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Cue Energy to spud NS-2 well in Mahakam Hilir PSC in November

JAKARTA ( – Australian listed oil and gas company Cue Energy Resources Ltd (ASX: CUE) said it will spud Naga Selatan-2 (NS-2) well within Mahakam Hilir PSC in East Kalimatan in November this year.

“In the Mahakam Hilir PSC, Indonesia, Cue will operate the drilling of the Naga Selatan-2 (NS-2) well targeting shallow oil objectives. Cue believes the feature is geologically analogous to the 500 mmbbl Sanga Sanga oilfield trend ten kilometers away,” the company said.

It said well planning is currently progressing with civil works contracts and a rig contract near award.

In addition it is planning to carry out a 3D and 2D seismic and drilling of 2 wells in the Mahato PSC by the third quarter of Fiscal Year 2016, with the wells aimed at delineating an extension of the Chevron operated Petapahan field into the Mahato block. Further wells are expected in other areas of the PSC as a result of the seismic surveys.

In the Carnarvon Basin, offshore Western Australia, Cue has identified Ironbark, a large, deep Mungaroo formation gas prospect straddling the 100% Cue owned WA-359-P and WA-409-P permits. The prospect has the potential to contain multi-trillion cubic feet of gas reserves and lies close to existing LNG infrastructure. A process has been initiated to farm down Cue’s interest and find a joint venture partner for both permits.

Strong results

The company has delivered a strong financial result for the year ended 30 June 2015, reporting gross profit from production of $23.73 million (2014: $15.79 million) up from $15.79 million in the previous year largely due to a 10.8 percent rise in the company revenue from Maair field oil production in New Zealand, gas production in Wortel field in offshore East Java and lower operating costs.

It reported a net profit after tax of $40.05 million (2014: $2.17 million loss).

The net profit result is heavily influenced by non-cash items due principally to a 60 percent increase in the value of the Mahakam Hilir PSC ($36.02 million) and a write down of $18.01 million on the carrying value of the Maari oil field development in New Zealand.

Cue CEO, David Biggs said the 30 June 2015 financial year result is “a strong one for the company.” In addition to the carrying value of the Mahakam Hilir PSC due to the acquisition of the 60 percent interest of the Mahakam Hilir PSC, the net profit was also contributed of the sale of the entire PNG asset portfolio in late 2014 and a favourable foreign exchange movement between the USD and the AUD.”

“Our Maari production asset is now producing significantly higher volumes, with even higher rates expected as a result of the upcoming well workover program. The Sampang PSC Joint Venture has improved oil production at Oyong through a workover program and completed a Wortel compressor upgrade to maintain gas production beyond 2018 and maximise gas reserves,” he said.

“We have achieved a 100 percent reserves replacement ratio over the last 18 months due to reserve upgrades at Sampang and the low cost acquisition of reserves at Pine Mills, East Texas. This is a significant achievement for Cue,” he noted..

“The company is in a strong financial position and is looking forward to near term exploration activity which has the potential to generate significant shareholder value.” (*)

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