to finance operations at the island nation.

"While the company intends to undertake a farm out process to potentially assist funding the drilling phase, the offer is primarily being undertaken to enable the company to conduct the necessary preparation to enable it to drill in Cuba in 2018," a letter to shareholders read.

Melbana is one of the few Western oil companies, and the only one listed on the Australian exchange, with a footprint in Cuba. The company has personnel on the ground in Cuba working to engage consultant firms there on the future potential.