Melbana Energy : Cuba Update

• Prospectivity assessment confirms Block 9 as one of the world's most exciting onshore exploration opportunities
• Exploration potential of Block 9 recently upgraded to 12.5 billion barrels of Oil-in- Place with Prospective Resources of 637 million barrels (unrisked Best Estimate, 100% basis)*
• Melbana has prioritised 19 individual prospects and leads to focus on the highest impact, lowest risk opportunities
• High graded Alameda Prospect well has multiple targets, cumulative potential of 130 million recoverable barrels (unrisked Best Estimate, 100% basis)*
• On track for ambition to accelerate 2 well Cuban exploration program in 2018

MELBOURNE, AUSTRALIA (22 March, 2017)

Melbana Energy Limited (ASX: MAY) is pleased to provide the following update on the significant exploration potential, drilling opportunities and forward drilling program in its 100% owned# onshore Cuba Block 9 Production Sharing Contract ("Block 9 PSC").

Block 9 Prospectivity Assessment Identifies Multiple High Impact Exploration Drilling Opportunities

The Block 9 PSC is a large (2,380 km2) onshore block located along trend from the multi-billion barrel Varadero oil field. A prospectivity assessment undertaken by Melbana in 2016 and upgraded in February 2017 confirmed Block 9 as one of the world's most exciting exploration plays. Melbana has estimated that Block 9 contains exploration potential for approximately 12.5 billion barrels of Oil-in-Place with a Prospective (Recoverable) Resource of 637 million barrels (Best Estimate, 100% basis)* of potentially high quality oil. The prospectivity assessment also identified 19 individual prospects and leads which the Company has been prioritizing to focus on the highest impact, lowest risk drill opportunities. The most recent increase in the assessed exploration potential is due to the identification of the U1 lead, a shallow structure with a Prospective (Recoverable) Resource of 25 million barrels (Best Estimate, 100% basis)* that could be targeted as a secondary objective as part of drilling the Alameda prospect.

* See Prospective Resources Cautionary Statement on page 3

# Subject to a conditional 40% back-in option to be exercised no later than September 2017 held by Petro Australis Limited.

Alameda 1 - High Priority Exploration Drill Opportunity

The highest ranked exploration drilling opportunity is the proposed Alameda-1 well which will test a combined exploration potential of over 2.5 billion barrels Oil-in-Place and 130 million barrels of recoverable oil on a 100% unrisked, best estimate basis and over 400 million recoverable barrels aggregate high side potential (Table 1 and Table 2). This exploration well has been designed as a mildly deviated well, with a total measured depth of 4,000m (Figure 2) to enable the well to penetrate three independent exploration objectives; the primary Alameda objective as well as the shallower N and U1 objectives.

The U1 objective is a structure indicated on seismic as being updip of the tested oil recoveries in the Marti- 2 well. While characterised as an exploration well, the chance of success at Alameda-1 benefits from two old wells, Marti-2 and Marti-5, both of which recovered oil from the objectives targeted in Alameda-1.

Alameda-1 would take approximately 80 days to drill based on historical information.

* Prospective Resources Cautionary Statement: The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Future exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

Additional preliminary drilling design studies have also been undertaken for exploration wells to test the Zapato prospect (formerly lead C1) and shallower Piedra prospect (formerly lead P). The Zapato target has exploration potential of 71 million barrels of recoverable oil on a 100% unrisked, best estimate basis (Table 3). The Piedra target has exploration potential of 39 million barrels of recoverable oil on a 100% unrisked, best estimate basis (Table 3).

The proposed Zapato-1 well location is in the central portion of Block 9 and is designed to test a Lower Sheet closure in close proximity to the shallower Motembo oil field, which has historically produced a high quality light oil. The Zapato feature has a crest at approximately 2,000 metres and is a robust structure with nearly 1,000 metres of vertical relief (Figure 3).

The proposed Piedra-1 well provides an opportunity to test a Lower Sheet target at relatively shallow drill depths in the western area, closer to the existing infrastructure of the Varadero oil field, the largest oil field in Cuba.