Material Risks Risk Management Approach Disputes and litigation Risk The Company is not currently aware of any material disputes or litigation, but may be involved in legal proceedings in the future. Any significant or costly dispute or litigation could adversely impact the value of its assets, financial performance or reputation. The Company maintains robust contractual and governance frameworks, obtains legal advice on key agreements, and implements compliance and riskmanagement practices designed to prevent and promptly address disputes. Appropriate insurance cover is maintained to help limit potential financial exposure, though some residual risk remains. Tax Risk The Company is subject to taxation, royalties and other imposts in Australia and other jurisdictions where it operates. It currently benefits from concessionary tax arrangements in Cuba; however, there is no assurance these concessions will remain in place or extend beyond their current agreed periods. Any changes in tax laws, government royalty policies, or their interpretation or enforcement—whether in Australia, Cuba or elsewhere— could increase the Company’s effective tax rate, reduce cash flows and profitability, or adversely affect project economics. The Company actively monitors taxation and royalty regimes in all jurisdictions of operation and investment, engages specialist tax and legal advisers, and structures its operations to comply with applicable laws while optimising available incentives. Financial forecasts incorporate tax and royalty sensitivity analyses, and the Company maintains constructive engagement with relevant tax authorities to help anticipate and manage potential changes. These measures aim to limit the financial impact of any adverse changes, though some residual risk remains. Schedule Risk The timing of the Company’s planned activities may be affected by factors beyond its control, including adverse weather, government actions or delays, industrial action, availability of key equipment, and the actions or funding delays of joint venture partners. Regulatory approvals and permitting in Cuba may also result in drilling or project delays, potentially impacting schedules and costs. The Company incorporates schedule contingencies and flexible project planning into its programs, engages early and regularly with regulators, and maintains strong relationships with contractors, suppliers and joint venture partners to minimise potential delays. Critical equipment procurement and logistics are closely managed, and alternative suppliers and schedules are assessed to reduce the impact of unforeseen disruptions. Joint Operations Risk The Company is party to a joint operation arrangement and may enter into further joint operations. Although The Company has sought, and will seek, to protect its interests, existing and future joint operations necessarily involve special risks., including but not limited to inconsistent goals with joint operations partners and potential reputational risk by association to a partner. Partners may also be unable or unwilling to fulfill their obligations under the joint venture or other agreements, such as contributing capital to exploration, expansion or maintenance projects. The Company has a clearly structured process of contracting with third parties. In addition, The Company will only participate in joint operations where it has a real influence in the operation and is not a dormant partner. The existing Joint Operation the company is the operator and therefore drives execution and oversight of the joint operation. All future Joint operations will continue to be structured in a manner that ensures an appropriate level of control and direction. Funding Risks The oil and gas industry is a capital-intensive industry with regulator mandated minimum work program obligations and financial support for those. There can be no assurances that all The Company’s future business activities will in fact be met without future borrowings or further capital raisings, and whether such funding will be available and on terms favourable to The Company. The Company successfully raised equity funding to complete its approved future work plans. The Company manages its capital structure and requirements actively and may issue additional equity securities, raise debt or other financing solutions to fund future work program obligations, at the best possible terms. Drilling Risks Drilling operations are high-risk and subject to hazards often encountered in exploration, development and production drilling programs. These include unexpected geological formations, infrastructure failure and other incidents or conditions which could result in damage to plant or equipment or the environment and which could impact production throughput. Although it is intended to take adequate precautions to minimise risk, there is a possibility of a material adverse impact on the Company’s operations and its financial results should any of these hazards be encountered. The Company manages drilling hazards through rigorous well design and planning, independent technical reviews, engagement of experienced contractors, continuous real-time well monitoring, and strict adherence to recognised HSE standards. It maintains insurance cover considered appropriate for its operations and regularly reviews emergency response plans and critical equipment to minimise downtime. These measures materially reduce the likelihood and potential impact of incidents, though a residual risk of operational or financial disruption remains. Governance and Risk continued 38 Melbana Energy Limited Annual Report 2025
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