Results for the year The net loss after tax of the Consolidated Entity for the financial year was $4,151,446 (2024: net profit after tax of $3,259,760). The loss for the year represents the support costs of the corporate function for Melbana as the majority of the costs are recovered from the Block 9 project. During the year, the Consolidated Entity incurred net operating cash outflows of $3,623,620 (2024: outflows of $3,670,961), net investing cash outflows of $3,796,677 (2024: outflows of $18,666,009 ) and net financing cash inflows of $nil (2024: inflows of $nil). The successful drilling and commercialisation of any oil and gas discoveries in Cuban and Australian exploration permits and/or the development/sale of the Consolidated Entity’s methanol and LNG Projects could ultimately lead to the establishment of a profitable business or result in a profit to the Company if an asset sale occurs. While the Consolidated Entity is in the exploration/appraisal stage of drilling for hydrocarbons in its offshore Australian exploration permits and overseas acreage, and in the project development phase for its other offshore Australian interests, funding will be provided by asset sales, equity capital raised from the issue of new shares, and/or farm-out or joint development arrangements with other companies. Review of financial position The net assets remained relatively flat year on year with an end of year balance of $55,926,331 at 30 June 2025 (30 June 2024: $55,931,168). During the year, the Consolidated Entity capitalised $2,795,726 (2024: $26,044,200) on exploration, mainly in relation to Block 9 in Cuba. The balance capitalised to exploration costs for Block 9 was lower than in prior years, reflecting a change in accounting treatment as the Company prepares for multi-well drilling operations during the field development stage. Inventory purchases are no longer fully charged to drilling costs at the time of purchase but are now expensed to drilling costs, and consequently capitalised to exploration costs, when utilised. This change resulted in Drilling Supplies and Material inventory of $12,060,045 at 30 June 2025 (30 June 2024: $nil). In addition, the Company held $634,142 (at cost) of crude inventory in storage tanks from production at the Amistad-1 well. This crude inventory has been valued on a pre-commercial development basis, which considers only the production costs of Amistad-1 over its estimated production life to 2040. As a result, the unit cost per barrel is higher than would be the case under a full-field development valuation. The main driver of the Consolidated Entity’s financial condition is the loss after tax of $4,151,446 (2024: Profit of $3,259,760). As the Company is pre-revenue this represents the non-project support costs for the year. The Company is building crude inventory to commence commercial shipment and therefore the earnings picture will change going forward. The net current assets position as at 30 June 2025 of the Consolidated Entity results in an excess of current assets over current liabilities of $6,726,659 (30 June 2024: $10,910,423). The cash balances, including term deposits, as at 30 June 2025 were $5,115,674 (2024: $12,322,890). Corporate The Consolidated Entity’s future prospects are centred on its ability to secure quality exploration, development and producing opportunities and seeking to maximise the value to shareholders of its current portfolio, identifying and securing additional value-accretive projects, and/or undertaking a corporate transaction. At balance date, available funds were sufficient to meet the Company’s forecast corporate costs. Following the successful capital raise completed on 21 August 2025, the Company is now appropriately funded to deliver on its committed work programs for the coming year. In addition, the planned commencement of crude sales will provide an additional source of funding for the business. While funding for the coming financial year is sufficient to cover corporate costs, additional capital will be required to meet field development and other work program commitments. Discussions with potential funding partners are well advanced, and the Consolidated Entity expects to progress its planned field development activities successfully. Should the Consolidated Entity be unable to secure the required funding through the structures currently being negotiated, it may seek to raise further capital. In the event of an unsuccessful capital raise, the Consolidated Entity may be required to consider alternative measures, including the surrender of permits or potential asset sales. Directors’ Report continued 22 Melbana Energy Limited Annual Report 2025
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